u.s. economic outlook 08 31 greer walker real e… · economic outlook 2 five key themes economic...
TRANSCRIPT
U.S. Economic Outlook
Mark Vitner, Managing Director & Senior Economist
August 31, 2016
Economic Outlook 2
Five Key Themes
Economic Outlook
Weaker Global Growth
Brexit will weigh on global economic growth, pulling at industries closely tied to it. With demand growing more slowly, inflation will likely remain below 2 percent.
Monetary Policy
The Fed’s more hawkish recent tone is aimed at avoiding another taper tantrum. The economy is closer to full employment than widely thought and the Fed will need to hike rates in coming quarters.
The Housing Recovery
Easier monetary policy has paved the way for a more substantial housing recovery. Single-family construction is gaining steam, while low interest rates pull money into private equity and keep the apartment boom going.
The Mix of Growth is Shifting
The economy is better for consumers than producers. Regions exposed to agriculture, energy, mining and manufacturing continue to struggle with slower growth.
Weaker real GDP over the past three quarters exaggerates the extent of the slowdown in the U.S. economy. Growth is solid, albeit unspectacular.
Economic Outlook 3 3
Economic Growth
Reductions in inventory building and widening trade gap account for much of the shortfall in Real GDP growth over the past three quarters. Private final demand remains much stronger,
led by growth in consumer spending and home building.
Source: U.S. Department of Commerce and Wells Fargo Securities
Real Private Final Sales Real GDP Forecast
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
2000 2002 2004 2006 2008 2010 2012 2014 2016
U.S. Real GDP Bars = CAGR Line = Yr/Yr Percent Change
GDP - CAGR: Q2 @ 1.1%
GDP - Yr/Yr Percent Change: Q2 @ 1.2%
Forecast
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
2000 2002 2004 2006 2008 2010 2012 2014 2016
Real Private Final Sales to Domestic PurchasersBars = CAGR Line = Yr/Yr Percent Change
Real Priv Fin Sales to Dom. Purch. - CAGR: Q2 @ 3.0%
Real Priv Fin Sales to Dom. Purch. - Yr/Yr Pct Chg: Q2 @ 2.3%
Forecast
3
Economic Outlook 4 4
Employment Situation
The monthly payroll employment numbers have been unusually volatile in recent months, primarily reflecting unusual seasonal factors. The unemployment rate is now below 5 percent.
Labor markets are tight around the country and job openings remain near an all-time high.
Source: U.S. Department of Labor and Wells Fargo Securities
Unemployment Rate Nonfarm Employment
-1,000
-800
-600
-400
-200
0
200
400
600
-1,000
-800
-600
-400
-200
0
200
400
600
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Nonfarm Employment ChangeChange in Employment, In Thousands
Monthly Change: Jul @ 255K
0%
2%
4%
6%
8%
10%
12%
0%
2%
4%
6%
8%
10%
12%
65 70 75 80 85 90 95 00 05 10 15
Unemployment and Wage RatesWages for Production & Nonsupervisory Workers, SA
Unemployment Rate: Jul @ 4.9%
Hourly Earnings - Yr/Yr % Change: Jul @ 2.6%
4
Economic Outlook 5
Consumer Confidence
Consumer confidence improved solidly in August and remains
near its high for this cycle
Source: The Conference Board and Wells Fargo Securities, LLC
0
20
40
60
80
100
120
140
160
0
20
40
60
80
100
120
140
160
87 89 91 93 95 97 99 01 03 05 07 09 11 13 15
Consumer Confidence IndexConference Board
Confidence Yr/Yr % Chg: Aug @ -0.2%
Confidence: Aug @ 101.1
12-Month Moving Average: Aug @ 96.7
5
Economic Outlook 6
Gradual Recovery in Homebuilding
We continue to expect a gradual recovery in home building.
Single-family construction has
been slow to come back on track with long-held norms relative to
population and employment growth. We look for stronger
gains this year, but improvement will remain
exceptionally gradual.
Source: U.S. Department of Commerce and Wells Fargo Securities
0.0
0.3
0.6
0.9
1.2
1.5
1.8
2.1
2.4
0.0
0.3
0.6
0.9
1.2
1.5
1.8
2.1
2.4
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
Thousands
Housing StartsMillions of Units
Multifamily Starts
Multifamily Forecast
Single-Family Starts
Single-Family Forecast
Forecast
Economic Outlook 7
Interest Rates
The Fed has consistently delayed and scaled back their
timeline and the ultimate magnitude for normalizing the
federal funds rate.
Brexit has made policymakers even more cautious.
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
Appropriate Pace of Policy FirmingTarget Federal Funds Rate at Year-End
June 2016 Median ResponseMarch 2016 Median ResponseDecember 2015 Median ResponseDecember 2014 Median ResponseFutures Market: August 29
2016 Longer Run2017 2018
Source: Federal Reserve Board, Bloomberg LP and Wells Fargo Securities
Economic Outlook 8
-1%
0%
1%
2%
3%
4%
5%
-1%
0%
1%
2%
3%
4%
5%
10 11 12 13 14 15 16
10-Year Government Bond YieldsPercent
Japan: Aug-25 @ -0.10%
United States: Aug-25 @ 1.58%
Germany: Aug-25 @ -0.14%
United Kingdom: Aug-25 @ 0.57%
Sovereign Yields
Government bond yields have declined across the globe
Source: Federal Reserve Board, IHS Global Insight and Wells Fargo Securities
Economic Outlook 9
-1.5%
0.0%
1.5%
3.0%
4.5%
6.0%
7.5%
-1.5%
0.0%
1.5%
3.0%
4.5%
6.0%
7.5%
1980 1985 1990 1995 2000 2005 2010 2015
Real Global GDP GrowthYear-over-Year Percent Change, PPP Weights
Period Average
WF
Forecast
Global Forecast
Global economic growth has remained sluggish for the past four years and is expected to remain below its long-term
average for the next few years.
Source: International Monetary Fund and Wells Fargo Securities
Regional Outlook
Economic Outlook 11
Year-over-Year Employment Growth by State (June 2016)
A majority of Western states have seen stronger job growth relative to the
rest of the country
Source: U.S. Dept. of Labor, U.S. Dept. of Commerce and Wells Fargo Securities
Economic Outlook
Southeast Employment Growth by MSA
Raleigh
Nashville
Birmingham
New Orleans
Orlando
Tampa
Charlotte
Greenville, SC
Memphis
Richmond
Charleston
Jackson
Chattanooga
Atlanta
Augusta
Huntsville
Asheville
Biloxi
Durham
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
-1% 0% 1% 2% 3% 4% 5%
3-M
onth
Annualized P
erc
ent
Change
Year-over-Year Percent Change
Southeast Employment Growth by Metro3-Month Moving Averages, July 2016
Total Population
Less than 550K
550K - 950K
More than 1,000K
Recovering Expanding
Contracting Decelerating
Source: U.S. Department of Labor and Wells Fargo Securities
Economic Outlook 13
0 10 20 30 40 50 60 70
Cape Coral, FL
Nashville, TN
North Port, FL
Portland, OR-WA
Las Vegas, NV
San Antonio, TX
Charlotte, NC-SC
Orlando, FL
Denver, CO
Austin, TX
Atlanta, GA
Tampa, FL
Phoenix, AZ
Dallas, TX
Houston, TX
Net Domestic Migration Top 15 MSAsNumber Added in Thousands, 2015
Domestic Migration
State-to-state migration trends tend to closely follow
employment conditions. The largest gains in domestic in-
migration have tended to be in the Southeast.
Source: International Monetary Fund and Wells Fargo Securities
Economic Outlook 14 14
Demographic Trends: Primary City vs. Suburban Growth
In line with broader national trends, many Southern metropolitan areas have seen stronger growth occurring in the region’s urban core cities relative to prior decades
Source: U.S. Department of Commerce and Wells Fargo Securities
Primary City vs. Suburb by Metro Area Primary City vs. Suburb United States
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
Richmond, VA
Portland, OR-WA
Las Vegas, NV
San Francisco, CA
Miami, FL
Phoenix, AZ
Houston, TX
New Orleans, LA
Nashville, TN
Oklahoma City, OK
San Antonio, TX
Dallas, TX
Washington, DC
Seattle, WA
Atlanta, GA
Charlotte, NC-SC
Denver, CO
Raleigh, NC
Orlando, FL
Austin, TX
Population Growth: Primary City vs. Suburbs2011 - 2015 Average Annual Growth Rate, Percent
Primary City
Suburban
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
1990 - 2000 2000 - 2010 2011 - 2015
US Population Growth: Primary City vs. SuburbsAnnual Average Growth, Percent
Primary City
Suburban
14
U.S. Commercial Real Estate
Economic Outlook 16
Construction Supply
Source: CoStar Realty Information, Inc., Reis, Inc., Smith Travel Research, Property and Portfolio Research and Wells Fargo Securities
Apartment
3- Yr.
Supply
Growth
Hotel Metro
3- Yr.
Supply
Growth
Warehouse
3- Yr.
Supply
Growth
Office
3- Yr.
Supply
Growth
Retail
3- Yr.
Supply
Growth
New York Metro 17.5% New York 15.9% Inland Empire 14.5% Oklahoma City 11.3% Charlotte 4.5%
Nashville 13.0% Cleveland 10.5% Atlanta 10.1% Nashville 8.3% Richmond 4.4%
Charlotte 10.6% Miami 10.3% Dallas - Fort Worth 9.2% Austin 8.1% Raleigh-Durham 3.7%
Charleston 10.5% Boston 9.8% Las Vegas 8.4% Dallas 7.9% Kansas City 3.6%
Seattle 10.2% Palm Beach County 9.1% Austin 8.4% Houston 6.2% Cincinnati 3.6%
Washington D.C 9.9% Austin 9.0% Phoenix 7.5% Charlotte 5.3% Austin 3.3%
Chattanooga 9.6% Houston 8.6% San Antonio 6.8% Kansas City 4.6% Winston-Salem 3.2%
Miami 8.7% Denver 8.6% Oklahoma City 6.3% Charleston 4.4% Baltimore 3.1%
Austin 8.6% Minneapolis 8.5% Nashville 6.1% Milwaukee 4.4% San Francisco 3.1%
Greenville 7.9% Nashville 8.4% Washington D.C 5.8% Denver 4.0% Northern New Jersey 3.0%
National 5.0% National 6.1% National 4.7% National 3.5% National 2.1%
Note: Supply growth is the cumulative supply expected to be added through 2018 as a percentage of current inventory.
-2%
0%
2%
4%
6%
8%
10%
-2%
0%
2%
4%
6%
8%
10%
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Completions as a Percent of InventoryPercent
Apartment: 2016 (Projected) @ 2.0%
Office: 2016 (Projected) @ 1.0%
Retail: 2016 (Projected) @ 0.5%
Industrial: 2016 (Projected) @ 1.6%
Hotel: 2016 (Projected) @ 2.2%
Aggregate: 2016 (Projected) @ 1.5%
Avg. '85-'89=4.8%
Avg. '97-'01=2.6%
Avg. '04-'08=1.3%
Avg. '12-'16F=0.96%
Economic Outlook 17
50
70
90
110
130
150
170
190
210
230
50
70
90
110
130
150
170
190
210
230
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Commercial Property Prices vs. S&P 500Index, Q1 2001 = 100
Moody's/RCA Commercial Property Price Index: Q2 @ 207.2S&P 500: Q1 @ 162.1S&P/Case Shiller National Home Price Index: Q1 @ 161.8
Real Estate Prices
Commercial property prices continue to advance
Source: Moody’s, Standard and Poor’s and Wells Fargo Securities
Economic Outlook 18 18
Apartment
Demand for apartment units was closely in line with supply in the second quarter. Areas with strong employment growth have seen the greatest increases in apartment demand as well as
lower vacancy rates.
Source: Real Capital Analytics, REIS, Inc. and Wells Fargo Securities
Supply & Demand Prices
0%
2%
4%
6%
8%
10%
$0
$20
$40
$60
$80
$100
$120
$140
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Apartment Price vs. Vacancy RateDollars per Square Foot, Percent
Apartment Price: Q2 @ $125.32 per SF (Left Axis)
Apartment Vacancy Rate: Q2 @ 4.5% (Right Axis)
-75
-50
-25
0
25
50
75
100
2%
3%
4%
5%
6%
7%
8%
9%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Apartment Supply & DemandPercent, Thousands of Units
Apartment Net Completions: Q2 @ 49,132 Units (Right Axis)
Apartment Net Absorption: Q2 @ 36,003 Units (Right Axis)
Apartment Vacancy Rate: Q2 @ 4.5% (Left Axis)
Economic Outlook 19 19
Office
Major office markets such as New York City and San Francisco, with a large share of high-tech jobs, are seeing stronger demand.
Source: Real Capital Analytics, REIS, Inc. and Wells Fargo Securities
Supply & Demand Prices
4%
6%
8%
10%
12%
14%
16%
18%
$0
$50
$100
$150
$200
$250
$300
$350
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Office Price vs. Vacancy RateDollars per Square Foot, Percent
Office Price: Q2 @ $288.05 per SF (Left Axis)
Office Vacancy Rate: Q2 @ 16.0% (Right Axis)
-40
-30
-20
-10
0
10
20
30
0%
3%
6%
9%
12%
15%
18%
21%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Office Supply & DemandPercent, Millions of Square Feet
Office Net Completions: Q2 @ 8.6M SF (Right Axis)
Office Net Absorption: Q2 @ 6.9M SF (Right Axis)
Office Vacancy Rate: Q2 @ 16.0% (Left Axis)
Economic Outlook 20 20
Industrial
Demand continues to outpace supply in the industrial market. Although supply is beginning to increase, it remains low compared to historical norms. E-commerce continues to spur demand
as retailers are seeing a pick up in consumer spending.
Source: Real Capital Analytics, CoStar Realty Information, Inc. and Wells Fargo Securities
Supply & Demand Prices
4%
6%
8%
10%
12%
14%
16%
$30
$40
$50
$60
$70
$80
$90
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Industrial Price vs. Vacancy Rate Dollars per Square Foot, Percent
Industrial Price: Q2 @ $79.99 per SF (Left Axis)
Industrial Vacancy Rate: Q2 @ 5.5% (Right Axis)
-80
-60
-40
-20
0
20
40
60
80
4%
5%
6%
7%
8%
9%
10%
11%
12%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Industrial Supply & DemandPercent, Millions of Square Feet
Industrial Net Completions: Q2 @ 37.0M SF (Right Axis)
Industrial Net Absorption: Q2 @ 46.8M SF (Right Axis)
Industrial Vacancy Rate: Q2 @ 5.5% (Left Axis)
Economic Outlook 21 21
Retail
The retail market has been slow to recover. The retail vacancy rate has continued to hover in the 10-11 percent range for almost six years, showing few signs of pick up. Low retail demand is
largely due to the on-going shift from traditional brick-and-mortar stores to online retailers.
Source: Real Capital Analytics, REIS, Inc. and Wells Fargo Securities
Supply & Demand Prices
6%
7%
8%
9%
10%
11%
12%
$40
$80
$120
$160
$200
$240
$280
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Retail Price vs. Vacancy RateDollars per Square Foot, Percent
Retail Price: Q2 @ $235.43 per SF (Left Axis)
Retail Vacancy Rate: Q2 @ 9.9% (Right Axis)
-8
-4
0
4
8
12
16
20
0%
2%
4%
6%
8%
10%
12%
14%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Retail Supply & DemandPercent, Millions of Square Feet
Retail Net Completions: Q2 @ 1.4M SF (Right Axis)
Retail Net Absorption: Q2 @ 3.2M SF (Right Axis)
Retail Vacancy Rate: Q2 @ 9.9% (Left Axis)
Charlotte
Economic Outlook 23 23
Employment Situation: Charlotte MSA
Job growth in Charlotte continues to outpace both the state and the nation. Employment growth has been broad based, as a majority of the region’s industries have seen job gains over
the past year.
Source: U.S. Department of Labor and Wells Fargo Securities
Employment by Industry Nonfarm Employment
-9%
-6%
-3%
0%
3%
6%
-9%
-6%
-3%
0%
3%
6%
91 93 95 97 99 01 03 05 07 09 11 13 15
Charlotte MSA Nonfarm Employment
Charlotte: Jul @ 2.3%
United States: Jul @ 1.7%
North Carolina: Jul @ 2.1%
Year-over-Year Percent Change of a 3-MMA
-1% 0% 1% 2% 3% 4% 5% 6% 7%
Information
Other Services
Manufacturing
Financial Activities
Educ. & Health Services
Leisure & Hospitality
Government
Prof. & Bus. Svcs.
Trade, Trans. & Utilities
Total Nonfarm
Charlotte MSA Employment Growth By Industry
Number of
Employees
Less
More
Year-over-Year Percent Change, 3-MMA
July 2016
23
Economic Outlook 24 24
Housing Market: Charlotte MSA
The housing market has ramped up over the past year, with both single and multifamily housing permits registering solid gains over the year. Charlotte’s stellar population growth
continues to be a boon for residential development.
Source: U.S. Department of Labor, U.S. Department of Commerce and Wells Fargo Securities
Population Growth Housing Permits
0
5
10
15
20
25
30
35
0
5
10
15
20
25
30
35
90 92 94 96 98 00 02 04 06 08 10 12 14 16
Thousands
Thousands
Charlotte MSA Housing Permits
Single-Family: Jun @ 18,324
Single-Family, 12-MMA: Jun @ 12,475
Multifamily, 12-MMA: Jun @ 5,569
Single-Family Average (1998-2003): 17,908
Thousands of Permits, Seasonally Adjusted Annual Rate
0
10
20
30
40
50
60
70
80
0
10
20
30
40
50
60
70
80
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Charlotte MSA Population Growth
Charlotte MSA: 2015 @ 47.2K
In Thousands
24
Economic Outlook 25
-50 0 50 100 150 200 250
Rocky Mount
Hickory
Goldsboro
Burlington
Jacksonville
Greenville
Fayetteville
Winston-Salem
Asheville
Wilmington
Greensboro
Durham-Chapel Hill
Raleigh
Charlotte
North Carolina Population Growth by MSATotal Population Gains From 2010 to 2015, In Thousands
North Carolina Population
Charlotte and Raleigh have seen a surge in population growth
over the past five years
Source: U.S. Department of Commerce and Wells Fargo Securities
Economic Outlook 26
-2.0
-1.0
0.0
1.0
2.0
3.0
2%
4%
6%
8%
10%
12%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Charlotte Apartment Supply & DemandPercent, Thousands of Units
Apartment Completions: Q2 @ 1728 Units (Right Axis)
Apartment Net Absorption: Q2 @ 641 Units (Right Axis)
Apartment Vacancy Rate: Q2 @ 6.1% (Left Axis)
Charlotte – Apartment Supply & Demand
The apartment vacancy rate has seen an increase over the past year as completions spiked in
the second quarter.
Source: Reis, Inc. and Wells Fargo Securities, LLC
Economic Outlook 27
-1.0
-0.5
0.0
0.5
1.0
1.5
4%
8%
12%
16%
20%
24%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Charlotte Office Supply & DemandPercent, Millions of SF
Office Completions: Q2 @ 0 SF (Right Axis)
Office Net Absorption: Q2 @ 73,000 SF (Right Axis)
Office Vacancy Rate: Q2 @ 15.6% (Left Axis)
Charlotte – Office Supply & Demand
Office vacancy rates have fallen modestly over the past year
Source: Reis, Inc. and Wells Fargo Securities, LLC
Economic Outlook 28
-300
-200
-100
0
100
200
300
400
0%
2%
4%
6%
8%
10%
12%
14%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Charlotte Retail Supply & DemandPercent, Thousands of Units
Retail Completions: Q2 @ 7,000 SF (Right Axis)
Retail Net Absorption: Q2 @ -10,000 SF (Right Axis)
Retail Vacancy Rate: Q2 @ 9.6% (Left Axis)
Charlotte – Retail Supply & Demand
Net absorption dipped in the second quarter, however, retial
demand has been relatively healthy over the past year.
Source: Reis, Inc. and Wells Fargo Securities, LLC
Economic Outlook 29
-2,500
-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Charlotte Warehouse Supply & DemandPercent, Thousands of Square Feet
Warehouse Net Absorption: Q2 @ 1,108,054 SF (Right Axis)
Warehouse Completions: Q2 @ 613,792 SF (Right Axis)
Warehouse Vacancy Rate: Q2 @ 5.4% (Left Axis)
Charlotte – Warehouse Supply & Demand
Warehouse vacancy rates continue to decline, falling to 5.4
percent in the second quarter.
Source: CoStar Realty Information, Inc. and Wells Fargo Securities
Economic Outlook 30
Five Critical Key Takeaways
Economic Outlook
North Carolina is Outpacing the
Nation
North Carolina is seeing stronger job and income growth than the nation. Population is also much stronger, particularly areas surrounding Charlotte and Raleigh.
Growth is More Urban Oriented
Employment growth and population growth have been more oriented toward urban areas this decade, reflecting demographic and technological shifts.
Interest Rates Are Set to Rise Off Historic Lows
The Fed is poised to raise interest rates but will ultimately raise them less than the FOMC had previously anticipated. Rates will remain low for quite some time.
The Election Outcome
The November election will not likely change the economy’s underlying growth trajectory but should bring about a resolution to HB2.
The economy should weather slower global growth. Exports will decelerate but we expect real GDP to rise about 1.4 percent in 2016 and x.x percent in 2017.
Economic Outlook 31
U.S. Forecast
Wells Fargo U.S. Economic Forecast
2013 2014 2015 2016 2017
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Real Gross Domestic Product 1 2.0 2.6 2.0 0.9 0.8 1.1 2.5 2.1 1.7 2.4 2.6 1.4 2.0
Personal Consumption 2.4 2.9 2.7 2.3 1.6 4.4 3.1 2.0 1.5 2.9 3.2 2.7 2.5
Inflation Indicators 2
PCE Deflator 0.3 0.3 0.3 0.4 0.9 0.9 1.0 1.4 1.3 1.5 0.3 1.1 1.9
Consumer Price Index -0.1 0.0 0.1 0.4 1.1 1.1 1.1 1.4 1.5 1.6 0.1 1.2 2.2
Industrial Production 1 -1.9 -2.7 1.5 -3.3 -1.7 -0.8 4.5 2.9 1.9 2.9 0.3 -0.5 2.6
Corporate Profits Before Taxes 2 7.5 -2.8 -4.5 -11.2 -6.6 -4.9 1.8 1.8 1.7 5.9 -3.0 -2.1 1.6
Trade Weighted Dollar Index 3 92.1 90.0 92.3 94.5 89.8 90.6 91.5 93.3 75.9 78.4 91.1 91.3 96.5
Unemployment Rate 5.6 5.4 5.2 5.0 4.9 4.9 4.8 4.7 7.4 6.2 5.3 4.8 4.6
Housing Starts 4 0.99 1.16 1.16 1.13 1.15 1.16 1.22 1.24 0.92 1.00 1.11 1.21 1.26
Quarter-End Interest Rates 5
Federal Funds Target Rate 0.25 0.25 0.25 0.50 0.50 0.50 0.50 0.75 0.25 0.25 0.27 0.56 1.00
Conventional Mortgage Rate 3.77 3.98 3.89 3.96 3.69 3.57 3.54 3.56 3.98 4.17 3.85 3.59 3.64
10 Year Note 1.94 2.35 2.06 2.27 1.78 1.49 1.49 1.53 2.35 2.54 2.14 1.57 1.65
Forecast as of: August 26, 20161 Compound Annual Growth Rate Quarter-over-Quarter2 Year-over-Year Percentage Change3 Federal Reserve Major Currency Index, 1973=100 - Quarter End4 Millions of Units5 Annual Numbers Represent Averages
2015 2016
ForecastActualForecastActual
Source: IHS Global Insight and Wells Fargo Securities
Appendix
Economic Outlook 33
Economic Outlook Group Publications
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economicsemail
A Sampling of Our Recent Special, Regional & Industry Commentary
Selected Recent Economic Reports
Date Title Authors
U.S. Macro
August-18 Will U.S. Export Growth Stregthen Anew Bryson & Pershing
August-17 Dragging Anchor Quinlan & House
August-16 Don Quixote and the Pursuit of Rising Inflation Silvia, Bullard & Iqbal
August-15 Working Hard or Hardly Working? Quinlan & House
August-15 2016 Long-Term Budget Outlook: An Uncertain Path Forward Silvia, Brown & Pugliese
U.S. Regional
August-18 New York Employment Conditions: July 2016 Vitner, Feik & Batcheller
August-18 Minnesota Employment Conditions:; July 2016 Vitner, Feik & Batcheller
August-12 Georgia Economic Outlook: August 2016 Vitner & Feik
August-03 Local area Employment & unemployment Vitner & Batcheller
August-01 Commercial real estate in the Carolinas Vitner & Batcheller
Global Econom y
August-15 Scant Growth in Japan in Q2 Quinlan
August-11 Mexican Energy Reform: Still Little to Show Alemán
August-11 Q2 GDP Data Suggest Russian Economy is Bottoming Bryson
August-05 Bank of England Eases Policy Further Bryson
August-02 Latin America and Brexit: What say you? Alemán
Interest Rates/Credit Market
August-17 Normal as an Evolving Target Silvia
August-10 Managing Expectations to Avoid Another Tantrum Silvia & Vitner
August-03 Net treasury issuance update for H2 2016 and beyond Silvia & Brown
July-27 Fiscal Policy: Optimism and Market Imperfections Silvia
July-13 Financial Evolution: More Government, More Something Else Alemán
Real Estate
August-11 Commercial Real Estate Chartbook: Q2 Khan, Causey & Tysinger
July-06 International Home Buying: 2016 Vitner, Khan & Batcheller
June-28 Brexit Vote Could Pump More Dollars into U.S. CRE Khan
June-01 Housing Chartbook: June 2016 Vitner, Khan & Batcheller
May-20 Commercial Real Estate Chartbook: Q1 Khan & Causey
Economic Outlook
Wells Fargo Securities Economics Group
34
John E. Silvia [email protected]
Global Head of Research and Economics Diane Schumaker-Krieg ………………… ………[email protected]
Global Head of Research & Economics
Chief Economist
Mark Vitner, Senior Economist [email protected]
Jay H. Bryson, Global Economist …[email protected]
Sam Bullard, Senior Economist [email protected]
Nick Bennenbroek, Currency Strategist [email protected]
Anika R. Khan, Senior Economist [email protected]
Eugenio J. Alemán, Senior Economist [email protected]
Azhar Iqbal, Econometrician [email protected]
Tim Quinlan, Senior Economist [email protected]
Senior Economists Erik Nelson, Currency Analyst [email protected]
Misa Batcheller, Economic Analyst [email protected]
Michael Pugliese, Economic Analyst [email protected]
Julianne Causey, Economic Analyst [email protected]
E. Harry Pershing, Economic Analyst [email protected]
May Tysinger, Economic Analyst [email protected]
Economists
Eric J. Viloria, Currency Strategist [email protected]
Sarah House, Economist [email protected]
Michael A. Brown, Economist [email protected]
Jamie Feik, Economist [email protected]
Economic Analysts
Administrative Assistants
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