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2019 Economic Outlook Garrett County Chamber of Commerce January 15, 2019 Andy Bauer Vice President and Regional Executive
2019 Economic Outlook
Garrett County Chamber of CommerceJanuary 15, 2019
Andy BauerVice President and Regional Executive
Overview• National Outlook
• Entering 2019 after a very strong ’18 – overall growth expected to slow to a rate closer to trend
• Consumer spending, labor market very strong• Solid business investment & commercial real estate• Residential sector continues to face challenges• Uncertainty huge – could material impact the outlook
• Maryland• Rebound last year after weak start; expecting solid growth in 2019• However, key metrics lag the US. Long-term very positive.
• Garrett County• Modest growth—income and employment—in recent years• Labor market continues to improve – lower unemployment, lower
unemployment rate• However, level of employment little changed; declining labor force
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Percent change from previous quarter at annual rate
FOMC Projections
Q3 3.4%
Note: Projection is the median, central tendency, and range from the December 2018 Summary of Economic Projections. Red dots indicate median projections. Projections of change in real gross domestic product (GDP) are from the fourth quarter of the previous year to the fourth quarter of the year indicated. 3
Real Gross Domestic Product
Source: Bureau of Economic Analysis via Haver Analytics & Federal Reserve Board
4
Nonfarm Payroll Employment
Source: Bureau of Labor Statistics via Haver Analytics
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400
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Quarterly average of monthly changes, thousands of persons
Q4
Dec 312Nov 176Oct 274Sep 119Aug 286
Monthly Change
Notes: White bar on the right is based on an incomplete quarter
5
Unemployment Rate
Source: Bureau of Labor Statistics & Board of Governors via Haver Analytics
Notes: FOMC projection is the median, range, and central tendency for the Q4 levels, from the December 2018 meeting. Red dots indicate median projections
3.0
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2007 2009 2011 2013 2015 2017 2019 2021
Percent
Dec 3.9%
FOMC Projection
6
Average Hourly Earnings
Source: Bureau of Labor Statistics via Haver Analytics
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1.5
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2.5
3.0
3.5
4.0
1.0
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2007 2009 2011 2013 2015 2017
Dec 3.2%
12 Month % Change of 3-Month Moving Average
Dec 0.4%Nov 0.2%Oct 0.2%Sep 0.3%Aug 0.4%
Monthly % Change
7
Personal Consumption Expenditure Price Index
Source: Bureau of Economic Analysis & Board of Governors via Haver Analytics
Notes: FOMC projection is the median, range, and central tendency for Q4/Q4 percent changes, from the December 2018 meeting. Red dots indicate median projections.
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2007 2009 2011 2013 2015 2017 2019 2021
12 Month % Change
2% Longer-run TargetFOMC ProjectionNov 1.8%
8
Core Personal Consumption Expenditure Price Index
Source: Bureau of Economic Analysis & Board of Governors via Haver Analytics
Notes: FOMC projection is the median, range, and central tendency for Q4/Q4 percent changes, from the December 2018 meeting. Red dots indicate median projections. Core PCE Price Index excludes expenditures on gasoline and food services.
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2007 2009 2011 2013 2015 2017 2019 2021
% Change
12 month percentage
change
FOMC Projection
Nov 1.9%
6 month percentage change annualized
Garrett County
Source: Bureau of Economic Analysis/Haver Analytics
Modest income growth in recent years
10
Source: Bureau of Labor Statistics/Haver Analytics
Modest & uneven job growth
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2250000
2300000
2350000
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2450000
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2550000
2600000
2650000
2700000
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12500
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Employment(12-month moving average)
Garrett County MD
Source: Bureau of Labor Statistics/Haver Analytics
Level of employment little changed in recent years and very near 2008 levels
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Source: Bureau of Labor Statistics/Haver Analytics
Number of unemployed down considerably; but number of employed less than prior to recession
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Labor force down roughly 2% over past 12 months
Source: Bureau of Labor Statistics/Haver Analytics
Labor market continues to tighten
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*12-month moving average
Source: Bureau of Labor Statistics
Labor market continues to tighten
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Source: Bureau of Labor Statistics/Haver Analytics
New business formation stalled
16
Source: Bureau of Labor Statistics
Establishments & Employment Detail
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# % # % # %
Total 16 1.9 29 0.3 $2,247,982 2.8
Service-providing 14 2.3 -61 -0.7 $856,392 1.5
Goods-producing 2 0.9 90 4.0 $1,391,590 6.0
Natural resources and mining -1 -2.9 -22 -6.1 ($248,697) -4.8
Construction -1 -0.7 27 2.8 $526,976 5.4
Manufacturing 4 9.1 85 9.2 $1,113,311 13.9
Trade, transportation, and utilities -3 -1.4 -17 -0.6 $28,524 0.1
Information -1 -10.0 -13 -8.1 ($105,627) -7.9
Financial activities 1 1.9 1 0.2 $149,618 3.8
Professional and business services 6 5.6 31 3.6 $832,276 10.4
Education and health services 6 8.2 -25 -1.4 ($298,480) -1.9
Leisure and hospitality 7 7.1 -12 -0.7 $589,178 9.1
Other services -2 -3.6 -26 -8.3 ($339,097) -12.7*June
Establishments Employment* Total Quarterly Wages
Garrett County Establishments & Employment(change from Q2-2017 to Q2-2018)
Summary• National Outlook
• Entering 2019 after a very strong ’18 – overall growth expected to slow to a rate closer to trend
• Consumer spending, labor market very strong• Uncertainty huge – could material impact the outlook
• Maryland• Rebound last year after weak start; expecting solid growth in 2019• However, key metrics lag the US• Long-term very positive
• Garrett County• Expectations for continued modest growth due to:
• Weaker trends in labor force & business formation• Labor market tight• Residential sector – challenging year in 2018. 2019 likely to be a year
with modest improvement
Source:
Appendix
Source: Bureau of Labor Statistics
Stuff
20
Quarterly Establishments
June Employment
Total Quarterly Wages
Average Weekly Wage
Total 857 10,435 $82,495,743 $631
Service-providing 623 8,105 $58,069,491 $574
Goods-producing 234 2,330 $24,426,252 $826
Natural resources and mining 34 339 $4,942,109 $1,140
Construction 152 981 $10,358,908 $848
Manufacturing 48 1,010 $9,125,235 $701
Trade, transportation, and utilities 210 2,643 $19,267,155 $576
Information 9 147 $1,233,583 $568
Financial activities 53 573 $4,098,968 $588
Professional and business services 113 885 $8,844,144 $805
Education and health services 79 1,747 $15,265,976 $669
Leisure and hospitality 106 1,824 $7,031,385 $333
Other services 53 286 $2,328,280 $623
Garrett County Establishments & Employment( Q2-2018)
Establishment/Employment Composition
Source: U.S. Bureau of Labor Statistics (QCEW)
Other services, 2.9 Leisure and
hospitality, 16.1
Education and health
services, 17.4
Professional and business services, 8.4Financial
activities, 5.3Information,
1.7
Trade, transportation,
and utilities, 25.6
Manufacturing, 10.0
Construction, 9.3
Natural resources and mining, 3.3
Garrett County Employment(percent of total, Q2-2018)
(Wholesale: 15%Retail 69%,Transportation/Warehousing 15%)
Other services, 6.2
Leisure and hospitality,
12.4
Education and health
services, 9.2
Professional and business services, 13.2
Financial activities, 6.2Information,
1.1
Trade, transportation,
and utilities, 24.5
Manufacturing, 5.6
Construction, 17.7
Natural resources and
mining, 4.0
Garrett County Establishments(percent of total, Q2-2018)
(Wholesale: 16%
Establishments/Employment Composition
Source: U.S. Bureau of Labor Statistics (QCEW)
Other services, 2.8Leisure and hospitality, 8.5
Education and health services,
18.5
Professional and business services,
10.7
Financial activities, 5.0Information, 1.5
Trade, transportation,
and utilities, 23.4
Manufacturing, 11.1
Construction, 12.6
Natural resources and mining, 6.0
Garrett County Employment(percent of total, Q2-2018)
(Wholesale: 16%Retail 59%,Transportation/Warehousing 22%)
Monetary Policy
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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Federal Funds Target Rate
Primary Credit Rate
Federal Funds Rate Target Range
Interest Rate Paid on Reserves
Percent
January 4
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Monetary Policy Instruments
Source: Board of Governors via Haver Analytics
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Summary of Economic Projections: Federal Funds Rate
Source: Board of Governors
Note: Each dot in the chart represents the value of an FOMC participant’s judgment of the midpoint of the appropriate target range (or the appropriate target level) for the federal funds rate at the end of the calendar year. Projections made for the September 2018 meeting.
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2018 2019 Longer run
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2020 2021
January 07, 2019
December 17, 2018
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2017 2018 2019 2020 2021 2022 2023 2024
Percent
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Eurodollar Futures
Source: CME Group via Bloomberg
The views expressed here are those of the author, and do not necessarily represent those of the Federal Reserve Bank of Richmond or the Federal Reserve System.
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2019 Economic OutlookOverviewSlide Number 3Slide Number 4Slide Number 5Slide Number 6Slide Number 7Slide Number 8Garrett CountyModest income growth in recent yearsModest & uneven job growth Level of employment little changed in recent years and very near 2008 levelsNumber of unemployed down considerably; but number of employed less than prior to recessionLabor market continues to tightenLabor market continues to tightenNew business formation stalledEstablishments & Employment DetailSummarySlide Number 19StuffEstablishment/Employment CompositionEstablishments/Employment CompositionMonetary PolicySlide Number 24Slide Number 25Slide Number 26The views expressed here are those of the author, and do not necessarily represent those of the Federal Reserve Bank of Richmond or the Federal Reserve System.
