Economic Forecast - Chase · Economic Forecast OUTPUT AND EMPLOYMENT WHAT THE TABLE SHOWS: ......

Economic Forecast

OUTPUT AND EMPLOYMENT WHAT THE TABLE SHOWS:

Missouri’s GDP forecast is derived from the

national forecast by allocating output to each

of the 50 states based on employment

shares. So, forecast misses reflect surprises

in the aggregate forecast as well as

unexpected shifts in a state’s GDP share.

Missouri’s recovery has slowed.

KEY MESSAGES:

Both the economy and jobs are expected to

improve a bit in 2014 and 2015.

Note: GDP figures are based on quarterly values that are

interpolated from annual GDP estimates using quarterly

employment changes. Unbolded figures are reported actual

values and bold figures represent forecasts.

Sources: US Department of Commerce;

US Department of Labor.

June 3, 2014

Regional Perspectives: Missouri Economic Outlook

Commercial Banking 2

2007 2008 2009 2010 2011 2012 2013 2014 2015

United States

Real GDP

$ billions (fourth quarter) $14,996 $14,575 $14,540 $14,942 $15,242 $15,540 $15,942 $16,501 $17,120

% change over the four quarters 1.9% -2.8% -0.2% 2.8% 2.0% 2.0% 2.6% 3.5% 3.8%

Nonfarm employment

Job count (fourth quarter) 138,246,000 135,493,667 129,877,667 130,652,000 132,642,667 134,853,667 137,247,667 139,694,848 141,679,460


Average monthly change 101,667 -229,361 -468,000 64,528 165,889 184,250 184,250 184,250 184,250

Missouri

Real GDP

$ billions (fourth quarter) $220 $219 $214 $217 $219 $223 $228 $234 $242


Nonfarm employment

Job count (fourth quarter) 2,801,600 2,769,367 2,661,567 2,662,333 2,672,600 2,705,467 2,747,133 2,776,794 2,801,201


Average monthly change 1,236 -2,686 -8,983 64 856 2,739 3,472 2,472 2,034

The Economy’s Structure

PERCENT OF TOTAL GDP DERIVED FROM SELECTED INDUSTRIES WHAT THE CHART SHOWS:

The figure compares the relative importance

of selected industries to the state’s economy

with the national footprint of each industry

(state and national figures reflect the value

added of each industry as a percent of

aggregate state or US nominal GDP,

respectively).

Missouri’s fairly diverse economy is not as

concentrated in real estate as many and that

is a plus. Now the manufacturing revival is

becoming an asset for the state.

KEY MESSAGES:

Missouri’s economy is more diversified than

the national economy.

Source: US Department of Commerce. Updated through

2011.

June 3, 2014



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US industry mix

Missouri industry mix

Bankruptcies

RATIO OF BANKRUPTCY FILINGS TO THE 2007 Q4 NUMBER WHAT THE CHART SHOWS:

The figure illustrates trends in bankruptcy

filings by businesses and persons relative to

the number of filings in 2007 Q4, prior to the

recession.

Financial strains are back to normal levels.

KEY MESSAGES:

Indicators of financial stress are a useful

coincident indication of economic distress.

Financial stresses are beginning to wane.

Source: Administrative Office of the U.S. Courts; Updated

through March 2014.

June 3, 2014



0

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0

1

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3

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5

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Business bankruptcy filingsNonbusiness bankruptcy filings

All US bankruptcy filings (shaded area)

FRB KC Business Survey

REAL GDP (% CHANGE 12 MONTHS EARLIER) DIFFUSION INDEXES (0 = NO CHANGE) WHAT THE CHART SHOWS:

The figure traces real GDP growth in

Missouri along with the Federal Reserve

Bank of Kansas City’s survey of local

manufacturing conditions.

Business conditions have perked up a llitle

recently.

KEY MESSAGES:

Business is expected to quicken somewhat

in coming quarters.

Note: Survey data are unavailable prior to 2001.

Sources: Federal Reserve Bank of Kansas City; US

Department of Commerce. Updated through May 2014

(surveys) and 2014 Q1 (GDP).

Note: diffusion indexes represent the percentage of respondents seeing an increase in activity plus one half of the percentage

reporting no change in activity.

June 3, 2014



-30

-25

-20

-15

-10

-5

0

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15

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25

30

-4

-2

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8

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Missouri real GDP (left scale)

FRB-Kansas City's manufacturing survey (right scale)

Forecast

Private Business Surveys REAL GDP (% CHANGE 12 MONTHS EARLIER) DIFFUSION INDEXES (50 = NO CHANGE)

WHAT THE CHART SHOWS:

The figures shows the Business Barometer

Index, based on the survey of purchasing

managers, and real GDP growth in Missouri

(a reading above 50 means the state’s

economy is growing, while less than 50

means the economy is shrinking). The index

comprises seven business activity

indicators, including production, new orders,

order backlogs, inventories, employment,

supplier deliveries, and prices paid.

The index, which is a timely measure of the

strength of the local economy, has

rebounded recently.

KEY MESSAGES:

This index will be a useful leading indicator

of the direction of the economy.

Note: Business Barometer data are unavailable prior to

1997.

Sources: Institute of Supply Management; US Department

of Commerce. Updated through April 2014 (survey) and

2014 Q1 (GDP).

Note: diffusion indexes represent the percentage of respondents seeing an increase in activity plus one half of the percentage

reporting no change in activity.

June 3, 2014



10

20

30

40

50

60

70

80

90

-6

-5

-4

-3

-2

-1

0

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4

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6

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Real GDP in the Midwest (left scale)

Business Barometer Index, Mid-America Purchasing Managers (right scale)

Forecast

Initial Jobless Claims

RATIO OF INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE TO THE 2007 Q4 LEVEL WHAT THE CHART SHOWS:

The figure tracks layoffs in Missouri and the

national level of claims.

Weekly layoffs, both the state and national

tallies, are illustrated in the figure as a ratio

to the level of layoffs in the fourth quarter of

2007, prior to the recession.

Layoffs are well below pre-recession levels.

KEY MESSAGES:

The low level of jobless claims points to a

positive outlook for the state’s job market.

Source: US Department of Labor. Updated through May 17,

2014 (state) and May 24, 2014 (US).

June 3, 2014



0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

2007 2008 2009 2010 2011 2012 2013 2014

MissouriUS (solid area)

Missouri accounts for 1.3% of auto manufacturing employment

Economic Growth

REAL GDP GROWTH (PERCENT CHANGE FROM FOUR QUARTERS EARLIER) WHAT THE CHART SHOWS:

Real GDP growth in Missouri (the line in the

figure) is superimposed on top of US real

GDP growth (bars in the figure).

Missouri’s economy grew more slowly than

the national economy for the past 15 years

and the same theme is present in the

recovery.

Missouri’s recovery has been lagging the

national recovery.

KEY MESSAGES:

Missouri’s growth is expected to pick up

speed a bit in coming years.


2012 (state) and 2014 Q1 (US). Quarterly estimates for

states after 2012 are interpolated from employment figures

(through April 2014), based on the historical correlation of

state and national employment changes.

June 3, 2014



-6

-5

-4

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90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

MissouriUS

Forecast

Economic Output

REAL GDP LEVEL (RATIO TO 2000 Q4) WHAT THE CHART SHOWS:

The figure illustrates the evolution of real

GDP of the state and the overall US

economy since the fourth quarter of 2000,

the peak of the previous business cycle—

that is, at any point in time the lines trace the

ratio of real GDP to its level in 2000 Q4.

Missouri’s economy has been steady, if a bit

slow since the mid-2000s.

KEY MESSAGES:

The state’s economy has been affected, like

others, by the disruptions in the industrial

sector.


2012 (state) and 2014 Q1 (US). Quarterly estimates for

states after 2012 are interpolated from employment figures

(through April 2014), based on the historical correlation of

state and national employment changes.

June 3, 2014



0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US

Missouri

Forecast

Employment Growth

NONFARM PAYROLL EMPLOYMENT (PERCENT CHANGE FROM 12 MONTHS EARLIER) WHAT THE CHART SHOWS:

Employment in Missouri, compared with the

nation.

Missouri’s job trends parallel the nation’s but

the slowdown in 2011 was a bit more

noticeable in Missouri than for the nation.

Job growth has been picking up.

KEY MESSAGES:

Employment is forecast to continue to grow

at a moderate pace.

Source: US Department of Labor. Updated through April

2014 (state) and April 2014 (US).

June 3, 2014



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90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

MissouriUS

Forecast

Employment

NONFARM PAYROLL EMPLOYMENT (RATIO TO THE 2000 Q4 LEVEL) WHAT THE CHART SHOWS:

The figure illustrates the evolution of

employment in the state compared with the

nation since 2000 Q4, the peak of the

previous business cycle. The lines trace out

the ratio of employment at the time to

employment in 2000 Q4.

Employment remains well below the 2007

cycle peak.

KEY MESSAGES:

Missouri’s economy is likely to improve

gradually in 2014 and 2015.



June 3, 2014



0.96

0.97

0.98

0.99

1.00

1.01

1.02

1.03

1.04

1.05

1.06

1.07

0.96

0.97

0.98

0.99

1.00

1.01

1.02

1.03

1.04

1.05

1.06

1.07

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US

Missouri

Forecast

Intrastate Employment

NONFARM PAYROLL EMPLOYMENT IN SELECTED COMMUNITIES (RATIO TO 2000 Q4 LEVEL) WHAT THE CHART SHOWS:

Job trends in local communities within the

state.

Missouri’s slow economic performance

masks a wide disparity of activity across the

state.

Economies of some communities are faring

better than others.

KEY MESSAGES:

Missouri’s economy has lagged the national

economy but some local economies remain

strong.



June 3, 2014



0.94

0.96

0.98

1.00

1.02

1.04

1.06

1.08

1.10

1.12

1.14

1.16

1.18

1.20

0.94

0.96

0.98

1.00

1.02

1.04

1.06

1.08

1.10

1.12

1.14

1.16

1.18

1.20

2001 2003 2005 2007 2009 2011 2013 2015

US forecast

US

St. Joseph

Columbia

Springfield

Joplin

Kansas City, MO-KS

Jefferson City

St. Louis

Kansas City

Missouri forecast

Missouri

Forecast

Unemployment

UNEMPLOYMENT (PERCENT OF THE LABOR FORCE) WHAT THE CHART SHOWS:

Unemployment rate trends in Missouri,

compared with the national average.

Missouri’s unemployment rate is falling

faster than the national unemployment rate.

KEY MESSAGES:

The unemployment rate is the single best

indicator of the relative economic

performance of a region.

Missouri’s falling unemployment rate is a

good sign that the economy is in recovery

mode.



June 3, 2014



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1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018

Missouri

US (shaded)

Forecast

Relative House Prices

RATIO OF THE STATE’S HOUSE PRICES TO THE NATIONAL AVERAGE (1995 Q2 = 1.0) WHAT THE CHART SHOWS:

The figure tracks the relative price of houses

in the state versus the nation—that is, it

reflects the ratio of the state price index to

the national house price index, with that ratio

set to unity in the summer of 1995. A drop

in the line means that house prices in the

state lag the national trend. States that did

not suffer from speculative conditions saw a

decline in the relative price of houses in this

last decade.

The state’s house prices lagged the boom in

the national market in this decade. Prices

are back in normal alignment with others,

however, as speculative excesses

elsewhere are history.

KEY MESSAGE:

The gap between the state’s real estate

market and the national housing market has

narrowed some, as inflated housing

conditions have corrected.

Source: FHFA. Updated through 2013 Q4.

June 3, 2014



0.8

0.9

1.0

1.1

0.8

0.9

1.0

1.1

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Real Estate Markets

HOUSE PRICES IN SELECTED COMMUNITIES (RATIO TO THE 1995 Q2 LEVEL) WHAT THE CHART SHOWS:

The figure tracks the cumulative percentage

deviation in house prices since 1995 in

selected local markets and compares those

with the national average.

House prices are rising at a moderate pace.

KEY MESSAGES:

Real estate trends have been steady for

most of this decade amid the national

housing bubble.

Source: FHFA. Updated through 2013 Q4.

June 3, 2014



0.75

1.00

1.25

1.50

1.75

2.00

0.75

1.00

1.25

1.50

1.75

2.00

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

US

St. Louis

Kansas City

Springfield

St. Joseph

Joplin

Columbia

US

New Home Building

HOUSING STARTS (RATIO TO THE JULY 1990 LEVEL) WHAT THE CHART SHOWS:

New home building activity compared with

the national building pace.

Housing activity is shown as a ratio to the

1990 level to enable proportionate

comparisons with national activity.

Home building is up slightly.

KEY MESSAGES:

Although Missouri did not suffer a bubble in

house values, the credit crunch has taken a

toll on the home building business

nonetheless.

Source: Census Department. Updated through March 2014

(state) and April 2014 (US).

June 3, 2014



0

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3

2000 2003 2006 2009 2012 2015

USMissouri

Forecast

Office Markets

PERCENT OF OFFICE SPACE THAT IS VACANT WHAT THE CHART SHOWS:

Conditions in local office markets, compared

with the nation.

Vacancy rates have stabilized at a high

level.

KEY MESSAGES:

Commercial real estate conditions remain

challenging.

Source: CB Richard Ellis (formerly CB Commercial Property

Information Systems), Office Vacancy Index of the United

States. Updated through 2014 Q1.

June 3, 2014



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1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Kansas City metropolitan areaSt. Louis metropolitan area

All metropolitan areas (shaded area)

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Economic Forecast - Chase · Economic Forecast OUTPUT AND EMPLOYMENT WHAT THE TABLE SHOWS: ......

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