Analysis. Answers. pg Springfield Business Development Corporation
Analysis. Answers
Beacon Economics, LLC
An Economic Outlook: What’s Next for the U.S. and the Region
Jordan G. Levine
Economist & Director of Economic Research
Beacon Economics
Analysis. Answers. pg Springfield Business Development Corporation
Bernanke is right… things are getting better.
2
The US economy is finishing its fourth year of expansion
Average growth 2.2%
Unemployment has fall by 1.5% in the last two years
US Economy in an industrial shift phase—IT revolution having an impact
Per capital real GDP is #1 among the largest 30 nations
The US expansion is keeping apace despite turbulence
First half growth roughly 1.7% pace, could be better in 2nd half
Consumers holding steady on better employment / income
Business Investment holding steady, corporate profits solid
Banking sector fundamentals continue to improve—particularly credit unions
State and local government starting to turn the corner
Interest rates still very low
Residential Real Estate remains on Fire—with many potential benefits
Analysis. Answers. pg Springfield Business Development Corporation 3
Everything fine? No….
US never had a ‘recovery’ in the classic sense of the word
Unwinding fiscal stimulus policies will continue to slow growth some in H2
2013: Blame the Right
A lack of credit is impeding potential home buyers and construction: Blame
the Left
Non-residential investment lagging residential: Blame the Internet
China is wobbly, Europe in a recession: Blame everyone
The big short term risks?
Politics: Debt ceilings and federal spending
Europe and China continue to have issues
Psychology and the Federal Reserve’s move to unwind monetary policy
Analysis. Answers. pg Springfield Business Development Corporation
GDP Update
4
2011 2012 Q1 2013
Old New Old New Old New
GDP 2.00 2.05 1.70 1.95 1.80 1.10
Personal consumption 1.39 1.38 1.30 1.39 1.83 1.54
Durable goods 0.44 0.40 0.62 0.56 0.58 0.43
Nondurable goods 0.23 0.12 0.14 0.25 0.45 0.43
Services 0.72 0.86 0.53 0.58 0.80 0.69
Gross investment 1.28 1.32 0.47 0.49 0.96 0.71
Structures 0.19 0.21 0.21 0.24 -0.26 -0.80
Equipment 0.77 0.59 0.34 0.25 0.31 0.09
Intellectual property 0.18 0.11 0.14
Residential 0.09 0.14 0.34 0.38 0.34 0.34
Change in inventories 0.23 0.20 -0.41 -0.49 0.57 0.93
Net exports -0.01 0.01 0.25 0.30 -0.09 -0.28
Exports 0.59 0.61 0.30 0.32 -0.15 -0.18
Imports -0.60 -0.59 -0.05 -0.02 0.06 -0.10
Government -0.67 -0.67 -0.35 -0.22 -0.93 -0.82
National defense -0.21 -0.23 -0.26 -0.26 -0.63 -0.57
Nondefense -0.13 -0.11 0.04 0.08 -0.06 -0.11
State and local -0.33 -0.34 -0.13 -0.04 -0.25 -0.14
14000
14500
15000
15500
16000
16500
17000
17500
20
06I
IV III II
20
09I
IV III II
20
12I
IV
Real GDP Trends
New Old Hyp
Analysis. Answers. pg Springfield Business Development Corporation
GDP: Q2
5
Initial Exp Rev
GDP 1.70 2.30
Personal consump. 1.22 1.26
Durable goods 0.48 0.54
Nondurable goods 0.31 0.30
Services 0.43 0.43
Gross investment 1.34 0.81
Structures 0.17 0.18
Equipment 0.23 0.24
Intellectual property 0.15 0.15
Residential 0.38 0.39
Change inventories 0.41 -0.14
Net exports -0.81 0.33
Exports 0.71 0.92
Imports -1.51 -0.59
Government -0.08 -0.08
National defense -0.02 -0.02
Nondefense -0.09 -0.09
State and local 0.04 0.04
-2
-1
0
1
2
3
4
5
6
GDP Growth
Analysis. Answers. pg Springfield Business Development Corporation
Trade and GDP Revisions
6
-60000
-50000
-40000
-30000
-20000
-10000
0
Ja
n-1
2
Ma
r-1
2
Ma
y-1
2
Ju
l-1
2
Se
p-1
2
No
v-1
2
Ja
n-1
3
Ma
r-1
3
Ma
y-1
3
Monthly Trade Deficit Nominal to June
170000
180000
190000
200000
210000
220000
230000
240000
Trade Trends: Real
Export Imports
Exports Imports
Total 2,096,819 Total -7,563,278
Transportation Equipment 2,475,708 Oil & Gas -3,640,189
Miscellaneous Manufactured Commodities 986,363 Chemicals -1,306,897
Petroleum & Coal Products 686,433 Petroleum & Coal Products -1,173,878
Oil & Gas 618,241 Primary Metal Mfg -1,080,433
Food & Kindred Products 416,329 Machinery, Except Electrical -898,845
Change June
12 to June
13 Nominal
Analysis. Answers. pg Springfield Business Development Corporation
US Consumer Spending
7
12500
13000
13500
14000
14500
15000
15500
16000
16500
270000
275000
280000
285000
290000
295000
300000
Ja
n-1
2
Ap
r-12
Ju
l-1
2
Oct-
12
Ja
n-1
3
Ap
r-13
Ju
l-1
3
Spending to July
New Vehicle Sales: SAAR
Retail Sales x Auto / Gas
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
10400
10450
10500
10550
10600
10650
10700
10750
Real Month Spending
Total 3 Mnt Gr
Analysis. Answers. pg Springfield Business Development Corporation
Employment
8
0
50
100
150
200
250
300
350
Jan-1
2
Apr-
12
Jul-1
2
Oct-
12
Jan-1
3
Apr-
13
Jul-1
3
Change In Payrolls Y-o-Y Ch
Jun-Jul Mo Avg %
Total nonfarm 162 190 1.7%
Administrative 7.6 28.7 4.3%
Leisure and hospitality 23.0 38.8 3.4%
Professional servicess 21.1 19.6 3.0%
Construction -6.0 13.8 3.0%
Mining and logging 4.0 1.9 2.7%
Retail trade 46.8 29.3 2.4%
Real estate 3.2 3.2 2.0%
Health care 8.3 27.5 1.9%
Wholesale trade 13.7 6.9 1.5%
Finance and insurance 12.0 6.8 1.4%
Transportation 4.6 4.7 1.3%
Other services -2.0 3.5 0.8%
Information 9.0 1.3 0.6%
Educational services 5.0 1.2 0.4%
Local government 6.0 3.1 0.3%
Manufacturing 6.0 1.5 0.2%
State government -3.0 -1.4 -0.3%
Federal 0.8 -3.1 -1.7%
300000
320000
340000
360000
380000
400000
420000
1/4
/12
4/4
/12
7/4
/12
10
/4/1
2
1/4
/13
4/4
/13
7/4
/13
Initial Claims 4 Wk MA to Aug
Analysis. Answers. pg Springfield Business Development Corporation
Unemployment
9
63.0%
63.2%
63.4%
63.6%
63.8%
64.0%
64.2%
7.2%
7.4%
7.6%
7.8%
8.0%
8.2%
8.4%
Jan-1
2
Mar-
12
May-1
2
Jul-1
2
Sep-1
2
Nov-1
2
Jan-1
3
Mar-
13
May-1
3
Jul-1
3
Unemployment and Participation
Unemployment Participation
Jul-12 Jul-13 Ch
Total 140,013 142,165 2,152
Full Time 113,390 115,285 1,895
PT Economic 8,104 8,101 (3)
PT Non-Econ 18,519 18,779 260
Part Time Employment
Analysis. Answers. pg Springfield Business Development Corporation
Labor Markets Not Great, But Doing Well
10
Indicator Nonfarm
Employment Household
Employment
Peak Month Jan-08 Nov-07
Peak Employment (000s) 138,056.0 146,595.0
Trough Month Feb-10 Dec-09
Trough Employment (000s) 129,320.0 138,025.0
Peak to Trough (000s) -8,736.0 -8,570.0
Peak to Trough (%) -6.3 -5.8
Current Month Jul-13 Jul-13
Current Employment (000s) 136,038.0 144,285.0
Trough to Current (000s) 6,718.0 6,260.0
Trough to Current (%) 5.2 4.5
Remaining to Peak (000s) -2,018.0 -2,310.0
Remaining to Peak (%) -1.5 -1.6
Analysis. Answers. pg Springfield Business Development Corporation
Personal Income
11
11000
11500
12000
12500
13000
13500
14000
14500
15000
15500
16000
Jan-0
6
Jan-0
7
Jan-0
8
Jan-0
9
Jan-1
0
Jan-1
1
Jan-1
2
Jan-1
3
Personal Income: Revised Up 2%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Jan-1
0
Jul-1
0
Jan-1
1
Jul-1
1
Jan-1
2
Jul-1
2
Jan-1
3
Savings Rates
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Jan-1
2
Mar-
12
May-1
2
Jul-1
2
Sep-1
2
Nov-1
2
Jan-1
3
Mar-
13
May-1
3
Y-o-Y Growth Real PI
Analysis. Answers. pg Springfield Business Development Corporation
Consumer Finances: Better but not borrowing
12
9.0
10.0
11.0
12.0
13.0
14.0
15.0
19
80Q
1
19
83Q
4
19
87Q
3
19
91Q
2
19
95Q
1
19
98Q
4
20
02Q
3
20
06Q
2
20
10Q
1
Household Debt Service (% DPI)
2080
2100
2120
2140
2160
2180
2200
2220
2240
2260
Ja
n-1
1
Ju
n-1
1
No
v-1
1
Ap
r-12
Se
p-1
2
Fe
b-1
3
Private Consumer Credit to May
40
45
50
55
60
65
70
20
06Q
1
20
07Q
1
20
08Q
1
20
09Q
1
20
10Q
1
20
11Q
1
20
12Q
1
20
13Q
1
Household Real Net Worth
Analysis. Answers. pg Springfield Business Development Corporation
Q2 Consumer Debt Data
13
0
5
10
15
0
5
10
15
03:Q1 04:Q1 05:Q1 06:Q1 07:Q1 08:Q1 09:Q1 10:Q1 11:Q1 12:Q1 13:Q1
Credit Card
Mortgage
Auto Loan
HE Revolving
Percent of Balance 90+ Days Delinquent by Loan Type
Source: FRBNY Consumer Credit Panel/Equifax
Student
Loan
Analysis. Answers. pg Springfield Business Development Corporation
Corporate Income
14
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
19
82I II III
IV
19
91I II III
IV
20
00I II III
IV
20
09I II
Corporate Profits as % National Income
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
19
95.0
2
19
96.0
4
19
97.0
6
19
98.0
8
19
99.1
20
00.1
2
20
02.0
2
20
03.0
4
20
04.0
6
20
05.0
8
20
06.1
20
07.1
2
20
09.0
2
20
10.0
4
20
11.0
6
20
12.0
8
Implied Equity Premium Over Treasuries
Analysis. Answers. pg Springfield Business Development Corporation
The Disappointing Recovery
Beacon Economics
65%
66%
67%
68%
69%
70%
71%
72%
Q1-9
8
Q3-9
9
Q1-0
1
Q3-0
2
Q1-0
4
Q3-0
5
Q1-0
7
Q3-0
8
Q1-1
0
Q3-1
1
Consumer Spending as % GDP
14.0%
15.0%
16.0%
17.0%
18.0%
19.0%
20.0%
21.0%
22.0%
19
69I
19
74I
19
79I
19
84I
19
89I
19
94I
19
99I
20
04I
20
09I
Taxes as share income
11000
11500
12000
12500
13000
13500
14000
14500
15000
15500
20
00I
20
01II
20
02III
20
03IV
20
05I
20
06II
20
07III
20
08IV
20
10I
20
11II
20
12III
US GDP
Hypothetical Actual
Analysis. Answers. pg Springfield Business Development Corporation
Where are those jobs?
16
1 Idaho 2.98% 19 Maryland 1.66% 36 New York 0.94%
2 Texas 2.79% 20 New Hampshire 1.66% 37 Nebraska 0.90%
3 Colorado 2.71% 21 Iowa 1.65% 38 Wisconsin 0.88%
4 North Dakota 2.62% 22 North Carolina 1.52% 39 Oklahoma 0.82%
5 Mississippi 2.52% 23 Indiana 1.40% 40 Illinois 0.80%
6 Utah 2.25% 24 Kansas 1.34% 41 Kentucky 0.78%
7 Montana 2.00% 25 Virginia 1.33% 42 Arkansas 0.72%
8 Washington 2.00% 26 Delaware 1.27% 43 Connecticut 0.65%
9 Nevada 1.96% 27 Hawaii 1.26% 44 Pennsylvania 0.57%
10 Arizona 1.96% 28 Michigan 1.26% 45 Rhode Island 0.43%
11 New Jersey 1.92% 29 Massachusetts 1.23% 46 West Virginia 0.41%
12 Georgia 1.90% 30 Tennessee 1.18% 47 District of Columbia 0.38%
13 California 1.76% 31 Alabama 1.16% 48 Ohio 0.31%
14 Florida 1.72% 32 Louisiana 1.13% 49 Wyoming 0.28%
15 South Carolina 1.70% 33 Vermont 1.12% 50 Maine 0.10%
16 Minnesota 1.69% 34 South Dakota 1.01% 51 Alaska -0.42%
17 Missouri 1.69% 35 New Mexico 1.01%
18 Oregon 1.67%
Analysis. Answers. pg Springfield Business Development Corporation
Regional Growth
Analysis. Answers. pg Springfield Business Development Corporation
Why The Disappointing Recovery?
18
-7.0%
-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1998I
19
99IV
20
01III
2003II
2005I
20
06IV
20
08III
2010II
2012I
Net Trade % GDP
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
19
99I II III
IV
20
04I II III
IV
20
09I II III
IV
Construction as % of GDP: Real
Analysis. Answers. pg Springfield Business Development Corporation
Good News: Trade Trends and GDP Revisions
19
-60000
-50000
-40000
-30000
-20000
-10000
0
Ja
n-1
2
Ma
r-1
2
Ma
y-1
2
Ju
l-1
2
Se
p-1
2
No
v-1
2
Ja
n-1
3
Ma
r-1
3
Ma
y-1
3
Monthly Trade Deficit Nominal to June
170000
180000
190000
200000
210000
220000
230000
240000
Trade Trends: Real
Export Imports
Analysis. Answers. pg Springfield Business Development Corporation
US Production, Not Bad
20
88
90
92
94
96
98
100
Ja
n-1
1
Ap
r-11
Ju
l-1
1
Oct-
11
Ja
n-1
2
Ap
r-12
Ju
l-1
2
Oct-
12
Ja
n-1
3
Ap
r-13
Ju
l-1
3
Industrial Production
IP Total IP Manufacturing
73
74
75
76
77
78
79
Ja
n-1
1
Ap
r-11
Ju
l-1
1
Oct-
11
Ja
n-1
2
Ap
r-12
Ju
l-1
2
Oct-
12
Ja
n-1
3
Ap
r-13
Ju
l-1
3
Capacity Utilization
CU Total CU Manufacturing
Analysis. Answers. pg Springfield Business Development Corporation
US Affordability: Opportunity for Manufacturing & Tourism
70
75
80
85
90
95
100
105
110
115
Jan-0
0
Jan-0
1
Jan-0
2
Jan-0
3
Jan-0
4
Jan-0
5
Jan-0
6
Jan-0
7
Jan-0
8
Jan-0
9
Jan-1
0
Jan-1
1
Jan-1
2
Jan-1
3
$US Broad (real) NUMBER %
ARRIVALS Ch
CANADA 17,817,851 5.8
MEXICO 10,221,924 6.2
UNITED KINGDOM 2,848,912 -1.5
JAPAN 2,778,790 14.0
GERMANY 1,444,598 4.7
BRAZIL 1,260,707 17.5
PRC (EXCL HK) 1,179,620 38.6
FRANCE 1,150,739 -1.5
KOREA, SOUTH 940,118 7.2
AUSTRALIA 847,604 7.3
ITALY 642,349 -6.1
INDIA 587,783 8.5
ARGENTINA 474,531 20.7
SPAIN 466,641 -13.0
NETHERLANDS 457,456 -0.6
VENEZUELA 444,653 21.3
COLOMBIA 407,578 17.4
Analysis. Answers. pg Springfield Business Development Corporation
Europe: Turning? GDP and IP
22
-0.8
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
1.2
1.4
GDP Growth (SA)
United Kingdom United States
Euro area
90
92
94
96
98
100
102
104
106
108
110
Industrial Production
European Union (28 countries)
Germany
Spain
90
92
94
96
98
100
102
104
Industrial Production
France Italy United Kingdom
Analysis. Answers. pg Springfield Business Development Corporation
China: Official Statistics
23
0
2
4
6
8
10
12
14
16
Jan-1
1
Apr-
11
Jul-1
1
Oct-
11
Jan-1
2
Apr-
12
Jul-1
2
Oct-
12
Jan-1
3
Apr-
13
Industry Value Added: Y-o-Y Growth
10000
12000
14000
16000
18000
20000
22000
Jan-1
1
May-1
1
Sep-1
1
Jan-1
2
May-1
2
Sep-1
2
Jan-1
3
May-1
3
Real Retail Spending
95
97
99
101
103
105
107
109
111
113
115
Jan-1
1
May-1
1
Sep-1
1
Jan-1
2
May-1
2
Sep-1
2
Jan-1
3
May-1
3
Real Estate Prices
Bejing Shanghai
Guangzhou
Analysis. Answers. pg Springfield Business Development Corporation
Domestically, Forward Indicators Looking Up
24
48
50
52
54
56
58
60
62
64
66
Ja
n-1
1
Ap
r-11
Ju
l-1
1
Oct-
11
Ja
n-1
2
Ap
r-12
Ju
l-1
2
Oct-
12
Ja
n-1
3
Ap
r-13
Ju
l-1
3
ISM Surveys to July
ISM Manufacturing
ISM Non-Manufacturing
180000
190000
200000
210000
220000
230000
240000
250000
Ja
n-1
1
Ap
r-11
Ju
l-1
1
Oct-
11
Ja
n-1
2
Ap
r-12
Ju
l-1
2
Oct-
12
Ja
n-1
3
Ap
r-13
Ju
l-1
3
Durables
Durables: Orders Durables: Shipments
Analysis. Answers. pg Springfield Business Development Corporation
Residential Markets: Housing Is Hot
25
4.0
5.0
6.0
7.0
8.0
9.0
10.0
3,000
3,200
3,400
3,600
3,800
4,000
4,200
4,400
4,600
4,800
Jan-1
1
Apr-
11
Jul-1
1
Oct-
11
Jan-1
2
Apr-
12
Jul-1
2
Oct-
12
Jan-1
3
Apr-
13
Nar Stats to June
Sales Month's Supply
0
100
200
300
400
500
600
Jan-1
1
Apr-
11
Jul-1
1
Oct-
11
Jan-1
2
Apr-
12
Jul-1
2
Oct-
12
Jan-1
3
Apr-
13
New Home Sales
Analysis. Answers. pg Springfield Business Development Corporation
Residential Markets
26
130
135
140
145
150
155
160
165
170
150,000
160,000
170,000
180,000
190,000
200,000
210,000
Jan-1
1
Apr-
11
Jul-1
1
Oct-
11
Jan-1
2
Apr-
12
Jul-1
2
Oct-
12
Jan-1
3
Apr-
13
Prices
Median Price Core Logic
Analysis. Answers. pg Springfield Business Development Corporation
Consequences
27
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Home Equity Extraction % DPI to Q1: smoothed
• Wealth Effects
• Positive equity
withdrawal
• Financial
• Underwater can now refi
• Sell instead of foreclose
• Strategic Defaults: No
• Construction
• Jobs and Multipliers
Analysis. Answers. pg Springfield Business Development Corporation
Mortgage Bankers Data: Missouri Doesn’t Make the List
0
1
2
3
4
5
6
7
Q1-7
9
Q1-8
1
Q1-8
3
Q1-8
5
Q1-8
7
Q1-8
9
Q1-9
1
Q1-9
3
Q1-9
5
Q1-9
7
Q1-9
9
Q1-0
1
Q1-0
3
Q1-0
5
Q1-0
7
Q1-0
9
Q1-1
1
Q1-1
3
Share of Outstanding Mortgages
Foreclosure Inventory
Serious Delinquency
Florida 15.98 South Carolina 7.46
New Jersey 14.28 Massachusetts 7.44
Nevada 11.52 Louisiana 7.41
New York 10.91 Arkansas 7.13
Illinois 10.12 Hawaii 7.05
Maine 9.78 DC 6.93
Maryland 9.58 Kentucky 6.89
Connecticut 9.42 Alabama 6.79
Mississippi 8.97 Washington 6.7
Rhode Island 8.66 New Mexico 6.65
Ohio 8.5 Oklahoma 6.64
Delaware 8.34 Tennessee 6.62
Indiana 8.2 North Carolina 6.39
Pennsylvania 7.99 Vermont 6.27
Georgia 7.63 Michigan 6.25
Total Share by State
Analysis. Answers. pg Springfield Business Development Corporation
Updated Affordability: Through July—Operation Rate Watch
Beacon Economics
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
Jan-8
7
Sep-8
8
May-9
0
Jan-9
2
Sep-9
3
May-9
5
Jan-9
7
Sep-9
8
May-0
0
Jan-0
2
Sep-0
3
May-0
5
Jan-0
7
Sep-0
8
May-1
0
Jan-1
2
Estimate Monthly Payments as Share Median income with Tax
Adjustment
Rate 4.00 4.50 5.00 5.50
Price Gain
$200,000 29.2% 30.5% 31.9% 33.3%
$210,000 5% 30.6% 32.0% 33.4% 34.9%
$220,000 10% 32.1% 33.5% 35.0% 36.6%
$230,000 15% 33.5% 35.1% 36.6% 38.2%
$240,000 20% 35.0% 36.6% 38.2% 39.9%
$250,000 25% 36.5% 38.1% 39.8% 41.6%
$260,000 30% 37.9% 39.6% 41.4% 43.2%
$270,000 35% 39.4% 41.2% 43.0% 44.9%
$280,000 40% 40.8% 42.7% 44.6% 46.6%
Analysis. Answers. pg Springfield Business Development Corporation
Housing Construction
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Jan-0
6
Jul-0
6
Jan-0
7
Jul-0
7
Jan-0
8
Jul-0
8
Jan-0
9
Jul-0
9
Jan-1
0
Jul-1
0
Jan-1
1
Jul-1
1
Jan-1
2
Jul-1
2
Jan-1
3
Single Family to June
Permits Starts
0
100
200
300
400
500
600
Jan-0
6
Jul-0
6
Jan-0
7
Jul-0
7
Jan-0
8
Jul-0
8
Jan-0
9
Jul-0
9
Jan-1
0
Jul-1
0
Jan-1
1
Jul-1
1
Jan-1
2
Jul-1
2
Jan-1
3
Multi Family to June-Smoothed
Permits Starts
Analysis. Answers. pg Springfield Business Development Corporation
Tight Credit…
0
100
200
300
400
500
600
700
800
900
19
97 -
Q1
19
98 -
Q1
19
99 -
Q1
20
00 -
Q1
20
01 -
Q1
20
02 -
Q1
20
03 -
Q1
20
04 -
Q1
20
05 -
Q1
20
06 -
Q1
20
07 -
Q1
20
08 -
Q1
20
09 -
Q1
20
10 -
Q1
20
11 -
Q1
20
12 -
Q1
20
13-
Q1
MBA Estimates Mortgage Originations to Q1
Mortgage Originations: 1-4 Family: Purchase (Bil.$)
Mortgage Originations: 1-4 Family: Refinance (Bil.$)
0
200
400
600
800
1,000
1,200
03:Q1 05:Q1 07:Q1 09:Q1 11:Q1 13:Q1
Newly Originated Installment Loan
Balances Billions
Source: FRBNY Consumer
Credit Panel/Equifax
Analysis. Answers. pg Springfield Business Development Corporation
Senior Loan Officer Survey to Q3: Good for Businesses
32
-40
-20
0
20
40
60
80
100
20
07Q
1
20
07Q
3
20
08Q
1
20
08Q
3
20
09Q
1
20
09Q
3
20
10Q
1
20
10Q
3
20
11Q
1
20
11Q
3
20
12Q
1
20
12Q
3
20
13Q
1
20
13Q
3
Net % Banks Reporting Increases
Standard Commercial RE
Standards C&I
-40
-20
0
20
40
60
80
100
Net % Banks Reporting Increases
Standards: Not Traditional Mortgages
Standards Prime
Analysis. Answers. pg Springfield Business Development Corporation
Banking Data
33
0
1
2
3
4
5
6
7
8
19
85Q
1
19
86Q
4
19
88Q
3
19
90Q
2
19
92Q
1
19
93Q
4
19
95Q
3
19
97Q
2
19
99Q
1
20
00Q
4
20
02Q
3
20
04Q
2
20
06Q
1
20
07Q
4
20
09Q
3
20
11Q
2
20
13Q
1
Delinquencies: All Loans Q2 12 Q2 13
Ag 1.65 1.27
Business 1.53 1.08
Real Estate 8.23 7.16
Consumer 2.92 2.53
SF Res 10.35 9.72
Receivables 0.84 0.82
Credit Cards 3.07 2.65
Other Consumer 2.77 2.42
Delinquency by Loan
Type
Loan Type 6 M Ar 6 M AR
RE: Revolving -8.9% -8.7%
RE: Closed-end 4.7% -2.6%
RE: Commercial 1.7% 3.0%
Consumer loans 1.9% 4.8%
Consumer: Credit cards 0.3% 0.7%
Consumer loans: Other 3.8% 9.7%
Fed funds / reverse RP 15.8% -14.0%
Other loans 4.6% 6.7%
Growth by Loan Type
Analysis. Answers. pg Springfield Business Development Corporation
CUs Outperform Banks: Potential for Opportunities
1,500
2,000
2,500
3,000
3,500
4,000
100
150
200
250
300
350
Ban
ks
($
Billio
ns)
Cre
dit
Un
ion
s (
$ B
illi
on
s)
Mortgage Lending Credit Unions vs. Banks
Credit Unions Banks
1.0
1.3
1.5
1.8
2.0
2.3
50
100
150
200
250
300
Nu
mb
er
of
Lo
an
s (
Mil
lio
ns)
Lo
an
Vo
lum
es (
$ B
illio
ns)
First Mortgage Loans
Mortgage Loan Volume
Number of Mortgage Loans
Analysis. Answers. pg Springfield Business Development Corporation
Household Formation Picking Up
35
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
95
100
105
110
115
120
125
20
00 0
1
20
00 1
2
20
01 1
1
20
02 1
0
20
03 0
9
20
04 0
8
20
05 0
7
20
06 0
6
20
07 0
5
20
08 0
4
20
09 0
3
20
10 0
2
20
11 0
1
20
11 1
2
20
12 1
1
Ho
useh
old
Fo
rmati
on
(M
illi
on
s)
To
tal
U.S
. H
ou
se
ho
lds (
Mil
lio
ns)
U.S. Household Formation: Current Population Survey
U.S. Total Household Formation (Annual)
-200,000
0
200,000
400,000
600,000
800,000
1,000,000
By Region: Smoothed
Midwest Northeast South West
Analysis. Answers. pg Springfield Business Development Corporation
Kids Still Living with Mom and Dad… Even With a Job
36
19
21
23
25
27
29
31
33
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
United States % of 18-34 Year Olds Living
with Parents
Total With Job
2.40
2.45
2.50
2.55
2.60
2.65
2.70
2.75
2.80
2.85
Pers
on
s p
er
Ho
useh
old
U.S. Avg. Household Size
Persons Per Household
Analysis. Answers. pg Springfield Business Development Corporation
Construction
37
0
200000
400000
600000
800000
1000000
1200000
1400000Ja
n-0
6
Ju
n-0
6
No
v-0
6
Ap
r-07
Se
p-0
7
Fe
b-0
8
Ju
l-0
8
De
c-0
8
Ma
y-0
9
Oct-
09
Ma
r-1
0
Au
g-1
0
Ja
n-1
1
Ju
n-1
1
No
v-1
1
Ap
r-12
Se
p-1
2
Fe
b-1
3
Construction Spending to June
Public Non-Residential Residential
Analysis. Answers. pg Springfield Business Development Corporation
Government
4900
4950
5000
5050
5100
5150
5200
5250
13700
13800
13900
14000
14100
14200
14300
14400
14500
14600
14700
Jan-0
8
Aug-0
8
Mar-
09
Oct-
09
May-1
0
Dec-1
0
Jul-1
1
Feb-1
2
Sep-1
2
Apr-
13
Employment
Local State
2012 2013
Federal I IV I Ch y-o-y
Current receipts 2664.9 2735.8 2947.3 282.4
Current expenditures 3723.6 3771.6 3728.5 4.9
Consumption
expenditures 1055.6 1041.9 1032.7 -22.9
Net lending -1172.5 -1168.9 -864.3 308.2
National defense 806.4 787.9 768.8 -37.6
Services 230.2 206.5 201 -29.2
Gross investment 102.9 106.1 96.8 -6.1
Fed Non-Defense
Consumption 352.1 360.1 360.7 8.6
State and Local
Current receipts 2050.4 2091.9 2113.2 62.8
Current tax receipts 1391.2 1408.9 1444 52.8
Federal grants-in-aid 455.3 479.4 464.8 9.5
Current expenditures 2178.1 2216.4 2223.6 45.5
Net lending -166.6 -156.2 -141.1 25.5
Analysis. Answers. pg Springfield Business Development Corporation
Social Insurance: Unsustainable
39
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
19
70
19
73
19
76
19
79
19
82
19
85
19
88
19
91
19
94
19
97
20
00
20
03
20
06
20
09
20
12
Real Public Spending Per Retiree Source: Census, BEA
0.00
1.00
2.00
3.00
4.00
5.00
6.00
Wo
rkin
g A
ge /
Reti
rem
en
t A
ge
US Support Ratio and Projections Source: Census
1970 2010 2050*
Cost / Working Age Person $2,059 $8,795 $29,823
* Based on per capita growth half the rate from 1970 to 2010
Analysis. Answers. pg Springfield Business Development Corporation
State Pension Problems
40
Adjusted Net Pension
Liabilities as % of
Revenue
Moody’s June 2013
report with updated
methodologies
Analysis. Answers. pg Springfield Business Development Corporation
Inflation
41
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Ja
n-1
1
Ap
r-11
Ju
l-1
1
Oct-
11
Ja
n-1
2
Ap
r-12
Ju
l-1
2
Oct-
12
Ja
n-1
3
Ap
r-13
6-Month Inflation (SAAR)
All All Less Energy
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Ja
n-9
4
No
v-9
5
Se
p-9
7
Ju
l-9
9
Ma
y-0
1
Ma
r-0
3
Ja
n-0
5
No
v-0
6
Se
p-0
8
Ju
l-1
0
Ma
y-1
2
M2 Growth SAAR to June
1 Year 3 Year
Analysis. Answers. pg Springfield Business Development Corporation
How About In Missouri and in Springfield?
42
Analysis. Answers. pg Springfield Business Development Corporation
Labor Markets Are Growing
43
Location Feb-10
Employment June-13
Employment Diff. (000s) Diff. (%)
St. Joseph 55.9 63.0 6.1 12.7
Columbia 92.1 98.2 5.1 6.6
Springfield 191.1 200.5 8.4 4.9
Kansas City 966.5 1,007.7 40.2 4.3
Joplin 77.8 80.1 1.3 3.0
St. Louis 1,285.4 1,314.9 28.5 2.3
Jefferson City 76.8 76.1 -1.7 -0.9
Missouri 2,648.2 2,705.4 56.2 2.2
United States 129,320.0 135,876.0 6,555.0 5.1
Analysis. Answers. pg Springfield Business Development Corporation
Slower out of Gate, but Gaining Steam
• Nearly 8,400 jobs created
• Only 0.5% from peak
• Unemployment rate:
• 6.0% in Jun-13
• Down from over 9.0%
• Outpacing state overall
• Keeping pace with nation
• Unemployment up?
44
0
1
2
3
4
5
6
7
8
9
10
160
165
170
175
180
185
190
195
200
205
Un
em
plo
ym
en
t R
ate
(%
, S
A)
No
nfa
rm (
000
s, S
A)
Springfield Labor Market
Total Nonfarm Unemployment Rate
Analysis. Answers. pg Springfield Business Development Corporation
Unemployment Can be Misleading
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
215
216
217
218
219
220
221
222
223
224
225
226
Jan-1
0
May-1
0
Sep-1
0
Jan-1
1
May-1
1
Sep-1
1
Jan-1
2
May-1
2
Sep-1
2
Jan-1
3
May-1
3
Un
em
plo
ym
en
t R
ate
(%
, S
A)
Lab
or
Fo
rce (
00
0s
, S
A)
Springfield Unemployment
Labor Force Unemployment Rate
45
0
2
4
6
8
10
12
Jan-9
0
Jul-9
1
Jan-9
3
Jul-9
4
Jan-9
6
Jul-9
7
Jan-9
9
Jul-0
0
Jan-0
2
Jul-0
3
Jan-0
5
Jul-0
6
Jan-0
8
Jul-0
9
Jan-1
1
Jul-1
2
Un
em
plo
ym
en
t R
ate
(%
, S
A)
Springfield Missouri United States
Analysis. Answers. pg Springfield Business Development Corporation
Springfield: A Growth Region
Annual Average Employment Growth
Decade Springfield Missouri United
States
1990-2000 3.20 1.70 1.86
2000-2010 0.81 -0.25 -0.07
2010-2013(6) 1.07 -0.01 0.86
46
85
90
95
100
105
110
115
Jan-0
0
Jan-0
1
Jan-0
2
Jan-0
3
Jan-0
4
Jan-0
5
Jan-0
6
Jan-0
7
Jan-0
8
Jan-0
9
Jan-1
0
Jan-1
1
Jan-1
2
Jan-1
3
Ind
ex (
20
00
=10
0, S
A)
Nonfarm Employment
Springfield Missouri United States
Analysis. Answers. pg Springfield Business Development Corporation
Structure of the Economy: Employment
47
Share of Employment by Industry
Variable Springfield Missouri United States Diff. (%)
Education/Health 18.4 15.5 15.2 3.2
Transport,Warehouse,Util. 4.8 3.4 3.7 1.1
Retail Trade 12.1 11.4 11.1 0.9
Wholesale Trade 4.9 4.5 4.2 0.7
Other Services 4.5 4.2 4.0 0.5
Financial Activities 6.2 6.2 5.8 0.4
Information 2.0 2.1 2.0 0.0
NR/Construction 4.0 4.2 4.9 -0.9
Leisure and Hospitality 9.5 10.6 10.4 -1.0
Government 14.4 16.1 16.1 -1.7
Professional/Business 11.9 12.6 13.7 -1.7
Manufacturing 6.9 9.3 8.8 -1.9
Total Nonfarm 100.0 100.0 100.0 0.0
Analysis. Answers. pg Springfield Business Development Corporation
Structure of the Economy: Gross Output
48
Share of Real Gross Product by Industry
Industry
Springfield
2011
RGDP
Share of GDP
Diff. (%) Springfield Missouri United
States
Education/Health 1,824 13.6 9.7 8.4 5.2
Retail Trade 1,268 9.5 7.0 6.5 3.0
Administrative 676 5.1 3.4 3.1 1.9
Transportation/Utilities 738 5.5 5.5 4.8 0.7
Other services 392 2.9 2.5 2.3 0.7
Manufacturing 1,678 12.5 12.2 12.1 0.4
Construction 417 3.1 3.5 3.4 -0.3
Leisure/Hospitality 440 3.3 4.3 3.9 -0.6
Information 546 4.1 6.6 5.1 -1.1
Government 1,433 10.7 12.2 11.8 -1.1
Natural Resources/Mining 36 0.3 1.2 2.7 -2.5
Management/Professional 837 6.3 9.0 9.3 -3.0
Financial activities 2,210 16.5 17.3 21.1 -4.6
All industry total 13,383 100.0 100.0 100.0 0.0
Analysis. Answers. pg Springfield Business Development Corporation
Springfield in Recovery Mode
49
-6
-4
-2
0
2
4
6
8
10,500
11,000
11,500
12,000
12,500
13,000
13,500
14,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Gro
wth
(%
)
Real
GM
P (
$ M
illi
on
s)
Economic Growth
RGDP Growth
Analysis. Answers. pg Springfield Business Development Corporation
Where Are the Jobs?
50
Industry
Jun-13
Empl’t
(000s, SA)
YoY
Change
(000s, SA)
YoY
Change
(%, SA)
Missouri
YoY
Change
(%, SA)
U.S. YoY
Change
(%, SA)
Professional/Bus. 23.9 1.8 8.1 0.9 3.6
NR/Construction 8.0 0.6 7.7 5.4 3.0
Information 4.0 0.2 5.3 -3.1 0.6
Other Services 9.1 0.4 4.5 0.2 1.0
Education/Health 37.0 1.2 3.4 2.0 1.8
Leisure/Hospitality 19.0 0.6 3.2 5.0 3.4
Financial Activities 12.4 0.1 0.9 2.6 1.3
Government 28.9 0.2 0.8 -0.9 -0.3
Wholesale Trade 9.9 0.0 0.0 3.3 1.4
Retail Trade 24.2 -0.2 -0.8 2.1 2.1
Manufacturing 13.8 -0.2 -1.5 1.2 0.3
Transport,Warehous. 9.7 -0.2 -2.0 -1.1 1.3
Total Nonfarm 200.5 5.3 2.7 1.6 1.7
Analysis. Answers. pg Springfield Business Development Corporation
Construction First—Business is Booming
Residential Building Permits
State 2012 2012
YTD 2013
YTD Diff. (%)
Kansas 6,300 2,805 4,174 48.8
Nebraska 6,637 3,078 4,169 35.4
Kentucky 8,052 3,953 5,052 27.8
Missouri 11,593 4,872 6,032 23.8
Illinois 13,510 5,686 6,980 22.8
Tennessee 18,800 9,456 11,267 19.2
Arkansas 7,147 3,274 3,476 6.2
Iowa 9,876 4,267 4,375 2.5
U.S. Total 805,437 377,288 474,883 25.9
Trough-Current Construction Employment
Location Jun-13
Empl’t
T2C
Diff.
(000s) T2C
Diff. (%)
Iowa 68.6 6.8 12.8
Missouri 111.0 9.7 10.7
Kansas 52.8 -0.1 1.7
Arkansas 46.7 -1.0 0.0
Kentucky 66.7 -1.1 -0.1
Illinois 188.5 -10.5 -4.8
U.S. Total 5,793.0 357.0 6.6
51
Analysis. Answers. pg Springfield Business Development Corporation
The Blossoming Professional/Business Sector
52
Industry 2011 2012 Change
Share of
Job Growth
(%)
Share of
Industry (%)
Computer Systems Design and Related
Services 447 1,079 632 36.2 5.3
Accounting, Tax Preparation, Bookkeeping, and
Payroll Services 1,247 1,585 338 19.3 7.7
Management of Companies and Enterprises 3,119 3,311 192 11.0 16.2
Office Admin./Facilities Support 3,554 3,741 187 10.7 18.3
Employment Services 3,104 3,271 167 9.6 16.0
Legal Services 1,255 1,352 97 5.5 6.6
Mgmt. Consulting, R&D, Architects/Engineers 1,260 1,335 75 4.3 6.5
Business Support Services 3,253 3,309 56 3.2 16.2
Waste Management and Remediation Services 340 350 10 0.6 1.7
Other Professional, Scientific, and Technical
Services 694 703 9 0.5 3.4
Specialized Design Services 66 73 7 0.4 0.4
Advertising, Public Relations, and Related
Services 389 367 -22 -1.3 1.8
Professional and Business Services 18,728 20,476 1,748 100.0 100.0
Analysis. Answers. pg Springfield Business Development Corporation
Economic and Workforce Perspective on Education
• Education is more important than ever
Better individual outcomes
More enhanced quality of life
Better job prospects
• Not all education was created equal
Benefits, both personal and social
STEM education has better payoffs
As a grad, better to be STEM
Future STEM needs in the workforce
Forecast of job growth for key sectors
Analysis. Answers. pg Springfield Business Development Corporation
Why Bring this up? Better Outlook for Grads—Better for Springfield
Education
New Jobs
by 2020
Growth
(%)
Share of
All Jobs (%)
Doctoral or professional degree 876.6 19.9 3.1
Master's degree 431.2 21.7 1.6
Bachelor's degree 3,656.1 16.5 15.6
Associate's degree 1,440.0 18.0 5.4
Postsecondary non-degree award 1,100.9 16.9 4.4
Some college, no degree 142.2 17.5 0.7
Some Post-Secondary 7,647.0 17.5 30.8
High school diploma or equivalent 7,576.1 12.2 39.7
Less than high school 5,245.7 14.1 29.5
Total, all occupations 20,468.9 14.3 100.0
Source: Bureau of Labor Statistics, Employment Projections 2010-2020
Analysis. Answers. pg Springfield Business Development Corporation
Better for Local Businesses—Multiplier Effects
Education
Springfield MSA Rest of Missouri
Personal
Income Hhld.
Income Personal
Income Hhld.
Income
Less Than High
School
13,100
38,000
12,500
32,400
High School
Graduate
21,000
41,000
24,000
48,500
Some College
20,000
44,800
26,000
52,500
Bachelors
Degree
34,000
63,000
41,200
76,000
Grad./Prof.
Degree
44,000
74,800
52,000
95,100
Total
22,700
47,200
29,500
57,500
55
Analysis. Answers. pg Springfield Business Development Corporation
Current Educational Mix
56
8.2%
27.4%
34.2%
18.9%
11.3%
Less Than High School High School Graduate Some College
Bachelors Degree Grad./Prof. Degree
Analysis. Answers. pg Springfield Business Development Corporation
Current Educational Mix, Continued
57
0
10
20
30
40
50
60
70
80
90
100
0 100,000 200,000 300,000 400,000 500,000 600,000 700,000
% P
ost-
Seco
nd
ary
Number of Jobs
Employment and Education
Analysis. Answers. pg Springfield Business Development Corporation
Clearer Picture in Terms of Growth
58
Industry Post-
Secondary Total % Post-
Secondary
Job
Growth
(%)
Professional/Business 184,994 248,041 74.6 8.1
NR/Construction 92,162 219,189 42.0 7.7
Information 42,658 52,588 81.1 5.3
Other Services 75,738 129,205 58.6 4.5
Education/Health 527,716 664,438 79.4 3.4
Leisure/Hospitality 127,995 259,459 49.3 3.2
Financial Activities 140,089 185,076 75.7 0.9
Government 106,353 133,899 79.4 0.8
Wholesale Trade 47,738 76,776 62.2 0.0
Retail Trade 184,678 321,926 57.4 -0.8
Manufacturing 157,564 310,932 50.7 -1.5
Transport/Warehouse 78,943 142,404 55.4 -2.0
Total 1,766,628 2,743,933 64.4 2.7
Analysis. Answers. pg Springfield Business Development Corporation
Tightest Where we Need it Most
59
Missouri Springfield MSA
Education # Unemployed
Unemp. Rate
(%) # Unemployed
Unemp. Rate
(%)
> High School 67,924 23.2 5,675 21.8
High School Graduate 99,437 11.7 8,555 10.9
Some College 87,659 8.5 8,307 8.1
Bachelors Degree 23,350 4.3 2,070 4.7
Grad./Prof. Degree 7,962 2.5 393 1.7
Grand Total 286,332 9.4 25,000 9.1
Analysis. Answers. pg Springfield Business Development Corporation
So what does it mean?
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2013: The Unwinding Continues
H2: 2% to 2.5%
2014—should be better
Big Themes for the Year
Consumers will continue to spend—after small Q2 hit on from Payroll tax
Housing recovery to accelerate (look out for apt bubble)
Commercial will continue slow recovery
Exports, business spending to grow slowly
Treasuries to stabilize, settle down more
Look for Fed to continue to make noise, start moving later in the year
Gains in state and local to have some modest offset for Fed
Future issues remain
Policy uncertainty in 2nd half is a big issue
We still have to deal with national / state entitlement reform
European situation could heat up next year
Analysis. Answers. pg Springfield Business Development Corporation
Local Round Up
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Springfield Is In Recovery Mode
Employment is growing, just 0.5% below peak
Unemployment is low in absolute and relative terms
Local construction sector benefitting from housing rebound
The Outlook
Headwinds from federal policy, but private growth will offset
Housing market will drive continued gains in construction
Professional, Healthcare, and domestic sources of growth (restaurants and service sector)
Try to capitalize on global trends and local logistics assets to lure manufacturing
Education Critical for the Future
Educated residents are good for the community, but they are critical for the economy
Significant portion of job growth in high-skilled sectors
Already in relatively short supply, have added over 3,000 since hitting bottom
Analysis. Answers. pg Springfield Business Development Corporation 62
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