title

ON THE ECONOMIC, BUSINESS AND POLITICAL CLIMATE

Roger Tutterow, Ph.D.Coles College of BusinessKennesaw State Universityrtuttero@kennesaw.edu

College Park, GAFebruary 18, 2015

GDP vs. Final Sales

1Q-0

7

3Q-0

7

1Q-0

8

3Q-0

8

1Q-0

9

3Q-0

9

1Q-1

0

3Q-1

0

1Q-1

1

3Q-1

1

1Q-1

2

3Q-1

2

1Q-1

3

3Q-1

3

1Q-1

4

3Q-1

4-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

GDPFinal Sales

Average GDP Growth Rate

1982

-198

7

1991

-199

5

2001

-200

6

2009

-201

4

0.00.51.01.52.02.53.03.54.04.55.0

2.9 2.9

2.2

3.2

4.7

ISM’s “PMI”

Jan-00

Dec-00

Nov-01

Oct-02

Sep-03

Aug-04Ju

l-05

Jun-06

May

-07

Apr-08

Mar-

09

Feb-10

Jan-11

Dec-11

Nov-12

Oct-13

Sep-14

25

30

35

40

45

50

55

60

65

Consumer Sentiment

Jan-98

Jul-98

Jan-99

Jul-99

Jan-00

Jul-00

Jan-01

Jul-01

Jan-02

Jul-02

Jan-03

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Jan-13

Jul-13

Jan-14

Jul-14

556065707580859095100105110115

CONSUMER SENTIMENT

4Q-941Q-96

2Q-973Q-98

4Q-991Q-01

2Q-023Q-03

4Q-041Q-06

2Q-073Q-08

4Q-091Q-11

2Q-123Q-13

4Q-1450

60

70

80

90

100

110

120

130

Atlanta

Leading Economic Indicators(source: Conference Board, % change in last 6 months)

Jul-0

4Ja

n-05

Jun-

05N

ov-0

5Ap

r-06

Sep-

06Fe

b-07

Jul-0

7D

ec-0

7M

ay-0

8O

ct-0

8M

ar-0

9Au

g-09

Jan-

10Ju

n-10

Nov

-10

Apr-

11O

ct-1

1M

ar-1

2Au

g-12

Jan-

13Ju

n-13

Nov

-13

Apr-

14Se

p-14

-15%

-12%

-9%

-6%

-3%

0%

3%

6%

9%

Change in Employment (non-farm payrolls)

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

-1000

-800

-600

-400

-200

0

200

400

600

State Employment (Jobs Lost)

Nor

th D

akot

a

Dis

tric

t of

Col

Ala

ska

Sout

h D

akot

a

Neb

rask

a

Wes

t V

irgi

nia

Loui

sian

a

Texa

s

New

Yor

k

Mas

sach

usett

s

Iow

a

Ver

mon

t

New

Ham

pshi

re

Penn

sylv

ania

Mon

tana

Mai

ne

Okl

ahom

a

Ark

ansa

s

Vir

gini

a

Kans

as

Mis

sour

i

New

Mex

ico

Wyo

min

g

Min

neso

ta

Mar

ylan

d

Wis

cons

in

Was

hing

ton

Colo

rado

New

Jer

sey

Rhod

e Is

land

Kent

ucky

Mis

siss

ippi

Illin

ois

Haw

aii

Conn

ectic

ut

Uta

h

Indi

ana

Ala

bam

a

Ohi

o

Tenn

esse

e

Del

awar

e

Nor

th C

arol

ina

Sout

h Ca

rolin

a

Geo

rgia

Idah

o

Calif

orni

a

Ore

gon

Mic

higa

n

Flor

ida

Ari

zona

Nev

ada

-15%

-12%

-9%

-6%

-3%

0%

3%

6%

9%

12%

15%

State Employment (Jobs Added)

Nor

th D

akot

a

Uta

h

Texa

s

Colo

rado

Flor

ida

Calif

orni

a

Ore

gon

Nor

th C

arol

ina

Sout

h Ca

rolin

a

Tenn

esse

e

Was

hing

ton

Ari

zona

Del

awar

e

Nev

ada

Okl

ahom

a

Geo

rgia

Indi

ana

Mic

higa

n

Dis

tric

t of

Col

Min

neso

ta

Haw

aii

Mas

sach

usett

s

Idah

o

Kent

ucky

Mon

tana

Wis

cons

in

New

Yor

k

Ohi

o

Iow

a

Mar

ylan

d

Ala

ska

Wyo

min

g

Loui

sian

a

Conn

ectic

ut

Kans

as

Vir

gini

a

Sout

h D

akot

a

Neb

rask

a

Mis

sour

i

Illin

ois

Rhod

e Is

land

Ark

ansa

s

Ver

mon

t

New

Ham

pshi

re

Ala

bam

a

Wes

t V

irgi

nia

Penn

sylv

ania

Mis

siss

ippi

New

Jer

sey

Mai

ne

New

Mex

ico

-6%

-3%

0%

3%

6%

9%

12%

15%

18%

State Employment (Net Change)

Nor

th D

akot

a

Texa

s

Dis

tric

t of

Col

Uta

h

Ala

ska

Colo

rado

Okl

ahom

a

Mas

sach

usett

s

New

Yor

k

Was

hing

ton

Loui

sian

a

Mon

tana

Min

neso

ta

Sout

h D

akot

a

Iow

a

Neb

rask

a

Calif

orni

a

Wes

t V

irgi

nia

Tenn

esse

e

Indi

ana

Nor

th C

arol

ina

Haw

aii

Sout

h Ca

rolin

a

Wis

cons

in

Ore

gon

Mar

ylan

d

Del

awar

e

Kent

ucky

Ver

mon

t

Wyo

min

g

Flor

ida

Kans

as

New

Ham

pshi

re

Vir

gini

a

Geo

rgia

Penn

sylv

ania

Ark

ansa

s

Mis

sour

i

Idah

o

Conn

ectic

ut

Mic

higa

n

Rhod

e Is

land

Ohi

o

Illin

ois

Mai

ne

Ari

zona

New

Mex

ico

Ala

bam

a

New

Jer

sey

Mis

siss

ippi

Nev

ada

-6%

-3%

0%

3%

6%

9%

12%

15%

18%

21%

Employment: Georgia

GEO

RG

IA

Alb

any

Ath

ens

Atl

anta

Au

gust

a

Bru

nsw

ick

Co

lum

bu

s

Dal

ton

Gai

nes

ville

Hin

esvi

lle

Mac

on

Ro

me

Sava

nn

ah

Val

do

sta

War

ner

Ro

bin

s-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%RecessionRecovery

Level of Employment: ATL

Jan-04

Sep-04

May

-05Jan

-06

Sep-06

May

-07Jan

-08

Sep-08

May

-09Jan

-10

Sep-10

May

-11Jan

-12

Sep-12

May

-13Jan

-14

Sep-14

2000

2100

2200

2300

2400

2500

2600

Change in Employment: ATL

-150

-100

-50

0

50

100

150

Location Quotient: Atlanta

Min

ing

Cons

truc

tion

Man

ufac

turi

ng

Trad

e, T

rans

& U

til

Info

rmati

on

Fina

ncia

l acti

vitie

s

Prof

& B

is S

ervi

ces

Educ

and

hea

lth

Leis

ure

and

hosp

ital

ity

Oth

er se

rvic

es

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

Location Quotient:South Metro vs Atlanta

Min

ing

Cons

truc

tion

Man

ufac

turi

ng

Trad

e, T

rans

& U

til

Info

rmati

on

Fina

ncia

l acti

vitie

s

Prof

& B

is S

ervi

ces

Educ

and

hea

lth

Leis

ure

and

hosp

it...

Oth

er se

rvic

es

0%

50%

100%

150%

200%

250%

300%

350%

Coweta DeKalb Douglas Fayette Fulton

Henry Rockdale Spalding

Job Loss by Sector: Recession

Tota

l

Cons

truc

tion

Man

ufac

turi

ng

Trad

e, T

ran

& U

til

Info

rmati

on

Fina

ncia

l

Prof

& B

iz S

ervi

ce

Educ

& H

ealt

h Ca

re

Leis

ure

& H

ospi

talit

y

Oth

er S

ervi

ves

Gov

ernm

ent

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

US

GA

Job Growth by Sector: Recovery

Tota

l

Cons

truc

tion

Man

ufac

turi

ng

Trad

e, T

ran

& U

til

Info

rmati

on

Fina

ncia

l

Prof

& B

iz S

ervi

ce

Educ

& H

ealt

h Ca

re

Leis

ure

& H

ospi

talit

y

Oth

er S

ervi

ves

Gov

ernm

ent

-5%

0%

5%

10%

15%

20%

25%

US

GA

Location Quotient:South Metro vs Atlanta

Min

ing

Cons

truc

tion

Man

ufac

turi

ng

Trad

e, T

rans

& U

til

Info

rmati

on

Fina

ncia

l acti

vitie

s

Prof

& B

is S

ervi

ces

Educ

and

hea

lth

Leis

ure

and

hosp

ita.

..

Oth

er se

rvic

es

0%

20%

40%

60%

80%

100%

120%

140%

160%

Crude Oil(Spot Price, WTI)

Jan-04

Sep-04

May

-05Jan

-06

Sep-06

May

-07Jan

-08

Sep-08

May

-09Jan

-10

Sep-10

May

-11Jan

-12

Sep-12

May

-13Jan

-14

Sep-14

20

40

60

80

100

120

140

Federal Funds RateTime to Move Near?

10-Year Treasury Bond

Jan-00

Dec-00

Nov-01

Oct-02

Sep-03

Aug-04Ju

l-05

Jun-06

May

-07

Apr-08

Mar-

09

Feb-10

Jan-11

Dec-11

Nov-12

Oct-13

Sep-14

0%

1%

2%

3%

4%

5%

6%

7%

“Five Little PIIGS”

Portugal Ireland Italy Greece Spain0%

1%

2%

3%

4%

5%

6%

7%

8%

FX: Major Trading Partners

Jan-02

Oct-02

Jul-0

3

Apr-04Jan

-05

Oct-05

Jul-0

6

Apr-07Jan

-08

Oct-08

Jul-0

9

Apr-10Jan

-11

Oct-11

Jul-1

2

Apr-13Jan

-14

Oct-14

60

70

80

90

100

110

120

Bank Credit Loosening?

-40

-20

0

20

40

60

80

100

Med & LargeSmall

Bankers on C&I Loan Demand?

Oct-91Jan

-93

Apr-94Ju

l-95

Oct-96Jan

-98

Apr-99Ju

l-00

Oct-01Jan

-03

Apr-04Ju

l-05

Oct-06Jan

-08

Apr-09Ju

l-10

Oct-11Jan

-13

Apr-14

-80

-60

-40

-20

0

20

40

60

Construction Spending

Jan-01

Sep-01

May-02

Jan-03

Sep-03

May-04

Jan-05

Sep-05

May-06

Jan-07

Sep-07

May-08

Jan-09

Sep-09

May-10

Jan-11

Sep-11

May-12

Jan-13

Sep-13

May-14

-30%

-20%

-10%

0%

10%

20%

30%

Public

Private

Construction Spending: Private

Jan-01

Oct-01

Jul-02

Apr-03Jan

-04

Oct-04

Jul-05

Apr-06Jan

-07

Oct-07

Jul-08

Apr-09Jan

-10

Oct-10

Jul-11

Apr-12Jan

-13

Oct-13

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Residential

Non-Residential

Non-Residential Construction

L

odgi

ng

O

ffice

C

omm

ercia

l

H

ealth

care

E

duca

tiona

l

R

elig

ious

P

ublic

safe

ty

A

mus

e &

Rec

T

rans

port

ation

C

omm

unica

tion

P

ower

H

ighw

ay a

nd st

reet

S

ewag

e &

was

te d

isp

W

ater

supp

ly

C

onse

rv a

nd d

evel

op

M

anuf

actu

ring

-30%-20%-10%

0%10%20%30%40%50%60%

2011-122012-132013-14

US Housing Starts: SF and Total(12 month moving average)

Jan-98

Jul-98

Jan-99

Jul-99

Jan-00

Jul-00

Jan-01

Jul-01

Jan-02

Jul-02

Jan-03

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Jan-13

Jul-13

Jan-14

Jul-14

300

600

900

1200

1500

1800

2100

US Housing Starts: Multi-family(12 month moving average)

Jan-98

Jul-98

Jan-99

Jul-99

Jan-00

Jul-00

Jan-01

Jul-01

Jan-02

Jul-02

Jan-03

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Jan-13

Jul-13

Jan-14

Jul-14

0

75

150

225

300

375

450

ATL Housing Starts: SF and Total(12 month moving average)

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

0

10000

20000

30000

40000

50000

60000

70000

80000

ATL Housing Starts: Multi-family(12 month moving average)

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

The Demographics: Boom & Bust

Home Prices & CPI

Jan-87

Mar-

88

May

-89Ju

l-90

Sep-91

Nov-92Jan

-94

Mar-

95

May

-96Ju

l-97

Sep-98

Nov-99Jan

-01

Mar-

02

May

-03Ju

l-04

Sep-05

Nov-06Jan

-08

Mar-

09

May

-10Ju

l-11

Sep-12

0

50

100

150

200

250

300

350

400

CPICase-Shiller

CS/S&P Home Price Index(FROM PEAK TO NOVEMBER 2014)

Dal

las

Den

ver

Bost

on

Char

lott

e

Port

land

Nati

onal

-US

Seatt

le

San

Fran

cisc

o

Atl

anta

Clev

elan

d

Com

posi

te-2

0

Was

hing

ton

Los

Ang

eles

New

Yor

k

San

Die

go

Min

neap

olis

Det

roit

Chic

ago

Tam

pa

Mia

mi

Phoe

nix

Las

Vega

s-70%-60%-50%-40%-30%-20%-10%

0%10%20%

DropSince peak

Case Shiller: Atlanta & US-20

Jan-

01Ju

l-01

Jan-

02Ju

l-02

Jan-

03Ju

l-03

Jan-

04Ju

l-04

Jan-

05Ju

l-05

Jan-

06Ju

l-06

Jan-

07Ju

l-07

Jan-

08Ju

l-08

Jan-

09Ju

l-09

Jan-

10Ju

l-10

Jan-

11Ju

l-11

Jan-

12Ju

l-12

Jan-

13Ju

l-13

Jan-

14Ju

l-14

-30%

-20%

-10%

0%

10%

20%

30%

US

ATL

Case Shiller: Atlanta by Tier

Jan-

98Au

g-98

Mar

-99

Oct

-99

May

-00

Dec-

00Ju

l-01

Feb-

02Se

p-02

Apr-

03N

ov-0

3Ju

n-04

Jan-

05Au

g-05

Mar

-06

Oct

-06

May

-07

Dec-

07Ju

l-08

Feb-

09Se

p-09

Apr-

10N

ov-1

0Ju

n-11

Jan-

12Au

g-12

Mar

-13

Oct

-13

May

-14

-40%-30%-20%-10%

0%10%20%30%40%50%60%

LOW TIER (<163K)MIDDLE TIER (163K-279K)HIGH TIER (>279K)

Household RE Equity(in $ Billions)

0

2000

4000

6000

8000

10000

12000

14000

16000

Home Investor Purchases

Investor Activity

Atla

nta

Phoe

nix

Las

Vega

s

Tam

pa

Char

lott

e

Mia

mi

Dal

las

Los

Ange

les

Chic

ago

Det

roit

Den

ver

San

Die

go

Min

neap

olis

Was

hing

ton

Clev

elan

d

San

Fran

cisc

o

Seatt

le

Port

land

Bost

on

New

Yor

k

0%2%4%6%8%

10%12%14%16%18%

All InvestLarge Invest

Currents Issues in Fiscal Affairs

• Federal:– “Bush Cuts” < 400K made permanent– Government default avoided in 2011 & 2013 – what about

2015?– In Play: Affordable Care Act, Keystone, Dodd-Frank, EPA,

NLRB, SCOTUS• States:

– Bond ratings preserved during downturn– Tax Reform Initiatives in other States– Recent gains in manufacturing facilities due to “reshoring”– SE states domination biz location ranking

• Local:– RE valuation and revenues rising– Fiscal distress moderating

ON THE ECONOMIC, BUSINESS AND POLITICAL CLIMATE

Roger Tutterow, Ph.D.Coles College of BusinessKennesaw State Universityrtuttero@kennesaw.edu

College Park, GAFebruary 18, 2015