2019 economic outlook by patrick jankowski
TRANSCRIPT
2019 Economic OutlookPresented to the Southeast Texas Economic Development Foundation
By Patrick JankowskiSenior Vice President, ResearchGreater Houston Partnership
73
80
92
106
114
120
Housing Bubble '01 - '07
World War II Economy '38 - '45
Reagan Years '82 - '90
60s Boom '61 - '69
Current Boom June '09 to Present
Tech Boom '91 - '01
Source: National Bureau for Economic Research
Mon
ths
Longest U.S. Expansions
“Expansions don’t die of old age.”
Janet Yellen
Chair, Board of GovernorsU.S. the Federal Reserve System,
2014–2018
“Expansions don’t die of old age.”
Janet Yellen
Chair, Board of GovernorsU.S. the Federal Reserve System,
2014–2018
Typical Recession Causes
Bursting of an asset bubble
Commodity price spikes
Credit crunch
Debt accumulation
Financial institution failures
Government spending cuts
Loss of consumer confidence
������������������ ���
RISING INTEREST RATES
Reductions in business investment
When? Cause
’69 – ’70 Interest rate hikes, fiscal austerity
’73 – ’75 Stock market crash, oil price spike
’80 - ’82 Interest rate hikes, oil price spike
’90 – ’91 High debt levels, consumer pessimism, oil price spike,
’01 – ’02 Dot-com bust, weak business investment, 9/11
’08 – ’09 Subprime mortgage crisis
Six Most Recent Recessions
www.nber.org
Real Gross Domestic ProductEmploymentReal Personal IncomeReal Sales (business and retail)Industrial Production
What NBER considers when dating a business cycle
Rea
l GD
P
Time
NBER Business Cycle
Peak
Recession
Trough
Expansion
Rea
l GD
P
Time
Jankowski Business Cycle
Peak
Recession
Trough
Recovery
Expansion
10
11
12
13
14
15
16
17
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Inco
me
($ T
rillio
ns)
Source: U.S. Bureau of Economic Analysis
96 months
U.S. Real Personal Income
14
15
16
17
18
19
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
Source: U.S. Bureau of Economic Analysis
$ Trillions
U.S. Real Gross Domestic Product
90 months
125
130
135
140
145
150
155
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Jobs
(Mill
ions
)
Source: U.S. Bureau of Labor Statistics
56 months
U.S. Payroll Employment
85
90
95
100
105
110
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
201
2 =
10
0
Source: Board of Governors of the Federal Reserve System
U.S. Industrial Production Index13
months
What the current data tells us about
the economy.
The Consumer Side of the Economy
0
50
100
150
200
250
300
350
400
'11 '12 '13 '14 '15 '16 '17 '18 '19
Jobs
(00
0s)
Source: U.S. Bureau of Labor Statistics
1-Month Net Change
U.S. Job Growth
200
250
300
350
400
450
Source: U.S. Employment and Training Administration
4-Week Moving Average, Seasonally Adjusted, 000s
Initial Claims for Unemployment Insurance
2
3
4
5
6
7
8
9
10
'11 '12 '13 '14 '15 '16 '17 '18 '19
% U
nem
ploy
ed
Source: U.S. Bureau of Labor Statistics * seasonally adjusted
U.S. Unemployment Rate*
61.5
62.0
62.5
63.0
63.5
64.0
64.5
'11 '12 '13 '14 '15 '16 '17 '18 '19
Source: U.S. Bureau of Labor Statistics
Percent Population 16 and Older in the Workforce
U.S. Labor Force Participation Rate
0
20
40
60
80
100
120
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: University of Michigan
1966:Q1=100, Not Seasonally Adjusted
Consumer Confidence
The Financial Side of the Economy
0
2
4
6
8
10
12
14
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: Board of Governors of the Federal Reserve System
Percent, Quarterly, Seasonally Adjusted
Delinquencies Single-Family Mortgages
0
1
2
3
4
5
6
7
8
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: Board of Governors of the Federal Reserve System
Percent, Quarterly, Seasonally Adjusted
Credit Card Delinquencies
0
1
2
3
4
5
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: Board of Governors of the Federal Reserve System
Percent, Quarterly, Seasonally Adjusted
Delinquencies Commercial & Industrial Loans
9
10
11
12
13
14
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
Source: Board of Governors of the Federal Reserve System (US)
Percent, Quarterly, Seasonally Adjusted
Household Debt as Percent of Personal Income
The Business Side of the Economy
1.5
3.7
3.0
2.0
-1.0
2.9
-0.1
4.7
3.2
1.7
0.50.5
3.6
0.5
3.23.2
-1.0
5.14.9
1.9
3.33.3
1.00.4
1.5
2.31.91.81.8
3.02.82.32.2
4.2
3.5
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: U.S. Bureau of Economic Analysis
Growth Rate, % Change from Previous Quarter
U.S. Real Gross Domestic Product
-3.00
-2.00
-1.00
0.00
1.00
2.00
3.00
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: Federal Reserve Bank of Philadelphia
Percent, Monthly, Seasonally Adjusted
U.S. Leading Economic Index
-30
-20
-10
0
10
20
30
40
50
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: Federal Reserve Bank of Philadelphia
Future Capital Expenditures Index*
*Calculated by subtracting percent reporting increases from percentage reporting decreases.
400
600
800
1,000
1,200
1,400
1,600
'11 '12 '13 '14 '15 '16 '17 '18 '19
Source: U.S. Census Bureau
Seasonally Adjusted Annual Rate
U.S. Housing Permits
12.7
14.415.5
16.417.4 17.5 17.1 17.5
'11 '12 '13 '14 '15 '16 '17 '18
Source: National Automobile Dealers Association
New, Light-Duty Vehicles, Millions
U.S. Vehicle Sales
300
330
360
390
420
450
480
'11 '12 '13 '14 '15 '16 '17 '18
Source: U.S. Bureau of the Census * excludes food services
Billions of Dollars, Monthly, Seasonally Adjusted*
U.S. Retail Sales
36
Texas Economy
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
$ T
rillio
ns
Source: U.S. Bureau of Economic Analysis
37
Texas Real GDP
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
12.5
13.0
'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18
Mill
ions
Source: U.S. Bureau of Labor Statistics * seasonally adjusted
38
Total Employment*
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
'10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Jobs
(00
0s)
Source: U.S. Bureau of Labor Statistics *seasonally adjusted
39
Texas Monthly Job Growth
3
4
5
6
7
8
9
'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
% U
nem
ploy
ed
Source: U.S. Bureau of Labor Statistics * seasonally adjusted
40
Texas Unemployment Rate*
20
30
40
50
60
70
80
90
100
110
120
Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19
$ P
er B
arre
l
Source: U.S Energy Information Administration
Crude Spot Price, Weekly Average
West Texas Intermediate
104 95 95 99117
129151
168192
163
207
251265
278 286
249231
265
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Source: U.S. Trade Administration
$ Billions
42
Texas Exports
-50
-40
-30
-20
-10
0
10
20
30
40
50
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: Federal Reserve Bank of Dallas
Survey Production Index
43
Texas Manufacturing Outlook
-30
-20
-10
0
10
20
30
40
50
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: Federal Reserve Bank of Dallas
Above 50 = Expansion
44
Texas Service Sector Outlook
-60
-40
-20
0
20
40
60
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: Federal Reserve Bank of Dallas
Above 50 = Expansion
45
Texas Retail Outlook
A self-fulfilling prophesy?
Trade Tariffs, Higher Interest Rates Slowing Global Growth, OECD Says
“NABE Outlook panelists continue to view the economy as having solid momentum entering 2019, but they foresee GDP growth cooling from 2.9% this year to 2.7% in 2019,” said NABE President Kevin Swift . . .
So, what about Beaumont-Port
Arthur
Beaumont-Port Arthur Gross Domestic Product
15.3 15.816.6
19.0
17.3 17.818.9
17.318.7
19.8
18.2 18.719.4 19.7
20.4 20.720.1
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Source: U.S. Bureau of Economic Analysis
$ Billions
0
10
20
30
40
50
60
70
80
90
100
'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18*
Source: WISERTrade * 12 months ending October ‘18
Metric Tons
Port Arthur Customs District Traffic
12-Month Running Totals
152
154
156
158
160
162
164
166
168
170
172
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
Jobs
(00
0s)
Source: Texas Workforce Commission
Beaumont-Port Arthur Payroll Employment
2
4
6
8
10
12
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
% U
nem
ploy
ed
Beaumont Texas U.S.
Unemployment Rates
Recent Headlines
Bottom line: Growth for
the U.S., Texas and
Beaumont in 2019.
Thank you
2019 Economic OutlookPresented to the Southeast Texas Economic Development Foundation
By Patrick JankowskiSenior Vice President, ResearchGreater Houston Partnership