small business & agricultural advisory board federal ......10:30am introductory remarks...
TRANSCRIPT
Small Business & Agricultural Advisory Board
Federal Reserve Bank of New York 33 Liberty Street
10F, Paul Volcker Boardroom Tuesday, April 15, 2014
AGENDA 10:30am Introductory Remarks
Christine Cumming, First Vice President 10:40am-11:10am The National Economy
Joseph Tracy, Executive Vice President 11:10am-11:30am Regional Update
Jim Orr, Vice President 11:30am-12:00pm International Update
John Clark, Senior Vice President
12:00pm 12:15pm 12:15pm-1:55pm
Adjourn to NWCR-10F Lunch Round Table Discussion with William Dudley, President Questions for discussion with President Dudley: Your experience and that of your customers and suppliers can give us insight into current economic conditions. 1. Has your firm experienced an increase in demand in recent
months? 2. Has demand for your product or service increased sufficiently that you increased or plan to increase employment in 2014? 3. Has demand for your product or service increased sufficiently
that you plan to increase investment in plant and equipment in 2014?
4. Has your access to credit changed in 2014? 5. Has demand for your products or services or your plans for
employment at your firm been impacted by recent changes in tax policy, legislation or regulations?
6. Did severe weather reduce demand for your product or services this year?
2:00 pm Adjourn
US Macro Overview April 15, 2014 Joe Tracy
Overview of US Economic Conditions
• Since the end of the Great Recession, the US economy has grown at a compound annual rate of 2.3%, somewhat less than over the period from 2000 to 2007. • The apparent “output gap” has not closed despite significant fiscal & monetary stimulus • Price and wage data are consistent with the economy still operating with “slack”. • The amount of slack is unknown and the subject of a great deal of research.
• Consumer spending strengthened over the second half of 2013. • Household deleveraging is well advanced – wealth effects supporting consumption • Need stronger income growth to sustain momentum
• Excess supply of housing appears to have been worked off, but household formation remain low, likely due to relatively weak labor market and continued tight mortgage underwriting standards.
• Business investment spending not providing the growth contribution that it has at this point in previous business cycles.
• Inflation running below the FOMC’s stated goal of 2% (measured by PCE deflator).
12
13
14
15
16
17
18
19
20
12
13
14
15
16
17
18
19
20
2000 2002 2004 2006 2008 2010 2012 2014 2016
Real GDP Trillions of 2009 US$ Trillions of 2009 US$
Source: Bureau of Economic Analysis
2000Q1 to 2007Q4: 2.5% Compound Annual Growth Rate
2009Q2 to 2013Q4: 2.3% Compound Annual Growth Rate
Note: * Based on 2000Q1-2007Q4 Trend
3
-4
-3
-2
-1
0
1
2
3
4
5
6
7
8
9
2000 2002 2004 2006 2008 2010 2012 2014-4
-3
-2
-1
0
1
2
3
4
5
6
7
8
9
Real Personal Consumption Expenditures (PCE) % Change - Year to Year % Change – Year to Year
Source: Bureau of Economic Analysis
Real PCE
-15
-10
-5
0
5
10
15
20
25
-15
-10
-5
0
5
10
15
20
25
2006 2007 2008 2009 2010 2011 2012 2013 2014
Consumer Debt by Credit Score Quintile % Change – 4 Quarter % Change – 4 Quarter
Source: FRBNY Consumer Credit Panel
1st Quintile
2nd Quintile 3rd Quintile
4th Quintile
5th Quintile
Note: Includes Student Loans 5
400
450
500
550
600
650
700
1959 1971 1983 1995 20072
4
6
8
10
12
14
16
Household Net Worth and the Saving Rate Ratio Percent
Source: Federal Reserve Board and BEA
Household Net Worth As a Percent of Disposable Income (left axis)
Personal Saving Rate (right axis)
0
2
4
6
8
10
12
400 450 500 550 600 650 7000
2
4
6
8
10
12
Source: Bureau of Economic Analysis and Federal Reserve Board Households’ Net Worth as a Percent of Disposable Income
2006-2007
2008Q2
2009Q2
Note: Fitted line is from 1983Q1 to 2005Q4.
2011Q2
Personal Saving Rate and Household Net Worth Personal Saving Rate (Percent) Personal Saving Rate (Percent)
2010Q2
2013Q4 Est. (639, 4.5)
2012Q2
2013Q3
7
Source: Bureau of Labor Statistics
% Change - Year to Year % Change - Year to Year
-12
-9
-6
-3
0
3
6
9
2000 2002 2004 2006 2008 2010 2012-12
-9
-6
-3
0
3
6
9
Real Compensation and Aggregate Hours Nonfarm Business Sector
Compensation Per Hour
Aggregate Hours
-12
-10
-8
-6
-4
-2
0
2
4
6
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-12
-10
-8
-6
-4
-2
0
2
4
6
Private Employment and Hours Worked % Change – 3-month Annual Rate % Change – 3-month Annual Rate
Source: Bureau of Labor Statistics
Aggregate Hours
Employment
Note: Both series are private industries only.
106
107
108
109
110
111
112
113
114
115
116
117
2000 2002 2004 2006 2008 2010 2012 2014106
107
108
109
110
111
112
113
114
115
116
117
Millions Millions
Source: Bureau of Labor Statistics
Private Non-Farm Payroll Employment
8.8 million
0
2
4
6
8
10
12
2000 2002 2004 2006 2008 2010 2012 201456
57
58
59
60
61
62
63
64
65
66
67
68
Measures of the Employment Situation
Source: Bureau of Labor Statistics
Unemployment Rate (Left Axis)
Labor Force Participation Rate
(Right Axis)
Percent Percent
Employment to Population
Ratio (Right Axis)
11 11
20
50
80
110
140
170
200
230
1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 20143
4
5
6
7
8
9
10
11
12
13
Single Family Housing Market Index Months’ Supply
Source: CoreLogic, National Association of Realtors
CoreLogic Single Family Detached House Price
Index (Left Axis)
NAR Months’ Supply of Single Family Homes on the Market
(Right Axis)
Sellers’ Market
12 12
Cumulative Housing Production and Household Formations Relative to Trend
-3000
-2000
-1000
0
1000
2000
3000
4000
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015-3000
-2000
-1000
0
1000
2000
3000
4000
Thousands Thousands
Source: Census Bureau and author’s calculations.
Cumulative Housing Starts Relative to
Demographic Trend
Cumulative Household Formations Relative to
Demographic Trend
13 13
0
75
150
225
300
375
450
525
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140
400
800
1200
1600
2000
Housing Starts Units (Thousands) Units (Thousands)
Source: Census Bureau
Multifamily (Left Scale)
1 Unit (Right Scale)
14 14
0
1
2
3
4
5
6
1948 1960 1972 1984 1996 20080
1
2
3
4
5
6
Real Net Stock of Private Fixed Nonresidential Capital Year/Year % Change Year/Year % Change
Source: Bureau of Economic Analysis
Includes structures, equipment, and intellectual property products.
15
-4
-2
0
2
4
6
2000 2002 2004 2006 2008 2010 2012 2014-4
-2
0
2
4
6
Inflation: CPI Yr/Yr % Change Yr/Yr % Change
Source: Bureau of Labor Statistics
Total CPI
Core CPI
16 16
-3
-2
-1
0
1
2
3
4
5
2000 2002 2004 2006 2008 2010 2012 2014-3
-2
-1
0
1
2
3
4
5
Inflation Breakdown: Core Goods and Core Services Yr/Yr % Change Yr/Yr % Change
Source: Bureau of Labor Statistics
Core Goods
Core Services
17 17
-10
-8
-6
-4
-2
0
2
4
6
8
10
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-10
-8
-6
-4
-2
0
2
4
6
8
10
Import Prices & Core Goods Prices Year over Year % Change Year over Year % Change
Source: Bureau of Labor Statistics, Federal Reserve Board
Nonpetroleum Import Price Index
CPI: Core Goods
TIPS Based Inflation Expectations
Source: Federal Reserve Board
0
1
2
3
4
2006 2007 2008 2009 2010 2011 2012 2013 20140
1
2
3
4Percent Percent
Note: Dashed lines represent 2 Standard Deviations from the mean
5-10 Years
March 3: 2.43 2011 – Present
Average 2.71
3.13 (+2 SD)
2.29 (-2 SD)
19
Appendix Charts:
-1000
-500
0
500
1000
1500
2000
2003 2005 2007 2009 2011 2013-1000
-500
0
500
1000
1500
2000
Household Formations 2 Year Avg. Change 2 Year Avg. Change
Source: Bureau of the Census
Total
Owner Occupied
Renter Occupied
21 21
0
3
6
9
12
15
1980 1986 1992 1998 2004 20100
3
6
9
12
15
Private Employment Cost Indices Year over Year % Change Year over Year % Change
Source: Bureau of Labor Statistics
Total Compensation Index
Benefits Index
Wage and Salaries Index
22
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1991 1994 1997 2000 2003 2006 2009 2012-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Long-Term Trends in Productivity and Compensation 5 % Year Change, AR 5 Year % Change, AR
Source: Bureau of Labor Statistics, and Bureau of Economic Analysis
Real Output Per Hour
(Left Axis)
Real Compensation
Per Hour (Left Axis)
23
Age and Gender Contributions to Change in Labor Force Participation Rate
Age Gender ∆ 1964-2000 ∆ 2000-2007 ∆ 2007-2013 16-24 -0.1 -1.0 -0.9
Men -0.7 -0.5 -0.5 Women 0.6 -0.5 -0.4
25-54 10.4 -2.7 -4.0 Men 0.6 -1.2 -2.4
Women 9.8 -1.5 -1.6 55-64 -1.4 2.2 1.3
Men -1.7 1.0 0.6 Women 0.3 1.2 0.6
65+ -0.5 0.5 0.8 Men -0.5 0.2 0.5
Women 0.8 0.3 0.3
Total 8.4 -1.0 -2.8
Men -2.4 -0.5 -1.8
Women 10.8 -0.6 -1.0 24
Components of Net Lending/Borrowing as a Share of GDP Share of GDP Share of GDP
Source: Federal Reserve Board, BEA Note: Shading represents NBER recessions.
-15
-10
-5
0
5
10
-15
-10
-5
0
5
10
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Government
Business
Households
25
Net Lending
25
Regional Economic Outlook Presentation to the Advisory Council on Small Business and Agriculture
James Orr, Vice President April 15, 2014
The views expressed here are those of the presenter and do not necessarily represent the views of the Federal Reserve Bank of New York or the Federal Reserve System.
Regional Economic Activity Index of Coincident Economic Indicators (CEI)
1 Source: Federal Reserve Bank of New York; Puerto Rico Government Development Bank. Note: The Puerto Rico composite index is based on a different methodology than the indexes produced by the FRBNY.
80
85
90
95
100
105
110
115
Jan07 Jul07 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Jan12 Jul12 Jan13 Jul13 Jan14
New Jersey
New York City
New York State
Puerto Rico
Feb
Index (December 2007 = 100)
Shading indicates NBER recession
Apr08 Mar08
Jan08
Nov05
Nov09
Oct09 Nov10
Current Economic Conditions FRBNY Business Surveys, Current Conditions
Source: Federal Reserve Bank of New York. 2
-60
-40
-20
0
20
40
60
Jan07 Jul07 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Jan12 Jul12 Jan13 Jul13 Jan14
Shading indicates NBER recession
Diffusion Index
Mar
Empire State Manufacturing Survey
Business Leaders Survey
Future Economic Conditions FRBNY Business Surveys, Conditions Six Months Ahead
Source: Federal Reserve Bank of New York. 3
-60
-40
-20
0
20
40
60
Jan07 Jul07 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Jan12 Jul12 Jan13 Jul13 Jan14
Shading indicates NBER recession
Diffusion Index
Mar
Empire State Manufacturing Survey
Business Leaders Survey
Total Employment Seasonally Adjusted Index
Source: Bureau of Labor Statistics and Moody’s Economy.com. 4
88
92
96
100
104
108
Jan07 Jul07 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Jan12 Jul12 Jan13 Jul13 Jan14
Shading indicates NBER recession
Index (December 2007 = 100) Dashed Line Indicates U.S. Employment Trough (February 2010)
Puerto Rico
New York State
New Jersey
United States
Mar
Feb
Total Employment Seasonally Adjusted Index
Source: Bureau of Labor Statistics and Moody’s Economy.com. 5
88
92
96
100
104
108
Jan07 Jul07 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Jan12 Jul12 Jan13 Jul13 Jan14
Shading indicates NBER recession
Index (December 2007 = 100) Dashed Line Indicates U.S. Employment Trough (February 2010)
New York City
Northern New Jersey
Upstate Metros
United States
Mar
Feb
Total Employment Seasonally Adjusted Index
Source: Bureau of Labor Statistics and Moody’s Economy.com. 6
88
92
96
100
104
108
Jan07 Jul07 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Jan12 Jul12 Jan13 Jul13 Jan14
Shading indicates NBER recession
Index (December 2007 = 100)
Mar
Dashed Line Indicates U.S. Employment Trough (February 2010)
Fairfield
Hudson Valley
Long Island
United States
Feb
Total Employment Seasonally Adjusted Index
Source: Bureau of Labor Statistics and Moody’s Economy.com. 7
85
90
95
100
105
110
115
120
125
130
Jan07 Jul07 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Jan12 Jul12 Jan13 Jul13 Jan14
Shading indicates NBER recession
Index (December 2007 = 100) Dashed Line Indicates U.S. Employment Trough (February 2010)
Mar
Feb
New York City
United States New York
New Jersey
Nevada
North Dakota
Florida
Recovered All Lost Jobs Recovered At Least 75 percent of Lost Jobs Recovered Less Than 75 percent of Lost Jobs No Recovery
Newark
Glens Falls
Elmira Binghamton
Putnam Fair- field
Edison
Kingston
Buffalo
Rochester Syracuse
Utica
Albany
Ithaca
NYC
US = 92 percent
Puerto Rico
Status of Jobs Recovery Share of Lost Jobs Gained Back During Local Recovery
8
Source: Bureau of Labor Statistics and Moody’s Economy.com. Note: Putnam and Bergen are the Putnam-Rockland-Westchester and Bergen-Hudson-Passaic Special BLS Areas.
Job Growth by Sector Year-Over-Year Percent Change, February 2014
Source: Bureau of Labor Statistics and Moody’s Economy.com. 9
United States
New York State
New York City
New Jersey
3.7 2.2 2.9 1.4 3.0 2.7 2.5 -1.4 2.6 -1.1 0.5 -5.5 2.0 1.0
1.3 1.5
1.9 1.8 4.2 1.6
1.8 3.1 5.1 1.6 1.5 2.3 3.2 0.5 0.8 0.1
0.3 -1.9
0.7 -0.8 2.8 0.7 0.1 -0.2 -0.4 -0.9
-2.0 1.5 4.2 -3.4
1.6 1.3 2.2 0.0
Professional & Business Services Leisure & Hospitality
Construction Wholesale Trade
Retail Trade
Transportation & Utilities Education & Health Services
Financial Activities
Manufacturing State & Local Government
Information
Total
Job Growth by Sector Year-Over-Year Percent Change, February 2014
Source: Bureau of Labor Statistics and Moody’s Economy.com. 10
Puerto Rico
5.9 0.5 3.6 4.7
-5.9 6.8 1.9 1.8 1.2 0.3
4.8 4.0 1.1 1.8
-1.6 -1.1
-1.3 -2.0 -3.7 -1.1 1.6 -2.8
0.1 0.7
Connecticut
Professional & Business Services Leisure & Hospitality
Construction Wholesale Trade
Retail Trade
Transportation & Utilities Education & Health Services
Financial Activities
Manufacturing State & Local Government
Information
Total
State and Local Government Seasonally Adjusted Index
Source: Bureau of Labor Statistics and Moody’s Economy.com.
11
95
96
97
98
99
100
101
102
Jan07 Jul07 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Jan12 Jul12 Jan13 Jul13 Jan14
United States
New York State
New Jersey
Mar
Feb
Shading indicates NBER recession
Note: Dotted line smoothes fluctuations due to summer jobs programs.
Index (December 2007 = 100)
Financial Activities Employment Seasonally Adjusted
Source: Bureau of Labor Statistics and Moody’s Economy.com. 12
200
225
250
275
300
325
350
375
400
350
375
400
425
450
475
500
525
550
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
New York City
(left scale)
New Jersey (right scale)
Feb
Thousands – New York City Thousands – New Jersey
Shading indicates NBER recessions
Sep01
Financial Activities Employment February 2014
NYC 438,046 NJ 250,700
NYC Technology Employment Level Change, 2009Q3 to 2013Q3
Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages.
13
14,429 new jobs
35% change
10,175
205%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Computer Systems Design and Related
Services
Internet Publishing and Broadcasting and Web
Search Portals
Unemployment Rates in the Region Seasonally Adjusted, February 2014
14 Source: Bureau of Labor Statistics and Moody’s Economy.com.
0%
2%
4%
6%
8%
10%
12%
14%
16%
New
Jersey
New York
City New York State
United States
Connecticut
6.7% (6.7% Mar)
6.8%
7.9% 7.1% 7.0%
15.0%
Puerto Rico
Dec11
Home Prices CoreLogic Home Price Index, Seasonally Adjusted
15 Source: CoreLogic Home Price Index (including distressed sales); Seasonally adjusted by FRBNY staff. Note: ‘NYC Metro’ refers to the ‘New York-White Plains-Wayne NY-NJ Metro Division.’
40
50
60
70
80
90
100
110
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Index (U.S. Peak of March 2006 = 100)
Shading indicates NBER recessions
Feb
NYC Metro
Upstate NY
New York State
United States
Negative Equity Share of Mortgages with Amount Owed Greater Than Home Value
16 Source: CoreLogic Negative Equity Report.
25%
8%
20%
65%
32%
47% 51%
13%
6%
14%
30%
13%
28%
22%
0%
10%
20%
30%
40%
50%
60%
70%
US NY NJ NV CA FL AZ
2011Q4 2013Q4
Backlog of Foreclosures Share of Mortgages in Foreclosure
17 Source: CoreLogic LoanPerformance (LP) and Lender Processing Services Mortgage Performance data (LPS).
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Downstate NY
United States
Northern NJ
Upstate NY Jan
Downstate New York includes Ulster, Dutchess, Orange, and all New York counties to the south. Upstate New York
includes all metropolitan counties to the north. Northern New Jersey includes Ocean, Monmouth, Middlesex,
Somerset, Hunterdon and all counties to the north.
Shading indicates NBER recession
Household Debt Total Debt Balance Per Capita
Source: FRBNY Consumer Credit Panel/Equifax.
18
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Q4
New York State
United States
Nevada
California
Texas
Thousands
New Jersey
Shading indicates NBER recession
Dec11
Home Prices CoreLogic Home Price Index, Seasonally Adjusted
19 Source: CoreLogic Home Price Index (including distressed sales); Seasonally adjusted by FRBNY staff. Note: ‘NYC Metro’ refers to the ‘New York-White Plains-Wayne NY-NJ Metro Division.’
40
50
60
70
80
90
100
110
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Index (U.S. Peak of March 2006 = 100)
Shading indicates NBER recessions
Feb Fairfield County
New Jersey
United States
Office Vacancy Rates Overall Vacancy Rates
20 Source: Cushman & Wakefield.
0%
5%
10%
15%
20%
25%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Q4
Northern NJ
NYC Midtown
NYC Downtown
Central NJ
Shading indicates NBER recessions
Office Vacancy Rates Overall Vacancy Rates
21 Source: Cushman & Wakefield.
0%
5%
10%
15%
20%
25%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Q4 Fairfield
County
Long Island
Shading indicates NBER recessions
Job Polarization
Occupations by Skill Categories Based on 2010 Median Occupational Wage, United States
Source: U.S. Bureau of the Census and FRBNY Calculations.
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
Legal Computer/Math Engineers/Architects Management Social Scientists
Scientists Finance Business Operation Health Practitioners
Protective Services Installation/Repair Teachers Arts/Entertainment Construction Precision Production Community Service
Admin Support Machine Operators Sales Transportation
Health Support Bldg Maintenance Farming Personal Care Food Prep
High Skill
Upper Middle
Lower Middle
Low Skill
25% 21% 38% 16% Employment Share
23
Job Growth by Skill Category Change in Jobs: 1980-2010, Our Region
Source: U.S. Bureau of the Census and Current Issues in Economics and Finance, “Job Polarization and Rising Inequality in the Nation and the New York-Northern New Jersey Region.”
-20%
0%
20%
40%
60%
80%
100%
120%
101%
46%
20%
91%
60%
38%
-7%
92%
United States Downstate NY High Skill
Upper Middle
Lower Middle
Low Skill
Note: Downstate NY includes all counties in New York State to the south of and including Dutchess and Orange counties.
24
Recent College Graduates
Source: U.S. Census Bureau and U.S. Bureau of Labor Statistics, Current Population Survey. Note: College graduates are those with a BA degree or higher; recent college graduates are those aged 22-27; figures exclude those currently enrolled in school.
0%
2%
4%
6%
8%
10%
12%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Working Age Population
All College Graduates
Apr 2013
Recent Graduates
Shading indicates NBER recessions
Unemployment Rate
U.S. Unemployment Rates 12-Month Moving Average
26
College Graduate Underemployment
• Classify jobs into two categories based on information from the Department of Labor:
Bachelor’s degree required: • e.g., pharmacist, social worker, software developer
Bachelor’s degree not required: • e.g., retail salesperson, food server, electrician,
health care technician
• Graduates working in these jobs are considered underemployed
27 FEDERAL RESERVE BANK OF NEW YORK
46% 49% 44% 46%
6% 5%
7% 7%
0%
10%
20%
30%
40%
50%
60%
United States Upstate NY Downstate NY Northern NJ
Underemployment
Unemployment
Total 52% 54%
51% 54%
Regional Unemployment & Underemployment Recent College Graduates, Share of Labor Force, 2009-11
Source: U.S. Census Bureau, American Community Survey; U.S. Department of Labor, O*NET. Note: Recent college graduates are those with a BA degree or higher aged 22-27; figures exclude those currently enrolled in school. 28