U.S. Economic Update and Outlook

Carolinas Cash Adventure ConferenceMay 24, 2016

Richard KaglicSenior Regional Economist

2

The views expressed here are my own and do not represent those of my colleagues at the Federal Reserve

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Percent change from previous quarter at annual rate

Note: Projection is the median, central tendency, and range from the March 2016 Summary of Economic Projections. Red dots indicate median projections. Projections of change in real gross domestic product (GDP) are from the fourth quarter of the previous year to the fourth quarter of the year indicated. 3

Q10.5%

Source: Bureau of Economic Analysis via Haver Analytics & Federal Reserve Board

FOMC Projection

Real Gross Domestic Product

75

80

85

90

95

100

105

110

115

120

125

130

135

140

75

80

85

90

95

100

105

110

115

120

125

130

135

140

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

4

2012 = 100

March

Industrial Production

Source: Board of Governors via Haver Analytics

Manufacturing

Mining

Overall

Mar. Apr. Mar. Apr.

Purchasing Managers Index 51.8 50.8 Non-Manufacturing Index 54.5 55.7

Production 55.3 54.2 Business Activity 59.8 58.8

New Orders 58.3 55.8 New Orders 56.7 59.9

Employment 48.1 49.2 Employment 50.3 53.0

Supplier Deliveries 50.2 49.1 Supplier Deliveries 51.0 51.0

Inventories 47.0 45.5 Inventories 52.5 54.0

Prices 51.5 59.0 Prices 49.1 53.4

Backlog of Orders 51.0 50.5 Backlog of Orders 52.0 51.5

New Export Orders 52.0 52.5 New Export Orders 58.5 56.5

Imports 49.5 50.0 Imports 53.0 54.0

MANUFACTURING BUSINESS: NON-MANUFACTURING BUSINESS:

5DIFFUSION INDEXES: Numbers above 50 percent indicate more favorable responses towards economic activity.

ISM: Business Survey Indexes

Source: Institute for Supply Management via Haver Analytics

6Source: Bureau of Economic Analysis via Haver Analytics & Federal Reserve Board

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-0.5

0.0

0.5

1.0

1.5

2.0

GDP PCE BFI Res Inventory Xports Imports Govt

2015q4

2016q1

Contributions to Real GDP Growth

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-3

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0

1

2

3

4

5

6

-4

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1

2

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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Disposable Personal Income & Expenditures

Source: Bureau of Economic Analysis via Haver Analytics

12 Month % Change

Real Personal Consumption Expenditure

Real Disposable Personal Income

March

Note: Real disposable personal Income was adjusted to remove tax-induced income shifting near end of 2012.

January February MarchIncome 0.2 0.2 0.3Expenditures 0.0 0.3 0.0

Month over Month % Change

450

500

550

600

650

700

450

500

550

600

650

700

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

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Q4.

Household Net WorthPercent of disposable personal income

Source: Z.1 Financial Accounts of the United States via Haver Analytics

2.5

3

3.5

4

4.5

5

5.5

6

6.5

2.5

3

3.5

4

4.5

5

5.5

6

6.5

200020012002200320042005200620072008200920102011201220132014201520162017

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Existing Single-Family Home Sales

Source: National Association of Realtors via Haver Analytics

Millions of Homes

Average Annual Existing Home Sales: 1990 through 1999

March4.76 mil.

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2000 2002 2004 2006 2008 2010 2012 2014 2016

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Private Single-Family Housing Starts & Permits

Source: Census Bureau via Haver Analytics

Millions of Starts & Permits

Starts

Permits

1990 - 1999 Average Housing Starts

March

45

50

55

60

65

70

75

45

50

55

60

65

70

75

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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Current $, Billions

Shipments

March

New Orders

Core Capital Goods

Notes: Core capital goods are nondefense capital goods excluding aircraft.

Source: Census Bureau via Haver Analytics

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Current $, Billions

Exports

Source: Census Bureau via Haver Analytics

100

120

140

160

180

200

100

120

140

160

180

200

06 07 08 09 10 11 12 13 14 15 16

75

85

95

105

115

125

135

75

85

95

105

115

125

135

1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

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Exchange Value of the USDIndex, March 1973 = 100

Source: Board of Governors via Haver Analytics

Notes: Measured as the real broad trade-weighted exchange value of the United States Dollar.

April

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0

100

200

300

400

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100

200

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Quarterly average of monthly changes, thousands of persons

Q1Average

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Nonfarm Payroll Employment

Source: Bureau of Labor Statistics via Haver Analytics

Apr. 160Mar. 208Feb. 233Jan. 168Dec. 271

Monthly Change

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Measures of Labor Utilization

Source: Bureau of Labor Statistics via Haver Analytics

3

6

9

12

15

18

3

6

9

12

15

18

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Percent

U3: Official Unemployment Rate

U6: U5 + Involuntary Part-Time

U5: U3 + Discouraged + Marginally Attached

April

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

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March0.8%

FOMC Projection

Personal Consumption Expenditure Price Index12 Month % Change

Source: Bureau of Economic Analysis & Board of Governors via Haver Analytics

2% Longer-run Target

Notes: FOMC projection is the median, range, and central tendency for Q4/Q4 percent changes, from the March 2016 meeting. Red dots indicate median projections.

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-21-18-15-12-9-6-30369

12151821242730

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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PPI Core Intermediate

Goods(Left Axis)

Commodity Research Bureau Spot Commodity

Price Index(Right Axis)

12 Month % Change

Commodity Price Indexes12 Month % Change

Source: Bureau of Labor Statistics & Commodity Research Bureau via Haver Analytics

April

Price Indexes March AprilPPI Core Intermed. Goods -2.9% -2.5%CRBS Spot Commodities -3.3% -1.0%

Questions/comments?

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