Ted Abernathy ted@econleadership.com

What Does the Future Hold for the

Economy

Global Unemployment Rates- 4 Years

9.1%

4.3%

6.1%

7.1%

10.0%

5.2%

10.8%

6.0% 6.1%

5.0%

3.3%

4.1%

7.1%

10.4%

5.8%

4.9%

6.9%

5.8%

0%

2%

4%

6%

8%

10%

12%

US Japan China Canada Euro Area Austrialia India Brazil Russia

2011 2016 South Africa- 25.5%Greece- 24.5%Spain- 20.8%Egypt 12.8%

Source: The Economist February 6 ,2016

Projected GDP 2013 & 2014 & 2015

1.9% 1.7%

7.7%

1.7%

-0.4%

2.4%

4.9%

2.2%1.5%

2.4%

0.6%

6.9%

1.2% 1.5%2.3%

7.2%

-3.7% -3.8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

US Japan China Canada Euro Area Austrialia India Brazil Russia

2013 2014 2015

Source: The Economist February 6 , 2016

Global Consumer Prices 2015

0.1%0.7%

1.5% 1.2%

0.0%

1.5%

4.9%

9.5%

15.4%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

US Japan China Canada Euro Area Austrialia India Brazil Russia

Source: The Economist February 6, 2016

Annual U.S. Employment Change

-1,757,000

-532,000

62,000

2,019,0002,484,000

2,071,000

1,115,000

-3,617,000

-5,052,000

1,022,000

2,103,0002,236,000 2,151,000

3,116,000

2,730,000

-6,000,000

-5,000,000

-4,000,000

-3,000,000

-2,000,000

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Jan 151,000

Source: BLS February 2016

% Annual U.S. Employment Change By Sector Dec 2014 to Dec 2015

1.9%

2.7%

0.2%

1.7%1.6%

3.1% 3.2% 3.2%

0.4%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Total

Co

nstru

ction

Man

ufactu

ring

Trade/Tran

s/Util

Finan

cial

Pro

f/Biz Services

Ed/H

ealth Services

Leisure

/Ho

sp

Go

vernm

ent

Source: U.S. BLS, Jan 2016

Southern States 1-Year Employment Changes December 2014 to December 2015

1.9%

1.0%

1.6%

2.9%

2.2% 2.1%

-0.9%

0.9%

2.1%

3.3%

2.3%

1.4% 1.5%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

USA AL AR FL GA KY LA MS NC SC TN TX VA

Source: U.S. BLS, Measured Jan Data

Southern States 1-Year Manufacturing Employment Changes Dec 2014 to Dec 2015

0.2%

-1.1%

-2.9%

2.8%

1.8%

3.3%

-0.3%

1.9%

1.0%

-0.6%

1.4%

-4.7%

0.5%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

USA AL AR FL GA KY LA MS NC SC TN TX VA

Source: U.S. BLS, Measured Jan Data

Southern States 10-Year Job Changes 2004-2014

5.7%

0.6%

2.5%3.9%

5.0%4.5%

3.1%

-0.3%

7.4%5.9%

4.0%

22.0%

4.5%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

USA AL AR FL GA KY LA MS NC SC TN TX VA

Source: U.S. BLS, Measured Jan Data

Source: Bureau of Economic Analysis 2015

How Competitiveness

Top Factors for Companies Considering New Investment

1) Highway accessibility2) Occupancy or construction costs3) Available land4) Availability buildings5) Availability of skilled labor6) Labor costs7) Right-to-work state8) Proximity to major markets9) Energy availability and costs10) Corporate tax rate11) Tax exemptions12) State & Local Incentives

Source: Area Development 29th Annual Survey of Corporate Executives, March 2015

Top Quality of Life Factors for Companies Considering New Investment 1) Low crime rate

2) Ratings of public schools

3) Health care facilities

4) Housing availability

5) Housing costs

6) Colleges & universities in the area

7) Recreational opportunities

8) Cultural opportunities

9) Climate

Source: Area Development 29th Annual Survey of Corporate Executives, March 2015

American South Tax Rankings(1 is Best, 50 is Worst) Corporate Tax Individual Income Sales Tax Property Tax

Alabama 27 23 41 10

Arkansas 40 28 44 19

Florida 14 1 12 16

Georgia 8 42 17 30

Kentucky 29 30 11 17

Louisiana 23 27 50 24

Mississippi 11 21 28 33

North Carolina 25 15 33 29

South Carolina 13 41 18 21

Tennessee 15 8 47 37

Texas 39 6 36 36

Virginia 6 39 6 26Source: Tax Foundation

AL

AK

AZ

AR

CA

CO

CT

DE

FLGA

HA

ID

ILIN

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KS

LAKY

ME

MD

MA

MI

MN

MS

MO

MT

NE

NV

NH

NJ

NM

NY

NC

ND

OH

OK

O

PA

RI

SC

SD

TN

TX

UT

VT

VA

WA

WV

WI

WY

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AverageStatisticalRanking

Average "Best States" ranking

Rankings and Performance States By Average Ranks by Forbes, CNBC, and Chief Executive

Plotted Against

Actual Performance for Job Growth, Wage Growth and Growth in GDP

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AverageStatisticalRanking

Average "Best States" ranking

Rankings and Performance States By Average Ranks by Forbes, CNBC, and Chief Executive

Plotted Against

Actual Performance for Job Growth, Wage Growth and Growth in GDP

AL

AK

AZ

AR

CA

CO

CT

DE

FLGA

HA

ID

ILIN

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LAKY

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AverageStatisticalRanking

Average "Best States" ranking

Rankings and Performance

Worse Performance Than Rank

Better Performance Than Rank

States By Average Ranks by Forbes, CNBC, and Chief Executive

Plotted Against

Actual Performance for Job Growth, Wage Growth and Growth in GDP

AL

AK

AZ

AR

CA

CO

CT

DE

FLGA

HA

ID

ILIN

IA

KS

LAKY

ME

MD

MA

MI

MN

MS

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NE

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NH

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0 10 20 30 40 50

AverageStatisticalRanking

Average "Best States" ranking

Rankings and Performance

Worse Performance Than Rank

Better Performance Than Rank

States By Average Ranks by Forbes, CNBC, and Chief Executive

Plotted Against

Actual Performance for Job Growth, Wage Growth and Growth in GDP

What Are the Big Trends That Shape the

Future?Urbanization Technology

TalentDemographics

Accelerating Global Urbanization

Source: Missouri Data Portal, July 2015

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Half of the US Population Lives in these 146 Counties

SOURCE: BUSINESS INSIDER 2013 WALTER HICKEY AND JOE WEISENTHAL

So What?

The Technology Transformation

Source: Business Insider, The Economist, 2014

Mismatch

2012

The Nature of Work is Different

Creative Work

Routine Work

Outsourced

RoutineWork

Machines

Routine

Work

Source: National Center on Education and the

Economy, Tough Choices or Tough Times, 2007

Work Shifts

-20%

-12% -13%

3%

7%

16%13%

21%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Men NoHS

WomenNo HS

Men HS WomenHS

Men BA WomenBA

MenAdvanced

WomenAdvanced

Percentage Change in Real Median Earning for Men and WomenFrom 1990 to 2013 By Educational Group

Source: The Hamilton Project, April 2015

Can the Skills of the Talent Pool Keep Up With the Demand for Skills?

0

50

100

150

200

250

1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040

Demands by Business Workforce Skills

Are the demands of businesses rising faster than the abilities of the average worker with average intelligence, average skills and average motivation?

Source: No source, I made this up

Demographics

Fewer children- in 1960, 3.7 children, today 1.9

Roughly 90% of the growth in the labor force between new and mid-century will be new immigrants and their childrenDemographic

and Societal Trends

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• The average American commuter spends a total of 38 hours sitting in traffic each year-which leads to 5.5 billion hours in lost productivity and 2.9 billion gallons of wasted fuel.

• In 2013, 24.3% of U.S. bridges—64,000 in all—were identified as structurally deficient or functionally obsolete.

• Delayed or canceled flights cost the American economy an estimated $30 billion to $40 billion each year.

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The 6 Drivers of State Economic Growth

• Entrepreneurs, the individuals who seed, grow and renew businesses• Education and Skills, the concentration of highly educated, highly

skilled individuals within economies• Innovation and Technology: the new ideas and technologies that

enter the economy and change what is produced, how it is produced, and the way that production itself is organized

• Private Capital: the sufficient and availability of debt and equity financing at all stages of company formation

• Global markets and linkages: The businesses competing successfully in global markets

• Industry Clusters: The firms embedded in regional clusters supported by institutions providing education, training, finance and marketing services, which experience higher rates of job and wage growth than comparable firms not embedded in such clusters

Source: National Governors Association

Economic Leadership LLC Competitiveness Process69

Establishing a Common

Current Reality

Envisioning a Common

Future Desire

Direction, or Compass is driven by the Vision, Mission and Core Values of the organization, place, or business

Context examines relative assets and converts comparative and longitudinal information to determine realistic options

Change is the group of factors, outside your control, that influences your future, global trends, demographic shifts, changing technology

Goals

Objectives

Actions

Action Plan Matrix• What actions will we undertake?• Who will be responsible for those actions?• What resources do we need to be successful?• Where will those resources come from?• When will each action start and be completed?• What results do we expect?

Strategic Action Agenda

Reality Filters

Compass

ContextSWOT & PEST

Change

Control

Impact

Resources

Time

Action Choice Filters

Community History & Previous Stratgies

AssessmentAdjustment

Metrics and Measurements

(Dashboards)

Communications

Action Choices

ResearchAssessments

SurveysExternal Input

LeadershipAssessment and

Continuous Improvement

Process

Information Stage Choice Stage Action Stage

The Near Future- Trend-Spotting

• Slow to moderate economic growth (US & Global)

• More Globalization, urbanization, and prosperity unevenness

• Rapid technological change- impacting every industry

• Aging and diversity- workforce implications

• Austere government budgets (Federal-State-Local)

• Austere personal budgets (For most)

• Business reordering (sharing economy)

• Intense competition for everything

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