2014-15 LAEDC Economic Forecast and Industry Outlook Robert A. - PowerPoint PPT Presentation

2014-15 LAEDC Economic Forecast and Industry Outlook Robert A. Kleinhenz, Ph.D. Chief Economist, Kyser Center for Economic Research February 19, 2014

Outline  U.S. Economy  California Economy  Southern California Economy & Industries  Forecast & Conclusion Kyser Center for Economic Research

U.S. Economy Kyser Center for Economic Research

U.S. Labor Market % Change Nonfarm Jobs Unempl. Rate in % 5.0 12.0% Change in Nonfarm Employment Unemployment Rate 4.0 10.0% 3.0 2.0 8.0% 1.0 0.0 6.0% -1.0 4.0% -2.0 -3.0 2.0% -4.0 -5.0 0.0% '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14f '15f Sources: Bureau of Labor Statistics, forecasts by LAEDC Kyser Center for Economic Research

108 Employment 11/1973 - 3/1975 1/1980-7/1980 Fell Faster and 106 7/1981-11/1982 Longer than 7/1990-3/1991 104 in Prior 3/2001-11/2001 12/2007-6/2009 Recessions... 102 99.4 100 …and 98 Recovered More Slowly! 96 94.6 94 92 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 Source: Bureau of Labor Statistics

U.S. Economic Growth Annual % change 3.8 3.4 2.9 2.8 2.7 2.5 2.5 1.9 1.8 1.8 -0.3 -2.8 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014f 2015f Sources: Bureau of Economic Analysis, forecasts by LAEDC Kyser Center for Economic Research

Consumer Inflation YTY % change in CPI-U 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% Sources: Bureau of Economic Analysis, forecasts by LAEDC Kyser Center for Economic Research

U.S. Personal Consumption Annual percent change 7 6 5 4 3 2 1 0 -1 -2 -3 Sources: Bureau of Economic Analysis Kyser Center for Economic Research

U.S. Total New Vehicle Sales Millions of vehicles 18 16 14 12 10 2008 2009 8 2010 6 2011 4 2012 2013 2 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Federal Reserve Kyser Center for Economic Research

U.S. Investment Spending Total Investment Spending Nonresidential Fixed Investment Residential Fixed Investment % Change 20.0 15.0 10.0 5.0 0.0 -5.0 -10.0 -15.0 -20.0 -25.0 2008 2009 2010 2011 2012 2013 2014 2015 Kyser Center for Economic Research

Federal Budget Receipts and Outlays as % of GDP Receipts Outlays 26.0 24.0 22.0 20.0 18.0 16.0 14.0 12.0 10.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Office of Management and Budget Kyser Center for Economic Research

Key Interest Rates Fed Funds Fixed Rate Mort 10-Year T-Bond 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 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 Source: Federal Reserve Kyser Center for Economic Research

Global Economy  Global growth forecasts advanced economies o 2014: +3.7% o 2015: +3.9%  Growth returns to Euro-zone  Slower growth in China and emerging markets  Feedback effects throughout global economy Kyser Center for Economic Research

U.S. Economic Forecast 2011 2012 2013 2014f 2015f GDP - Annual % Chg. 1.8% 2.8% 1.9% 2.5% 2.9% Nonfarm Jobs - 1.2% 1.7% 1.7% 1.7% 1.9% Annual % Chg. Unemployment Rate 8.9% 8.1% 7.4% 6.6% 6.1% Consumer Prices - 3.2% 2.1% 1.5% 1.7% 2.1% Annual % Chg. Forecast Source: LAEDC Kyser Center for Economic Research

California Economy Kyser Center for Economic Research

California Growth Tracks U.S. US GDP CA GSP YTY % Change 3.5 4.0 2.8 2.6 3.0 2.0 1.0 0.0 -1.0 -2.0 -3.0 -4.0 -5.0 -6.0 2008 2009 2010 2011 2012 2013 2014 2015 Source: US Bureau of Economic Analysis; forecasts by LAEDC Kyser Center for Economic Research

California Unemployment Rate & Nonfarm Jobs YTY % change, nonfarm jobs Unemployment rate in % 4.0% 14.0% Dec. 2013: 14.8 million jobs, +1.6% YTY; U.S.: +1.7% YTY 2.0% 12.0% 0.0% 10.0% -2.0% 8.0% 8.3% -4.0% 6.0% Nonfarm YTY % Change -6.0% 4.0% Unemployment Rate -8.0% 2.0% 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 Source: CA EDD, Labor Market Information Division Kyser Center for Economic Research

Job Trends by California Metro Area Annual percent change in nonfarm jobs Dec. 2013: +235,700, +1.6% YTY San Jose 3.4% San Francisco 2.6% Bakersfield 2.5% Orange County 2.4% Sacramento 2.1% Ventura 2.0% San Diego 1.8% Stockton MSA 1.7% Riverside-San Bernardino 1.2% LA 1.2% Modesto 0.9% Fresno MSA 0.4% Oakland 0.2% 0% 1% 2% 3% 4% Source: CA EDD, Labor Market Information Division Kyser Center for Economic Research

California Job Changes by Industry Annual percent change in nonfarm jobs Dec. 2013: +235,700, +1.6% YTY Construction 4.8% Leisure & Hospitality 4.5% Management of Companies & Enterprises 4.0% Administrative & Support & Waste Services 3.8% Wholesale Trade 2.2% Professional, Scientific & Technical Services 1.8% Real Estate & Rental & Leasing 1.8% Transportation, Warehousing & Utilities 1.7% Health Care & Social Assistance 1.6% Retail Trade 1.4% Durable Goods 1.0% Nondurable Goods 1.0% Educational Services 0.8% Information 0.1% Finance & Insurance -0.3% -0.8% Government -2% -1% 0% 1% 2% 3% 4% 5% 6% Source: CA EDD, Labor Market Information Division Kyser Center for Economic Research

Home Sales & Median Prices California Existing, single-family homes (Sales, Thousands, SAAR) (Price, Thousands) 600 $700 $600 500 $500 400 $400 300 $300 200 $200 Home Sales 100 $100 Median Home Price 0 $0 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Source: California Association of Realtors

Residential Building Permits Issued in California Permits issued, thousands 250.0 Multi-Family Single-Family 200.0 62 54 57 150.0 56 79 100.0 45 62 139 151 155 44 108 50.0 32 32 73 20 68 25 11 51 36 33 25 25 26 22 0.0 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14f '15f Source: CIRB; CA Homebuilding Foundation; forecasts by LAEDC Kyser Center for Economic Research

California Construction Employment Dec. 2013: +28,900 jobs, +4.8% YTY 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Feb-08 May-08 Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Source: CA EDD, Labor Market Information Division Kyser Center for Economic Research

California Economic Forecast 2011 2012 2013 2014f 2015f Nonfarm Jobs - 1.2% 2.1% 1.7% 1.8% 2.1% Annual % Chg. 11.8% 10.5% 8.9% 7.9% 7.1% Unemployment Rate Personal Income - 6.6% 5.0% 2.4% 5.0% 5.2% Annual % Chg. Total Taxable Sales - 9.1% 7.8% 5.1% 5.1% 5.9% % Chg. Housing Permits - 47.0 57.5 79.7 112.7 152.1 thousands of units Forecast Source: LAEDC Kyser Center for Economic Research

L. A. County & Southern California Kyser Center for Economic Research

Local Unemployment Rates Dec. 2013 LA - 8.8% OC - 5.2% IE - 8.9% 20% 20% 18% 18% 16% 16% 14% 14% 12% 12% 10% 10% 8% 8% 6% 6% 4% 4% 2% 2% 0% 0% Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Source: CA EDD, Labor Market Information Division Kyser Center for Economic Research

Los Angeles County Nonfarm Jobs YTY % change in nonfarm jobs – Dec. 2013: +1.2% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% -7.0% -8.0% Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Source: CA EDD, Labor Market Information Division Kyser Center for Economic Research

Job Trends by Industry – Los Angeles YTY % change in nonfarm employment Dec. 2013: +46,000 jobs, +1.2% YTY Leisure & Hospitality 3.8% Administrative & Support & Waste Services 3.6% Construction 3.2% Professional, Scientific & Technical Services 2.4% Educational Services 2.0% Financial Activities 1.7% Health Care & Social Assistance 1.6% Retail Trade 0.9% Wholesale Trade 0.2% Government 0.1% Transportation, Warehousing & Utilities -0.7% Information -1.9% Manufacturing -2.4% -4% -3% -2% -1% 0% 1% 2% 3% 4% 5% Source: CA EDD, Labor Market Information Division Kyser Center for Economic Research

Job Trends by Industry Orange County YTY percent change in nonfarm employment by industry Dec. 2013: +34,500, +2.4% YTY; u-rate: 5.2% Construction 15.2% Administrative & Support & Waste Services 4.9% Wholesale Trade 4.0% Durable Goods 3.6% Leisure & Hospitality 2.8% Finance & Insurance 2.5% Professional, Scientific & Technical Services 2.5% Educational Services 1.2% Retail Trade 1.1% Information 0.8% Transportation & Warehousing 0.4% Health Care & Social Assistance 0.3% Real Estate & Rental & Leasing -0.3% Nondurable Goods -1.1% -2.7% Government -10% -5% 0% 5% 10% 15% 20% Source: CA EDD, Labor Market Information Division Kyser Center for Economic Research