2018 Midyear Economic Forecast DRAGAS CENTER FOR ECONOMIC ANALYSIS - PowerPoint PPT Presentation

2018 Midyear Economic Forecast DRAGAS CENTER FOR ECONOMIC ANALYSIS AND POLICY

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The forecasts and commentary do not constitute an official viewpoint of Old Dominion University, its President, John R. Broderick, the Board of Visitors, the Strome College of Business, or the generous donors who support the activities of the Dragas Center for Economic Analysis and Policy. The data in this presentation are subject to revision. To our knowledge, all data in this presentation are accurate at the time of the presentation.

Current and Historical Expansions Expansion Duration Annual Annual In months Employment Real GDP Growth Growth October 1949 – July 1953 45 4.35% 6.14% May 1954 – August 1957 39 2.51% 3.67% April 1958 – April 1960 24 3.58% 4.86% February 1961 – December 1969 106 3.23% 4.68% November 1970 – November 1973 36 3.38% 4.60% March 1975 – January 1980 58 3.51% 4.01% December 1982 – July 1990 91 2.81% 3.81% March 1991 – March 2001 120 2.01% 3.45% November 2001 – December 2007 73 0.88% 2.66% June 2009 – Present* 106 1.41% 2.16% Source: Bureau of Labor Statistics, Bureau of Economic Analysis, National Bureau of Economic Research, and Old Dominion University Economic Forecasting Project. Real GDP in chained 2009 dollars. 4 CAGR = Compound Annual Growth Rate. Annual Real GDP CAGR derived from quarterly series. Annual employment CAGR derived from monthly series. Current expansion data ends in 2018 Q1 for GDP and March 2018 for Employment. Average annual Real GDP CAGR of previous expansions = 4.21% while average annual employment CAGR from previous expansions = 2.92%. Next update is May 30 th , 2018.

Growth in Real Gross Domestic Product United States and Virginia, 2010 - 2018 Q1 4.0% 3.7% 3.1% 3.5% 2.9% 3.0% 3.2% 2.3% 2.5% 2.5% 2.0% 2.8% 1.2% 2.2% 1.5% 1.0% 0.5% 0.8% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2017 2017 2017 2018 Q1 Q2 Q3 Q4 Q1 United States Real GDP Virginia Real GDP 5 Source: Bureau of Economic Analysis and Old Dominion University Economic Forecasting Project. Real GDP measured in chained 2009 dollars. U.S. 2018 Q1 and Virginia 2017 Q4 are advance estimates. VA 2018 Q1 is our forecast. Quarterly numbers are annualized rates of growth. Next update: US (May 30, 2018) and Virginia (July 24, 2018).

Total Nonfarm Employment United States, January 2007 – April 2018 148,424 150,000 + 18.70 Million Jobs 145,000 Thousands of Jobs 140,000 135,000 129,726 130,000 125,000 120,000 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 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 6 Source: Bureau of Economic Analysis and Old Dominion University Economic Forecasting Project. Seasonally adjusted data. Data for March and April 2018 are preliminary. Trough was February 2010. Next update: June 1, 2018

Total Nonfarm Employment Virginia, January 2007 – March 2018 4,100 3,987 + 391,100 Jobs 4,000 Thousands of Jobs 3,900 3,800 3,596 3,700 3,600 3,500 3,400 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 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 7 Source: Bureau of Economic Analysis and Old Dominion University Economic Forecasting Project. Seasonally adjusted data. Data for March 2018 are preliminary. Trough was February 2010. Next update: May 18, 2018

Recovery from the Great Recession Measured in Total Jobs Restored, 2008-2018* 7.23% 8% 6% 4% 5.24% 2% 0% -2% -4% -6% -8% 1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97 101 105 109 113 117 121 United States Virginia 8 Source: Bureau of Labor Statistics and Old Dominion University Economic Forecasting Project. Peak Pre-Recession Dates are January 2008 (United States) and April 2008 (Virginia). *Data for USA through April 2018, Virginia through March 2018. US data preliminary for March and April 2018. Virginia data preliminary for March 2018. Data from Current Employment Statistics. Seasonally adjusted data.

Recovery from the Great Recession Measured in Individual Employment, 2007-2018* 8% 4.94% 6% 4% 5.86% 2% 0% -2% -4% -6% -8% 1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97 101 105 109 113 117 121 125 United States Virginia 9 Source: Bureau of Labor Statistics and Old Dominion University Economic Forecasting Project. Peak Pre-Recession Dates are November 2007 (United States) and July 2008 (Virginia). *Data for USA through April 2018, Virginia through March 2018. US data preliminary for March and April 2018. Virginia data preliminary for March 2018. Current Population Survey data. Seasonally adjusted data.

Headline Unemployment Rate (U3) Virginia and United States, 2007 – 2018 12% 10% 8% 4.6% 6% 3.9% 4% 3.4% 2% 2.9% 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 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Virginia United States 10 Source: Bureau of Labor Statistics and Old Dominion University Economic Forecasting Project. Seasonally adjusted unemployment rates. Virginia data through March 2018 while US data through April 2018. Next update: US: June 1, 2018 and Virginia: May 18, 2018

Alternative Measure of the Unemployment Rate (U6) Virginia and the United States, 2003 – 1 st Quarter 2018 16.7% 18% 16% 14% 12% 10.1% 8.3% 12.9% 8.2% 10% 8% 6% 7.6% 6.8% 6.0% 4% 2% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 United States Virginia 11 Source: Bureau of Labor Statistics and Old Dominion University Economic Forecasting Project. U-6 measures total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers. State level data based on 4-quarter moving average. Annual averages are presented. Next update: July 27, 2018.

Number of Unemployed Individuals per Job Opening United States, January 2001 to March 2018 7 6.65 6 Unemployed/Job Openings 5 4 3 1.12 2 1.01 1 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 12 Source: Bureau of Labor Statistics and Old Dominion University Economic Forecasting Project. Seasonally adjusted data. Next update: June 5, 2018.

Corporate Profits as Percent of GDP United States, 1 st Quarter 1950 – 4 th Quarter 2017 12% 8.51% 10% 8% 6.52% 6% 4% 2% 0% 1950 1952 1954 1957 1959 1962 1964 1966 1969 1971 1974 1976 1979 1981 1983 1986 1988 1991 1993 1995 1998 2000 2003 2005 2008 2010 2012 2015 2017 13 Source: Bureau of Economic Analysis and Old Dominion University Economic Forecasting Project. Corporate Profits After Tax Without Inventory Adjustment

Cyclically Adjusted Price/Earnings Ratio Standard and Poor’s Composite Price Index January 1881 – May 2018* 50 44.2 45 40 31.3 32.6 35 30 25 20 15 16.9 10 5 0 1881 1884 1888 1892 1896 1900 1904 1907 1911 1915 1919 1923 1927 1930 1934 1938 1942 1946 1950 1953 1957 1961 1965 1969 1973 1976 1980 1984 1988 1992 1996 1999 2003 2007 2011 2015 14 Source: Robert Schiller, Irrational Exuberance . Prices and earnings are in January 2000 dollars. Data as May 1, 2018 market close. For further information: http://www.econ.yale.edu/~shiller/data.htm

S&P Case-Shiller Home Price Index United States, January 1987 – February 2018 250 197.01 184.55 200 150 100 50 0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 2014 2015 2016 2017 15 Source: S&P Dow Jones Indices, LLC. Seasonally adjusted series. January 2000 = 100.

Case-Shiller Home Price Index Change from Pre-Recession Peak to February 2018 60% 48.1% 50% 40% 30% 20% 6.7% 10% 0% -10% -20% -11.9% -30% 16 Source: S&P Dow Jones Indices, LLC. Seasonally adjusted series. January 2000 = 100.

New Residential Construction Single Unit and Units in Buildings with 5 Units or More United States, January 2000 – March 2018 160 129.88 140 January 2000 = 100 120 100 80 60 68.38 40 20 0 Single Unit Housing 5 or More Units 17 Source: U.S. Bureau of the Census and Old Dominion University Economic Forecasting Project. Seasonally adjusted data. Annual rate. Next update: May 16, 2018. January 2000 = 100.

Cash Out Refinance Activity United States, 1st Quarter 1994 – 1st Quarter 2018 100% 89% 90% 80% 68% 70% 60% 50% 40% 30% 12% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 18 Source: Freddie Mac, Quarterly Refinance Statistics, 1 st Quarter 2018. Percentage of refinances refers to loan amounts that were at least 5 percent higher than the amortized unpaid principal balance of the original loan.

Federal Spending Provides a Short- Term Boost