2020 Southwest Regional Economic Forecast November 17 2020 Taner - PowerPoint PPT Presentation

2020 Southwest Regional Economic Forecast November 17 2020 Taner Osman, Ph.D. Manager, Regional and Sub-Regional Analysis UCR School of Business Center for Economic Forecasting and Development Founding Partner, Beacon Economics LLC UCR Center for Economic Forecasting & Development UCR Center for Economic Forecasting and Development | ucreconomicforecast.org

Outline 1. U.S. Economic Update � The slowing recovery 2. The Recovery in California � The lagging recovery 3. The Inland Empire � A relative bright spot in California 4. Southwest Region � Some encouraging signs? We’ve come a long way since April, there’s still a long way to go UCR Center for Economic Forecasting & Development

National Covid-19 Update UCR Center for Economic Forecasting & Development

COVID-19 Cases and Deaths: United States New Cases New Deaths Hospitalizations 200 3000 80 180 New Cases per Day (in thousands) 70 Total Hospitalizations (in thousands) 2500 160 60 New Deaths per Day 140 2000 120 50 100 1500 40 80 1000 30 60 40 20 500 20 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 / / / / / / / / / / / / / / / / / / / / 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 / / / / / / / / / / / / / / / / / / / / 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 / / / / / / / / / / 5 5 5 5 5 5 5 5 5 5 1 1 1 1 1 1 1 1 1 1 / / / / / / / / / / Cases 7-day MA New Deaths 7-day MA 2 3 4 5 6 7 8 9 0 1 1 1 Source: New York Times, The COVID Tracking Project UCR Center for Economic Forecasting & Development

COVID-19 Hotspots in the United States Source: New York Times UCR Center for Economic Forecasting & Development

US Labor Market Trends UCR Center for Economic Forecasting & Development

Lagging Indicators Change from US Payroll Jobs Feb-2020 Oct-2020 Share 155000 United States Emp Absolute % 150000 (000s) Total Nonfarm 142,373 -6.6 -10,090 145000 Employment (SA, 000s) Hospitality 9.4% -20.7 -3,486 140000 NR/Mining 0.4% -12.9 -92 Information 1.8% -9.1 -262 135000 Admin Support 6.0% -8.5 -797 Other Services 3.9% -7.3 -436 130000 Education/Health 16.3% -5.4 -1,326 125000 Prof/Business 14.3% -5.3 -1,149 Wholesale Trade 4.0% -5.1 -304 120000 Manufacturing 8.6% -4.8 -621 115000 Logistics 18.8% -3.9 -1,079 9 0 0 0 0 0 0 0 0 9 9 0 0 1 1 2 2 2 2 2 1 2 2 2 2 2 Construction 5.2% -3.8 -294 - - - - - - - - - - - - - t n r n l t v c b r y g p c a u c p a o e a e u u e O J O M A N D F M J J A S Retail Trade 10.7% -3.2 -499 Source: BLS UCR Center for Economic Forecasting & Development

U.S. Labor Market U.S. Nonfarm Jobs Added/Lost Unemployment Rate 10000 16.0 14.7 4,781 14.0 13.3 5000 2,725 1,7611,493672 638 214 251 Change, Thousands, SA 12.0 11.1 0 10.2 -1,373 10.0 -5000 8.4 7.9 8.0 % 6.9 -10000 6.0 4.4 -15000 3.6 3.5 4.0 -20000 2.0 -20,787 -25000 0.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 - - - - - - - - - - - - - - - - - - - - n r n l t n r n l t b r y g p b r y g p a u c a u c p p a a a e u u e a e u u e J O J O M A M A F M F M J J A S J J A S Source: BLS UCR Center for Economic Forecasting & Development

Employment Change by Income UCR Center for Economic Forecasting & Development

US Consumption and Income UCR Center for Economic Forecasting & Development

GDP & Consumption Growth Contributions Component 2019 Q1-20 Q2-20 Q3-20 Component 2019 Q1-20 Q2-20 Q3-20 GDP 2.4 -5.0 -31.4 33.1 PCE 2.5 -6.9 -33.2 40.7 Consumption 1.7 -4.8 -24.0 25.3 Health Care 0.6 -2.9 -10.9 11.9 Durable Goods 0.4 -0.9 0.0 5.2 Food/Accommodation 0.1 -2.4 -7.7 6.9 Nondurable Goods 0.4 1.0 -2.1 4.1 Other Services 0.3 -1.1 -5.0 3.0 Services 0.9 -4.8 -22.0 16.0 Motor Vehicles/Parts 0.0 -1.1 0.1 2.9 Investment -0.2 -1.6 -8.8 11.6 Transportation 0.1 -1.0 -4.0 2.8 Structures 0.1 -0.1 -1.1 -0.4 Clothing 0.1 -1.1 -1.4 2.7 Equipment -0.1 -0.9 -2.0 3.3 Other Durables 0.1 -0.3 -1.0 2.2 IPP 0.2 0.1 -0.5 0.0 Other Nondurable 0.4 1.0 0.2 2.2 Residential 0.1 0.7 -1.6 2.1 Recreational 0.4 0.2 1.2 1.7 Inventories -0.4 -1.3 -3.5 6.6 Furnishings 0.1 -0.1 -0.2 1.5 Exports 0.0 -1.1 -9.5 4.9 Gas 0.0 -0.4 -1.3 1.2 Imports 0.3 2.3 10.1 -8.0 Financial Services 0.2 -0.2 0.2 0.9 Gov. Spending 0.5 0.2 0.8 -0.7 Federal Food/Beverage 0.1 2.0 -0.4 0.4 0.3 0.1 1.2 -0.4 State & Local Housing 0.2 -0.1 0.9 0.4 0.2 0.1 -0.4 -0.3 Source: BEA UCR Center for Economic Forecasting & Development

Source: BEA $, Billions, SAAR 10,000 11,000 12,000 13,000 14,000 PCE 8,000 9,000 2015-01-01 2015-05-01 2015-09-01 2016-01-01 2016-05-01 2016-09-01 Real PCE 2017-01-01 2017-05-01 2017-09-01 2018-01-01 2018-05-01 2018-09-01 2019-01-01 2019-05-01 2019-09-01 2020-01-01 2020-05-01 2020-09-01 Indexed at Jan-20 = 100 100 105 110 115 75 80 85 90 95 J a n - 2 UCR Center for Economic Forecasting & Development 0 F e Nondurable Goods Total PCE b - 2 0 Real Consumer Spending M a r - 2 0 A p r - 2 0 M a y - 2 0 Services Durable Goods J u n - 2 0 J u l - 2 0 A u g - 2 0 S e p - 2 0

US Real Estate UCR Center for Economic Forecasting & Development

Housing U.S. Existing Home Sales Case-Shiller Home Price Index 7,000 325 6,500 Indexed at Jan-2000 = 100 275 6,000 5,500 225 Units, SAAR 5,000 175 4,500 125 4,000 75 3,500 Mar-01 Mar-08 Mar-15 Jan-00 May-02 Jul-03 Sep-04 Nov-05 Jan-07 May-09 Jul-10 Sep-11 Nov-12 Jan-14 May-16 Jul-17 Sep-18 Nov-19 3,000 Oct-19 Jan-20 Feb-20 Mar-20 May-20 Jun-20 Aug-19 Sep-19 Nov-19 Dec-19 Apr-20 Jul-20 Aug-20 Sep-20 National San Francisco Los Angeles New York Pheonix Source: National Association of Realtors, S&P Down Jones Indices UCR Center for Economic Forecasting & Development

U.S. Outlook UCR Center for Economic Forecasting & Development

§ All roads lead to the Coronavirus � This was not a structural recession � Recovery has been fueled by Congress � Will Congress act again? § Significant damage has been sustained to the labor market � If we continue adding jobs at the October rate, we will not return to February 2020 employment levels until 2022 � Full recovery is not expected until 2023 § There is positive news! � Vaccine news encouraging � Economic damage not due to structural problems � At present we would be able to return to “normalcy” quickly UCR Center for Economic Forecasting & Development

California Covid-19 Update UCR Center for Economic Forecasting & Development

COVID-19 Cases and Deaths: California New Cases New Deaths Hospitalizations 14000 250 10000 9000 12000 200 8000 Total Hospitalizations per day New Deaths per Day 10000 New Cases per Day 7000 150 8000 6000 5000 6000 100 4000 4000 3000 50 2000 2000 1000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 / / / / / / / / / / / / / / / / / / / / 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 / / / / / / / / / / / / / / / / / / / / 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 1 1 1 1 0 0 0 0 0 0 0 2 2 2 2 2 2 2 / / / / / / / 1 9 6 4 1 8 5 / / 1 2 3 / 1 4 5 0 / / / / New Cases 7-day MA New Deaths 7-day MA 6 7 8 1 1 1 Source: Los Angeles Times UCR Center for Economic Forecasting & Development

COVID-19 Hotspots in California Source: New York Times UCR Center for Economic Forecasting & Development

Labor Market UCR Center for Economic Forecasting & Development

California Job Performance Change from California Payroll Jobs Feb-2020 Sep-2020 California 18000 Share Emp Absolute % (000s) 17500 Total Nonfarm 15,982 -9.2 -1,622 17000 Employment (SA, 000s) 9.1% -29.2 -601 Hospitality 16500 Other Services 2.9% -20.3 -118 Information 3.2% -12.3 -73 16000 6.5% -8.6 -98 Admin Support 15500 Retail Trade 9.6% -7.2 -119 7.6% -7.2 -95 Manufacturing 15000 NR/Mining 0.1% -6.2 -1 14500 18.0% -6.1 -188 Logistics Construction 5.3% -6.1 -55 14000 Education/Health 16.8% -5.9 -169 13500 16.2% -5.6 -154 Prof/Business 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 - - - - - - - - - Wholesale Trade 4.1% -5.4 -37 n r n l b r y g p a u p a a e u u e J M A F M J J A S 5.2% -1.6 -13 Finance UCR Center for Economic Forecasting & Development