rupert report peter rupert professor department of economics, ucsb - PowerPoint PPT Presentation

rupert report peter rupert professor department of economics, ucsb director, ucsb economic forecast project league of california cities december 13, 2017

what we don’t know solving issues without knowing what the issue is problem is that most people are, well, ignorant

issues at hand noticeable changes since the election? international trade immigration health care tax reform ...but keep this in mind

Real GDP Log Real Per Capita GDP, 2009$, Seasonally Adjusted 11.0 10.5 10.0 9.5 Linear Trend 1947 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2017 Econsnapshot.com Source: BEA

...but we can go back even farther economic growth long history of increasing output

Log Real GDP (U.S.) 10.0 9.5 9.0 8.5 8.0 7.5 1800 1830 1860 1890 1920 1950 1980 2010 Source: Maddison Project

...and farther how far you ask?

how are we doing more recently? what does the market think? gdp and economic growth?? why so slow? labor markets continue to expand

the stock market

SP500 2500 2000 1500 1000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

SP500 Election 2600 2400 2200 2000 1800 Jan 01 Apr 01 Jul 01 Oct 03 Jan 02 Apr 03 Jul 03 Oct 02 2016 2016 2016 2016 2017 2017 2017 2017

SP 500 My Birthday 2600 2400 2200 2000 1800 Jan 01 Apr 01 Jul 01 Oct 03 Jan 02 Apr 03 Jul 03 Oct 02 2016 2016 2016 2016 2017 2017 2017 2017

gross domestic product = income

Real GDP 6 5.2% quarterly change at an annual rate year−over−year change 4.6% 4% 4 3.3% 3.2% 3.1% 3.1% 2.8% 2.7% 2.8% Percent 2.2% 2% 2 1.8% 1.6% 1.2% 0.8% 0.5% 0.6% 0 −0.9% −2 2013 2014 2015 2016 2017 Econsnapshot.com Source: BEA

Real GDP Trough during recession = 1 1960 cycle 1.4 1969 cycle 1973 cycle 1981 cycle 1990 cycle 1.3 2001 cycle Current cycle 1.2 1.1 1.0 0 5 10 15 20 25 30 35 Quarters after trough Source: BEA

GDP Growth During an Expansion Average, annualized rate of change 8 6 5.71 5.35 4.88 4.44 4.18 3.91 4 3.82 3.5 2.74 2.12 2 0 1949 Q1 1954 Q2 1958 Q2 1961 Q1 1970 Q4 1975 Q1 1982 Q4 1991 Q1 2001 Q4 2009 Q2 Trough Date Econsnapshot.com Source: BEA

so, why so slow? new research

so, why so slow? new research leisure on the job has gone up!

so, why so slow? new research leisure on the job has gone up! technology: makes you more productive but also easier to take leisure on the job!

labor market

Net Payroll Employment Change Thousands, SA first estimate 400 second estimate final 300 ● ● ● ● ● ● ● ● ● ● ● 200 ● ● ● ● ● ● ● ● ● ● 100 ● ● ● 0 ● −100 N D J F M A M J J A S O N econsnapshot.com Source: BLS

Employment to Population Ratio Percent, SA 63 62 61 60 59 58 2006 2007 2009 2010 2012 2013 2015 2016 econsnapshot.com Source: BLS

Labor Force Participation Rate Percent, SA 67 66 65 64 63 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 econsnapshot.com Source: BLS

Labor Force Participation Rates Percent, SA 80 Men 70 Women 60 50 16−19 40 55+ 30 1948 1955 1965 1975 1985 1995 2005 2015 econsnapshot.com Source: BLS

seasonality employment and unemployment look at employment composition farm information leisure and hospitality

Total Employment, All Industries, Santa Barbara County Number Employed (Thousands) 210 Original Series Seasonally Adjusted 200 190 180 2006 2007 2009 2010 2012 2013 2015 2016 Most Recent (Unadjusted) = 209,000 Most Recent (Adjusted) = 206,498 Percent Change (Month) = 0.74 % and Percent Change (Year) = 1.85 %

Total Employment, All Industries, Santa Clara County Number Employed (Thousands) 1100 Original Series Seasonally Adjusted 1050 1000 950 900 850 2006 2007 2009 2010 2012 2013 2015 2016 Most Recent (Unadjusted) = 1,104,900 Most Recent (Adjusted) = 1,098,746 Percent Change (Month) = 0.21 % and Percent Change (Year) = 1.43 %

housing

Zillow Home Value Index (ZHVI) Index (100 = Pre−Recession Maximum Value) US [ $ 203,400 ] Arizona [ $ 228,400 ] 140 California [ $ 512,800 ] Colorado [ $ 340,000 ] Hawaii [ $ 606,100 ] Nevada [ $ 250,100 ] Oregon [ $ 312,500 ] Washington [ $ 344,300 ] 120 100 80 60 40 2000−Jan 2002−Jan 2004−Jan 2006−Jan 2008−Jan 2010−Jan 2012−Jan 2014−Jan 2016−Jan Source: Zillow Research Data www.efp.ucsb.edu Note: Current value in brackets.

Zillow Home Value Index, by MSA Index (100 = Pre−Recession Max Value) San Francisco, CA[ $871,300 ] 120 Los Angeles, CA[ $615,800 ] San Diego, CA[ $555,800 ] Santa Barbara, CA[ $580,200 ] Sacramento, CA[ $376,900 ] Riverside, CA[ $335,200 ] California [ $512,800 ] 100 80 60 40 1996−Apr 1999−Jan 2002−Jan 2005−Jan 2008−Jan 2011−Jan 2014−Jan 2017−Jan Source: Zillow Research Data www.efp.ucsb.edu Note: Current value in brackets.

analyzing policy changes

a simple framework law of demand make something more expensive, people will do less of it buy less of it substitute away from it

speaking of taxes...

federal, state and local taxes not enough time to talk about tax reform but how about gasoline tax policy? Nov. 1, 2017 state gas tax up 12 ¢ to 41 ¢ per gallon state diesel fuel tax up 20 ¢ to 36 ¢ per gallon

100,000 150,000 200,000 50,000 0 Miles of Road 4% Georgia 8% Tennessee 8% Indiana 10% Utah 11% Oregon 38% New Jersey 50% California 54% Rhode Island Good Roads Bad Roads 57% Connecticut 95% Washington D.C

$1,000 $250 $500 $750 $0 Road Cost Per Year Per Motorist Georgia Tennessee Indiana Utah Oregon New Jersey California Rhode Island Connecticut Washington D.C

fed stuff fed met yesterday and today sounded like a snooze-fest so what did they do/say?

fed stuff fed met yesterday and today sounded like a snooze-fest so what did they do/say? Answer: up 25bp/nothing

the policy statement “Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Averaging through hurricane-related fluctuations, job gains have been solid, and the unemployment rate declined further. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters.”

the future and the fed fed stuff reading level for fed statements

FOMC Statements: Reading Grade Level and Length Flesch-Kincaid Reading Grade Level 25 23 Chair Number of Words Greenspan 21 600 Bernanke 100 Yellen 19 17 15 13 11 December 16, 2008 9 Beginning of Unconventional Monetary Policy 7 5 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Statement Release Date NOTE: Reading grade-level calculated by ETS TextEvaluator SM ; https://texteval-pilot.ets.org/TextEvaluator/. SOURCE: FOMC post-meeting statements: Board of Governors of the Federal Reserve System; http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm and http://www.federalreserve.gov/monetarypolicy/fomc_historical.htm.

final thoughts economy continues its solid growth

final thoughts economy continues its solid growth will there be a recession?

final thoughts economy continues its solid growth will there be a recession? yes

Thank You