Economic Indicators to Watch The Disturbing Economic Tea Leaves Financial Advisors of Delaware Valley Philadelphia, PA Monday, April 1, 2013 Richard Yamarone Bloomberg Economic BRIEF Author of “The Trader’s Guide to Key Economic Indicators” Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737 Twitter: @Yamarone
The Stock Market and the Economy...Two Different Things Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Economy Isn’t Advancing Fast Enough to Engender Job Creation Nonfarm Payrolls vs. Real GDP Payrolls ('000) GDP YOY% 1200 6 5 800 4 400 3 2 0 1 -400 0 -1 -800 -2 -1200 -3 -4 -1600 NFP (lhs) GDP (rhs) -5 -2000 -6 -2400 -7 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 NFP T <Index>, GDP CYOY <Index> Source: BEA, BLS Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Economy Operating Well Below its Potential Real GDP (Blns) vs. Real Potential GDP (Blns) $14,500 $13,500 $12,500 $11,500 Potential GDP $10,500 Real GDP $9,500 $8,500 $7,500 $6,500 CBOPGDPR <Index>, GDP CHWG <Index> $5,500 1980 1985 1990 1995 2000 2005 2010 2015 Source: BEA, CBO, Bloomberg Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Employment To Be a Slow Train Coming Nonfarm Payroll Creation From Onset of Recession 102 100 98 '73 - '75 1980 96 '81 - '82 94 '90 - '91 92 2001 '07 - current 90 1 5 9 13 17 21 25 29 33 37 41 45 49 53 Source: BLS, NBER, Bloomberg Months Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Employment To Be a Slow Train Coming -- II peak-to-trough % jobs lost Recession Date (months) total jobs lost (millions) months to job restoration peak-to-trough Period 1 1948-49 11 2.34 22 5.17 1953-54 10 1.71 23 3.33 1957-58 8 2.22 20 4.17 1960-61 10 1.19 20 2.16 1969-70 11 1.04 18 1.46 1973-75 16 2.17 19 2.70 1980 6 1.16 10 1.20 1981-82 16 2.84 28 3.09 AVG: 11 1.83 20 2.91 Period 2 1990-91 8 1.62 32 1.40 2001 8 2.71 48 2.04 AVG: 8 2.16 40 1.72 Period 3 2007-09 (current) 18 8.31 ? 6.03 Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Recession Decimated Many Industries Jobs Created 2 Years Prior to Great Recession Trough*, in thousands Government 43 Others Services -215 Leisure/Hospitality -633 Healthcare 630 Education 120 Professional -1,469 Financial -548 Information -286 Utilities -1 Transportation -408 Retail Trade -1,135 Wholesale Trade -582 Manufacturing -2,233 Mining & Logging -73 Construction -1,906 -2,500 -2,000 -1,500 -1,000 -500 0 500 1,000 Source: BLS *February 2010 Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Hiring not Exactly Brisk Jobs Created Since Great Recession Trough*, in thousands Government -606 Others Services Leisure/Hospitality 163 982 Healthcare 901 Education 240 Temporary 584 Professional 1,595 Financial 113 Information -43 Utilities 2 Transportation 344 Retail Trade 645 Wholesale Trade 284 Manufacturing 490 Mining & Logging 188 Construction 209 -800 -600 -400 -200 0 200 400 600 800 1,000 1,200 1,400 1,600 Source: BLS *February 2010 Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
If GDP Dips to 2.0% -- It’s Recession Time Real GDP (Y/Y %) 14 12 10 8 6 4 2 0 -2 -4 -6 1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 GDP CYOY <Index> Source: NBER, BEA, Bloomberg Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Railcar Loads Are Plunging Real GDP (Y/Y%) vs. Railcar Loads of Waste/Scrap (Y/Y%) 40 8.00 30 6.00 20 4.00 10 2.00 0 -10 0.00 -20 -2.00 -30 Railcar Loads (lhs) GDP (rhs) -4.00 -40 RAILWAST <Index> -50 -6.00 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Source: Association of American Railroads, BEA, Bloomberg Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Manufacturing Gains Still Not Generating Jobs Industrial Production Index, Manufacturing Jobs ('000) 20,000 105 100 18,000 95 16,000 90 14,000 85 12,000 80 10,000 75 MFG Jobs (lhs) IP (rhs) 8,000 70 1995 2000 2005 2010 Source: Federal Reserve, BLS USMMMANU <Index>, IP <Index> Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
It’s 1941 For Manufacturing U.S. Manufacturing Employment (in thousands) 20,000 19,000 18,000 17,000 16,000 15,000 14,000 13,000 12,000 11,000 10,000 1940 1950 1960 1970 1980 1990 2000 2010 Source: Bureau of Labor Statistics USMMMANU <Index> Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Housing Starts, the Most Interest Rate Sensitive Sector of the Economy Housing Starts ('000) 1050 950 850 750 650 550 450 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 NHSPSTOT <Index> Source: Dept. of Commerce Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Still a Way to go for Housing Recovery Housing Starts ('000) 2,700 2,200 1,700 1,200 700 200 Jan-59 Jan-67 Jan-75 Jan-83 Jan-91 Jan-99 Jan-07 NHSPSTOT <Index> Source: Dept. of Commerce Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Won’t Get Any Jobs from Housing Residential Construction Spending ($ mls) Construction Employment (thousands) 700,000 8,000 7,500 Spending (lhs) Employment (rhs) 600,000 7,000 500,000 6,500 400,000 6,000 300,000 5,500 200,000 5,000 100,000 4,500 Source: U.S. Department of Commerce, Bureau of Labor Statistics, Bloomberg 0 4,000 1993 1997 2001 2005 2009 2013 USECTOT <Index>, CNSTRESI <Index> Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
This is what the Fed is Trying to Revive? Residential Investment as a Percent of GDP (%) 8 7 6 5 4 3 2 1947 1954 1961 1968 1975 1982 1989 1996 2003 2010 Source: BEA PFIVRESI <Index>, GDP CUR$ <Index> Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Sideways Movements in Housing Mortgage Bankers Association's Purchase Applications Index 550 500 450 400 350 300 250 200 150 100 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Mortgage Bankers Association MBAVPRCH <Index> Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Home Prices Have Little Improvement in Post Crisis S&P-Case-Shiller Home Price Index PHXR-SA LXXR-SA 300 SDXR-SA SFXR-SA DNXR-SA 250 WDXR-SA MIXR-SA TPXR-SA 200 ATXR-SA CHXR-SA BOXR-SA DEXR-SA 150 MNXR-SA CRXR-SA LVXR-SA 100 NYXR-SA CEXR-SA Source: S&P/Case-Shiller POXR-SA 50 DAXR-SA 2000 2002 2004 2006 2008 2010 2012 SEXR-SA Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Commercial Construction Slump Total U.S. Commercial Construction Spending ($ mlns) $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 1993 1996 1999 2002 2005 2008 2011 Source: U.S. Census Bureau CNSTCOMM <Index> Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Retailers Headed Out of the Malls Regional & Strip Mall Vacancies 12.0% 11.0% 10.0% Strip Mall Regional & Superregional Malls 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 2000 2003 2006 2009 2012 Source: Reis Inc. Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
State & Local Governments May be a Ticking Time Bomb State & Local Government Employment (in thousands) 14,800 5,250 5,200 14,600 5,150 14,400 5,100 14,200 5,050 14,000 5,000 13,800 4,950 13,600 4,900 Local (lhs) 13,400 4,850 State (rhs) 13,200 4,800 13,000 4,750 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: BLS USEGSTSA <Index>, USEGLCSA <Index> Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
Earnings/Analyst Conference Calls
Bloomberg Orange Book Summary of Commentary on ____________________ Current Economic Conditions By Corporation NI ORANGEBOOK <GO> from earning statements commencing July 1, 2010 Richard Yamarone, ryamarone@bloomberg.net, TEL: 212-617-8737
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