By: Anirban Basu Sage Policy Group, Inc. October 19 th, 2015 The Pit and the Pendulum On Behalf of Virginia Association of Community Banks.

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Presentation transcript:

By: Anirban Basu Sage Policy Group, Inc. October 19 th, 2015 The Pit and the Pendulum On Behalf of Virginia Association of Community Banks

Dawn of the Dead

Estimated Growth in Output by Select Global Areas 2015 Projected* *Real GDP. Notes: 1. Data for Lithuania are included in the euro area aggregates but were excluded in the April 2015 World Economic Outlook. Source: International Monetary Fund, October 2015 WEO Database

What Lies Beneath Source: BEA, BLS, S&P Case-Shiller, Yahoo! Finance *Through July 2015

Source: U.S. Bureau of Labor Statistics Median Weekly Earnings, Full-Time U.S. Workers* 2000Q1 through 2015Q2 *SA, Constant dollars (adjusted to CPI-U) Wage and salary workers ages 16+

Source: Bureau of Labor Statistics Employment Cost Index 12-Month Percent Change (NSA) All Civilian workers, all industries, NSA

Source: Moody’s Economy Recession Watch as of July 2015

Gross Domestic Product 1990Q2 through 2015Q2* Source: Bureau of Economic Analysis *Final Estimate

Contributions to GDP Growth by Component 2014Q2 – 2015Q2* Source: Bureau of Economic Analysis *Final Estimate

Invasion of the Body Snatchers

Source: U.S. Bureau of Labor Statistics September 2015: +142K Net Change in U.S. Jobs, BLS January 2002 through September 2015

National Nonfarm Employment by Industry Sector September 2014 v. September 2015 All told 2,752K Jobs gained Source: U.S. Bureau of Labor Statistics

Virginia Nonfarm Employment by Industry Sector Groups (SA) August 2014 v. August 2015 Absolute Change VA Total: +41.1K; +1.1% US Total (SA): +2,860K; +2.1% *According to the Local Area Unemployment Statistics (LAUS) series VA gained 18,140 jobs between August 2014 and August Source: U.S. Bureau of Labor Statistics

Northern VA Nonfarm Employment by Industry Sector Groups (NSA) August 2014 v. August 2015 Absolute Change Source: U.S. Bureau of Labor Statistics Northern VA Total (NSA): +31.4K; +2.3% DC MSA Total (NSA): +41.1K; +1.1% US Total (SA): +2,860K; +2.1%

Richmond Nonfarm Employment by Industry Sector Groups (NSA) August 2014 v. August 2015 Absolute Change Richmond Total: -1.1K; -0.2% VA Total: +41.1K; +1.1% US Total (SA): +2,860K; +2.1% Source: U.S. Bureau of Labor Statistics

Virginia Beach-Norfolk-Newport News, VA-NC Nonfarm Employment by Industry Sector Groups (NSA) August 2014 v. August 2015 Absolute Change Virginia Beach Total: +5.0K; +0.7% VA Total: +41.1K; +1.1% US Total (SA): +2,860K; +2.1% Source: U.S. Bureau of Labor Statistics

U.S. Year-over-year Percent Change: Aug: 2.1% Sept: 2.0% Employment Growth, U.S. States (SA) August 2014 v. August 2015 Percent Change R ANK S TATE %R ANK S TATE %R ANK S TATE % 1UTAH4.014MARYLAND2.034MISSOURI1.1 2OREGON3.519COLORADO1.934OHIO1.1 3FLORIDA3.319DISTRICT OF COLUMBIA1.934VIRGINIA1.1 3NEVADA3.319TENNESSEE1.938MISSISSIPPI1.0 5WASHINGTON3.219TEXAS1.938PENNSYLVANIA1.0 6CALIFORNIA3.023KENTUCKY1.840NEBRASKA0.9 6SOUTH CAROLINA3.024IOWA1.740NEW JERSEY0.9 8IDAHO2.924NEW HAMPSHIRE1.742MONTANA0.8 9MASSACHUSETTS2.624WISCONSIN1.743ILLINOIS0.7 9NORTH CAROLINA2.627SOUTH DAKOTA1.544LOUISIANA0.4 11INDIANA2.528ALABAMA1.445NEW MEXICO0.3 12ARKANSAS2.328NEW YORK1.445OKLAHOMA0.3 13MICHIGAN2.228VERMONT1.447KANSAS0.1 14ARIZONA2.031DELAWARE1.347WYOMING0.1 14CONNECTICUT2.032MINNESOTA1.249ALASKA GEORGIA2.032RHODE ISLAND1.250NORTH DAKOTA HAWAII2.034MAINE1.151WEST VIRGINIA-2.6 Source: U.S. Bureau of Labor Statistics

U.S. Unemployment Rate (Aug & Sept): 5.1% Unemployment Rates, U.S. States (SA) August 2015 Source: U.S. Bureau of Labor Statistics R ANK S TATE %R ANK S TATE %R ANK S TATE % 1NEBRASKA2.818INDIANA4.633RHODE ISLAND5.6 2NORTH DAKOTA2.918KANSAS4.636NEW JERSEY5.7 3HAWAII3.518OKLAHOMA4.636TENNESSEE5.7 4NEW HAMPSHIRE3.621MASSACHUSETTS4.738GEORGIA5.9 4VERMONT3.621OHIO4.738NORTH CAROLINA5.9 6IOWA3.723DELAWARE4.940LOUISIANA6.0 6SOUTH DAKOTA3.724MARYLAND5.140SOUTH CAROLINA6.0 6UTAH3.724MICHIGAN5.142CALIFORNIA6.1 9MINNESOTA4.026KENTUCKY5.242OREGON6.1 9WYOMING4.026NEW YORK5.244ALABAMA6.2 11MONTANA4.128CONNECTICUT5.345ARIZONA6.3 11TEXAS4.128FLORIDA5.345MISSISSIPPI6.3 13COLORADO4.228WASHINGTON5.347ALASKA6.6 13IDAHO4.231ARKANSAS5.448NEW MEXICO6.7 15MAINE4.531PENNSYLVANIA5.449DISTRICT OF COLUMBIA6.8 15VIRGINIA4.533ILLINOIS5.649NEVADA6.8 15WISCONSIN4.533MISSOURI5.651WEST VIRGINIA7.6

Unemployment Rates, 20 Largest Metros (NSA) August 2015 Source: U.S. Bureau of Labor Statistics RankMSAUR RankMSAUR 1 Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area Tampa-St. Petersburg-Clearwater, FL Metropolitan Statistical Area Dallas-Fort Worth-Arlington, TX Metropolitan Statistical Area Baltimore-Columbia-Towson, MD Metropolitan Statistical Area Boston-Cambridge-Nashua, MA-NH Metropolitan NECTA Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area Seattle-Tacoma-Bellevue, WA Metropolitan Statistical Area Atlanta-Sandy Springs-Roswell, GA Metropolitan Statistical Area San Francisco-Oakland-Hayward, CA Metropolitan Statistical Area Miami-Fort Lauderdale-West Palm Beach, FL Metropolitan Statistical Area Washington-Arlington-Alexandria, DC-VA-MD- WV Metropolitan Statistical Area Philadelphia-Camden-Wilmington, PA-NJ- DE-MD Metropolitan Statistical Area Houston-The Woodlands-Sugar Land, TX Metropolitan Statistical Area Phoenix-Mesa-Scottsdale, AZ Metropolitan Statistical Area New York-Newark-Jersey City, NY-NJ-PA Metropolitan Statistical Area Detroit-Warren-Dearborn, MI Metropolitan Statistical Area San Diego-Carlsbad, CA Metropolitan Statistical Area Los Angeles-Long Beach-Anaheim, CA Metropolitan Statistical Area St. Louis, MO-IL Metropolitan Statistical Area (1) Riverside-San Bernardino-Ontario, CA Metropolitan Statistical Area Area boundaries do not reflect official OMB definitions.

Nightmare on Elm Street

15-Year & 30-Year Fixed Mortgage Rates October 1995 through October 2015* Source: Freddie Mac *Week ending 10/15/2015

U.S. New Home Sales January 1999 through August 2015 Source: U.S. Census Bureau

U.S. Housing Starts August 1999 through August 2015 Source: U.S. Census Bureau

U.S. Homeownership

Source: U.S. Census Bureau U.S. Private New Multifamily Construction August 1993 through August 2015

U.S. Housing Building Permits August 1999 through August 2015 Source: U.S. Census Bureau August 2015: 1 Unit: 699K 5 Units or more: 440K

S&P/Case-Shiller Home Price Indices for Select Metros July 2015, 12-Month Percentage Change Source: Standard & Poor’s

Psycho

Source: Bureau of Labor Statistics Treasury Bond Yield Curve All Civilian workers, all industries, NSA

Sales Growth by Type of Business September 2014 v. September 2015* Source: U.S. Census Bureau *September 2015 advanced estimate

National Vehicle Sales January 2004 through September 2015 (SAAR) Source: Autodata Corp. September 2015: 18.2M

Conference Board Leading Economic Indicators Index August 2007 through August 2015 Source: Conference Board

Tell-Tale Heart We are now in the mid-cycle stage of recovery – please enjoy it; It’s all about interest rates – the four segments driving the U.S. economy presently are 1) consumer spending; 2) auto sales and production; 3) residential construction & 4) nonresidential construction – all are interest rate sensitive; The Federal Reserve has successfully managed to put itself in a no win situation – only imperfect policies to choose from; The world is not perfect - black swan threats remain: (1) Iran (2) Israel/Iran (3) Europe (4) contagion (5) cyber (6) EMP; Market is nervous, but perhaps for the wrong reasons; and More people benefit from lower oil prices than are hurt – more contractors and developers are helped than hurt – frankly, low oil prices just don’t make me that nervous (but something else does!)

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