1. A presentation by Bert Ely June 9, 2016
The U.S. Economic Outlook in a highly contentious election year Sigma Chi Fraternity Washington alumni chapter
A presentation by
Bert Ely
June 9, 2016

2. Where the U.S. has been economically
The U.S. economy has experienced slowing growth in recent quarters – Chart 1

3. #1

4. Where the U.S. has been economically
The U.S. economy has experienced slowing growth in recent quarters – Chart 1
The decline in energy prices has been a mixed blessing

5. Where the U.S. has been economically
The U.S. economy has experienced slowing growth in recent quarters – Chart 1
The decline in energy prices has been a mixed blessing
The unemployment rate continues to decline – Chart 2

6. U.S. Unemployment rate Seasonally adjusted – January 2000 to May 2016#2
Recessions
Percent
Jan 2000
Jan 2004
Jan 2008
Jan 2012
Jan 2016

7. Where the U.S. has been economically
The U.S. economy has experienced slowing growth in recent quarters – Chart 1
The decline in energy prices has been a mixed blessing
The unemployment rate continues to decline – Chart 2
While the labor-force participation rate may be turning up – Chart 3

8. #3
The U.S. labor-force participation rate Age 16 and older – January 2000 to May 2016 – seasonally adjusted
Recessions
Percent
This drop of 4.7 percentage
points over the last 17 years
equates to about 11 million
adults leaving the workforce
Jan 2000
Jan 2004
Jan 2008
Jan 2012
Jan 2016

9. Where the U.S. has been economically
The U.S. economy has experienced slowing growth in recent quarters – Chart 1
The decline in energy prices has been a mixed blessing
The unemployment rate continues to decline – Chart 2
While the labor-force participation rate may be turning up – Chart 3
A rising participation rate would greatly benefit the economy

10. Where the U.S. has been economically
The U.S. economy has experienced slowing growth in recent quarters – Chart 1
The decline in energy prices has been a mixed blessing
The unemployment rate continues to decline – Chart 2
While the labor-force participation rate may be turning up – Chart 3
A rising participation rate would greatly benefit the economy
Household balance sheets have strengthened over last seven years as house values and stock prices recovered – Chart 4

11. #4
The household sector’s finances have strengthened in recent years Quarterly data to 2015
Household net worth/GDP
(right scale)
Household assets
(in dollars –
left scale)
Trillions of dollars
Household net worth
(in dollars – left scale)
Household liabilities
(in dollars –left scale)
2000
2004
2008
2012
2015

12. Where the U.S. has been economically
The U.S. economy has experienced slowing growth in recent quarters – Chart 1
The decline in energy prices has been a mixed blessing
The unemployment rate continues to decline – Chart 2
While the labor-force participation rate may be turning up – Chart 3
A rising participation rate would greatly benefit the economy
Household balance sheets have strengthened over last seven years as house values and stock prices recovered – Chart 4
However, the improvement in household wealth has been concentrated in wealthier households

13. Where the U.S. has been economically
The U.S. economy has experienced slowing growth in recent quarters – Chart 1
The decline in energy prices has been a mixed blessing
The unemployment rate continues to decline – Chart 2
While the labor-force participation rate may be turning up – Chart 3
A rising participation rate would greatly benefit the economy
Household balance sheets have strengthened over last seven years as house values and stock prices recovered – Chart 4
However, the improvement in household wealth has been concentrated in wealthier households
Flattening per-capita GDP growth a key factor in growing income inequality – Charts 5A and 5B

14. Real GDP per capita – 1950 to 2015 Expressed in 2009 dollars

15. Real GDP per capita – 2000 to 2015 Expressed in 2009 dollars
#5B
Real GDP per capita – 2000 to 2015 Expressed in 2009 dollars
6 years, from 2007
to 2013, to reach same
per capita output level

16. External economic, political forces threaten U.S. economic growth
Uneven growth rates across Europe are creating strains within the EU, which has negative global implications
Brexit – negative economic impacts if UK votes June 23 to exit the EU

17. External economic, political forces threaten U.S. economic growth
Uneven growth rates across Europe are creating strains within the EU, which has negative global implications
Brexit – negative economic impacts if UK votes June 23 to exit the EU
China’s growth threatened by a continuing rise in debt – Chart 6

18. China driving deeper into debt#6

19. External economic, political forces threaten U.S. economic growth
Uneven growth rates across Europe are creating strains within the EU, which has negative global implications
Brexit – negative economic impacts if UK votes June 23 to exit the EU
China’s growth threatened by a continuing rise in debt – Chart 6
A credit contraction would shrink China’s badly bloated capital spending and infrastructure investment – Chart 7 – leading to reduced imports, rising unemployment, and potentially civil unrest

20. Trends in components of China’s GDP 1995 to 2014#7
Net exports
Gross fixed capital formation
Government consumption
Percent of GDP
Household consumption

21. External economic, political forces threaten U.S. economic growth
Uneven growth rates across Europe are creating strains within the EU, which has negative global implications
Brexit – negative economic impacts if UK votes June 23 to exit the EU
China’s growth threatened by a continuing rise in debt – Chart 6
A credit contraction would shrink China’s badly bloated capital spending and infrastructure investment – Chart 7 – leading to reduced imports, rising unemployment, and potentially civil unrest
The never-ending warring in the Middle East, and the consequent global terrorism, are another economic threat
Politically destabilizing effects of a sustained period of low energy prices

22. External economic, political forces threaten U.S. economic growth
Uneven growth rates across Europe are creating strains within the EU, which has negative global implications
Brexit – negative economic impacts if UK votes June 23 to exit the EU
China’s growth threatened by a continuing rise in debt – Chart 6
A credit contraction would shrink China’s badly bloated capital spending and infrastructure investment – Chart 7 – leading to reduced imports, rising unemployment, and potentially civil unrest
The never-ending warring in the Middle East, and the consequent global terrorism, are another economic threat
Politically destabilizing effects of a sustained period of low energy prices
Russia – a never-ending economic disaster – fear a wounded bear?

23. External economic, political forces threaten U.S. economic growth
Uneven growth rates across Europe are creating strains within the EU, which has negative global implications
Brexit – negative economic impacts if UK votes June 23 to exit the EU
China’s growth threatened by a continuing rise in debt – Chart 6
A credit contraction would shrink China’s badly bloated capital spending and infrastructure investment – Chart 7 – leading to reduced imports, rising unemployment, and potentially civil unrest
The never-ending warring in the Middle East, and the consequent global terrorism, are another economic threat
Politically destabilizing effects of a sustained period of low energy prices
Russia – a never-ending economic disaster – fear a wounded bear?
Possible fallout from political/economic problems in Brazil and potential political revolution in Venezuela

24. Specific economic news that could impact the presidential race
Inside the United States
Unemployment rate increases or decreases
Rate of economic growth – stronger or weaker
Inflation concerns increase, or not
A rise in interest rates threatens economic growth

25. Specific economic news that could impact the presidential race
Inside the United States
Unemployment rate increases or decreases
Rate of economic growth – stronger or weaker
Inflation concerns increase, or not
A rise in interest rates threatens economic growth
Outside the United States
Brexit – the Brits vote to leave the EU
China – economic events leading to political disruption
Regional war/even greater political turmoil

26. Specific economic news that could impact the presidential race
Inside the United States
Unemployment rate increases or decreases
Rate of economic growth – stronger or weaker
Inflation concerns increase, or not
A rise in interest rates threatens economic growth
Outside the United States
Brexit – the Brits vote to leave the EU
China – economic events leading to political disruption
Regional war/even greater political turmoil
Something out of the blue – no one predicted it

27. To a great extent, this year’s presidential election will be a referendum on the economic policies of recent decades

28. To a great extent, this year’s presidential election will be a referendum on the economic policies of recent decades
Would Trump be where he is today absent the slow economic recovery following the 2008 financial crisis?

29. What do you think?