Download presentation
Presentation is loading. Please wait.
Published byBennett Stephens Modified over 9 years ago
1
Economic Outlook Michael Wolf, Economist September 12, 2014
2
Economics 22 Gross Domestic Product Real GDP declined in the first quarter, but those contractionary forces should prove to be temporary Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
3
Government
4
Economics 4 Government Purchases The public sector has remained a weight on the overall economy, but should soon move back into being a minor contributor to overall growth Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
5
Economics 5 U.S. Budget Deficit Deficit is shrinking, but not nearly fast enough Source: U.S. Department of the Treasury and Wells Fargo Securities, LLC
6
Economics 6 U.S. Budget Gap The larger problem is that there is still no credible plan to move back into a surplus Source: Congressional Budget Office and Wells Fargo Securities, LLC
7
Economics 77 Federal Government Spending: Entitlements in the Driver’s Seat Entitlement programs are the main drivers of growing expenditures Source: Congressional Budget Office and Wells Fargo Securities, LLC
8
Business Investment
9
Economics 9 Business Investment Business investment looks to be strengthening after a hiccup earlier in the year Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
10
Economics 10 Corporate Cash The financial health of the corporate sector is very strong and should allow corporations to spend more going forward Source: Federal Reserve Board and Wells Fargo Securities, LLC
11
Economics 11 Business Lending Commercial and industrial lending has surged over the past quarter, helped by easier credit and increased demand Source: Federal Reserve Board and Wells Fargo Securities, LLC
12
Economics 12 Manufacturing Large, Global Businesses: Recent pickup in activity Source: Institute for Supply Management and Wells Fargo Securities, LLC
13
Economics 13 CRE: Industrial A rise in manufacturing and energy production has fueled growth in the industrial real estate market Source: PPR and Wells Fargo Securities, LLC
14
Economics 14 Manufacturing: Production and Jobs Gap Rising manufacturing production has not led to huge job gains Source: Institute for Supply Management and Wells Fargo Securities, LLC
15
Economics 15 CRE: Office Improvement in the office sector has been more modest despite strong gains in office-using employment Source: Reis, Inc. and Wells Fargo Securities, LLC
16
Economics 16 Commercial Real Estate The recovery has been uneven across property types Source: Reis, Inc., PPR and Wells Fargo Securities, LLC
17
Economics 17 Small Businesses Small Businesses: A full recovery in small business optimism is still distant, with taxes and regulation remaining the two big issues Source: National Federation of Independent Businesses, Gallup, Wells Fargo Bank and Wells Fargo Securities, LLC
18
Consumption
19
Economics 19 Personal Consumption Expenditures Consumption should rebound during the forecast period but growth is likely to remain somewhat subdued Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
20
Economics 20 Employment Total employment finally breached its prerecession peak… Source: U.S. Department of Labor and Wells Fargo Securities, LLC
21
Economics 21 Employment: Structural We still have a ways to go before recovering all of the full-time jobs lost in the most recent recession Source: U.S. Department of Labor and Wells Fargo Securities, LLC
22
Economics 22 Unemployment …but the unemployment rate overstates the health of the labor market. Discouraged workers and an abundance of part-time work rein in spending Source: U.S. Department of Labor and Wells Fargo Securities, LLC
23
Economics 23 Wages and Salaries In addition, wage growth has been relatively slow to pick up, while inflation begins to pull away Source: U.S. Department of Labor and Wells Fargo Securities, LLC
24
Economics 24 Income Growth: Different Rates After-tax nominal income has increased the most for the lowest and highest income households since the mid-1980s Source: U.S. Department of Labor and Wells Fargo Securities, LLC
25
Economics 25 Income Growth: Rising at Different Rates Since 2007, income growth has been clearly concentrated in the upper quintiles Source: U.S. Department of Labor and Wells Fargo Securities, LLC
26
Economics 26 Consumer Balance Sheet Although consumer leverage remains elevated, it is off its prerecession high Source: Federal Reserve Board, U.S. Department of Commerce and Wells Fargo Securities, LLC
27
Economics 27 Debt Service Ratio And the debt service ratio has fallen to historical lows Source: Federal Reserve Board, U.S. Department of Commerce and Wells Fargo Securities, LLC
28
Economics 28 Household Debt Rising student loan debt is crowding out other borrowing, particularly for autos and credit cards Source: Federal Reserve Board and Wells Fargo Securities, LLC 20132003
29
Housing Market
30
Economics 30 Housing Market: Existing Home Sales Existing home sales have started to rebound but remain lower than a year ago Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
31
Economics 31 Housing Market: Home Sales The recent weakness was seen across regions Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
32
Economics 32 Housing Market: New Home Sales New home sales have seen only modest improvement Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
33
Economics 33 Mortgage Rates Although mortgage rates remain low by historical standards, the rise over last year has had a negative effect on homebuying Source: Freddie Mac and Wells Fargo Securities, LLC
34
Economics 34 Residential Loan Standards Demand appears to be strengthening as tightening standards decrease Source: Federal Reserve Board and Wells Fargo Securities, LLC
35
Economics 35 Home Purchase Expectations But other indicators show that demand remains soft Source: The Conference Board and Wells Fargo Securities, LLC
36
Economics 36 Home Prices Home price gains have moderated considerably Source: Federal Housing Finance Agency, National Association of Realtors, S&P Corp. and Wells Fargo Securities, LLC
37
Economics 37 Housing Market: Inventories Low inventories have applied upward pressure on price Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
38
Economics 38 Housing Market: Distressed Home Sales Fewer distressed homes available at a discount also keep prices moving higher Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
39
Economics 39 Housing Market Fundamentals Are Changing Household formations remain well below their historical norms, and a larger proportion of new households are choosing to rent Source: U.S. Department of Commerce and Wells Fargo Securities, LLC Owners vs. RentersHousehold Formation
40
Economics 40 Housing Market: Home Sales Despite slow growth in new home sales, homebuilders remain a bit more optimistic Source: U.S. Department of Commerce, National Association of Home Builders and Wells Fargo Securities, LLC
41
Economics 41 Housing Market: Apartments Some builders are likely benefitting from growth in the multifamily market, where apartment demand and construction remains strong Source: Reis and Wells Fargo Securities, LLC
42
Economics 42 Housing Market: Condos Existing condo sales had also slipped recently but the upward trajectory is clear Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
43
Economics 43 Housing Market: Residential Construction We expect residential construction to continue to advance, though a full recovery in the housing market is a long way off Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
44
Economics 44 U.S. Forecast
45
Client/Prospect Name Wells Fargo Securities, LLC Economics Group 45 John E. Silvia …....................... … john.silvia@wellsfargo.comjohn.silvia@wellsfargo.com Global Head of Research and Economics Diane Schumaker-Krieg ………………… …… ….diane.schumaker@wellsfargo.comdiane.schumaker@wellsfargo.com Global Head of Research & Economics Chief Economist Mark Vitner, Senior Economist……………....………... mark.vitner@wellsfargo.com mark.vitner@wellsfargo.com Jay H. Bryson, Global Economist …………………....…… …. jay.bryson@wellsfargo.com jay.bryson@wellsfargo.com Sam Bullard, Senior Economistsam.bullard@wellsfargo.comsam.bullard@wellsfargo.com Nick Bennenbroek, Currency Strategist……nicholas.bennenbroek@wellsfargo.comnicholas.bennenbroek@wellsfargo.com Eugenio J. Alemán, Senior Economist… …………. eugenio.j.aleman@wellsfargo.com eugenio.j.aleman@wellsfargo.com Anika R. Khan, Senior Economist …. anika.khan@wellsfargo.comanika.khan@wellsfargo.com Senior Economists Zachary Griffiths, Economic Analyst zachary.griffiths@wellsfargo.comzachary.griffiths@wellsfargo.com Mackenzie Miller, Economic Analyst mackenzie.miller@wellsfargo.commackenzie.miller@wellsfargo.com Erik Nelson, Economic Analyst erik.f.nelson@wellsfargo.comerik.f.nelson@wellsfargo.com Alex Moehring, Economic Analyst alex.v.moehring@wellsfargo.comalex.v.moehring@wellsfargo.com Economists Azhar Iqbal, Econometrician………………… ……………azhar.iqbal@wellsfargo.comazhar.iqbal@wellsfargo.com Tim Quinlan, Economist …………………… ……………..tim.quinlan@wellsfargo.comtim.quinlan@wellsfargo.com Eric J. Viloria, Currency Strategist eric.viloria@wellsfargo.comeric.viloria@wellsfargo.com Sarah Watt House, Economist …………… …………sarah.house@wellsfargo.comsarah.house@wellsfargo.com Michael A. Brown, Economist ……………… … michael.a.brown@wellsfargo.commichael.a.brown@wellsfargo.com Michael T. Wolf, Economist ………………… …. michael.t.wolf@wellsfargo.com michael.t.wolf@wellsfargo.com Economic Analysts Administrative Assistants Wells Fargo Securities Economics Group publications are produced by Wells Fargo Securities, LLC, a U.S broker-dealer registered with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the Securities Investor Protection Corp. Wells Fargo Securities, LLC, distributes these publications directly and through subsidiaries including, but not limited to, Wells Fargo & Company, Wells Fargo Bank N.A., Wells Fargo Advisors, LLC, Wells Fargo Securities International Limited, Wells Fargo Securities Asia Limited and Wells Fargo Securities (Japan) Co. Limited. Wells Fargo Securities, LLC. ("WFS") is registered with the Commodities Futures Trading Commission as a futures commission merchant and is a member in good standing of the National Futures Association. Wells Fargo Bank, N.A. ("WFBNA") is registered with the Commodities Futures Trading Commission as a swap dealer and is a member in good standing of the National Futures Association. WFS and WFBNA are generally engaged in the trading of futures and derivative products, any of which may be discussed within this publication. Wells Fargo Securities, LLC does not compensate its research analysts based on specific investment banking transactions. Wells Fargo Securities, LLC’s research analysts receive compensation that is based upon and impacted by the overall profitability and revenue of the firm which includes, but is not limited to investment banking revenue. The information and opinions herein are for general information use only. Wells Fargo Securities, LLC does not guarantee their accuracy or completeness, nor does Wells Fargo Securities, LLC assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. Wells Fargo Securities, LLC is a separate legal entity and distinct from affiliated banks and is a wholly owned subsidiary of Wells Fargo & Company © 2014 Wells Fargo Securities, LLC. SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE Important Information for Non-U.S. Recipients For recipients in the EEA, this report is distributed by Wells Fargo Securities International Limited ("WFSIL"). WFSIL is a U.K. incorporated investment firm authorized and regulated by the Financial Conduct Authority. The content of this report has been approved by WFSIL a regulated person under the Act. For purposes of the U.K. Financial Conduct Authority’s rules, this report constitutes impartial investment research. WFSIL does not deal with retail clients as defined in the Markets in Financial Instruments Directive 2007. The FCA rules made under the Financial Services and Markets Act 2000 for the protection of retail clients will therefore not apply, nor will the Financial Services Compensation Scheme be available. This report is not intended for, and should not be relied upon by, retail clients. This document and any other materials accompanying this document (collectively, the "Materials") are provided for general informational purposes only. Donna LaFleur, Executive Assistant. donna.lafleur@wellsfargo.com donna.lafleur@wellsfargo.com Cyndi Burris, Senior Administrative Assistant cyndi.burris@wellsfargo.comcyndi.burris@wellsfargo.com
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.