Economic Trends
Terry Rephann
Roanoke Regional Chamber of Commerce
Meeting
June 2, 2009
Presentation Outline
• Introduction
• National Economic Trends
• Regional Economic Trends
• What’s Next?
• A Short Advertisement
How many employees are in your
business/agency?
59%
1. 1-4
2. 5-9
3. 10-19
4. 20-49
5. 50+ 14% 14%
6. N/A 4%
8%
1%
4
9
/A
+
9
9
-1
-4
1-
5-
50
N
10
20
What industry best describes your
business/agency?
1. Agriculture/Forestry
2. Mining 25%
3. Construction
20%
4. Transportation,
Communication, Public
Utility 13% 13%
5. Retail and Wholesale 10% 10%
Trade
5%
6. Manufacturing 4%
7. Finance, Insurance, Real 0% 0%
Estate
n
ns i ng
s
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er
t
g
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.
...
en
tio
r..
ov ice
n.
o.
nc urin
th
ho
su
tio
in
/F
nm
uc
O
rv
8. Services
M
re
W
In
t
ta
tr
ac
Se
er
tu
or
d
e,
uf
an
ul
sp
Co
an
G
ri c
an
na
il
M
ta
9. Government
Ag
Fi
Tr
Re
10. Other
National Economic Trends
Know your ABC’s: Part I
• GDP=C+I+G+(X-M)
• C= Personal Consumption
• I=Investment
• G=Government Expenditures
• X-M= Net Exports
Federal Funds Rate
Dot.com
% bubble The fed steers in turbulent seas.
burst
7 Housing
bubble
9/11 burst
6
5
4
3
2
1
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Board of Governors of the Federal Reserve System
Household Net Worth
$ trillions
70
Household wealth plummets.
65
60
55
50
45
40
2007 2008
Source: Board of Governors of the Federal Reserve System
TED Spread: Borrowing Risks
Lehman Brothers
5
Fails
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2002 2003 2004 2005 2006 2007 2008 2009
Source: Economagic
Monetary Base
Big injection
2.0
1.8
1.6
1.4
Trillions ($)
1.2
1.0 Little injection
0.8
0.6
0.4
0.2
0.0
19 0
81
83
85
87
88
90
92
94
95
97
99
01
02
04
20 6
08
8
0
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
Source: Board of Governors of the Federal Reserve System
Standard & Poor’s Index
Index
1,700
Stock market bottom?
1,500
1,300
1,100
900
700
500
2005 2006 2007 2008 2009
Source: Economagic
Real Personal Consumption Expenditures
% change
10 Consumer
8 spending
plummets.
6
4
2
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
-2
-4
Source: Bureau of Economic Analysis
Personal Savings Rate
16
14
12
Saving
picks up.
10
8
6
4
2
0
-2
59
62
65
68
71
74
77
80
83
86
89
92
95
98
01
04
07
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
-4
Source: Bureau of Economic Analysis
Value of Residential Construction
$ billions -- seasonally adjusted annual rate New housing
construction
800 slides.
700
600
500
400
300
200
100
0
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
Source: U.S. Census Bureau
Value of Construction
Commercial
$ billions -- seasonally adjusted annual rate
construction slides
800 as well.
700
600
500
400
Residential
300
200 Non-residential
100 Public
0
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
Source: U.S. Census Bureau
Foreign Exchange Rate
Trade weighted
currency index
140 Dollar retains attraction as
reserve currency.
130
120
110
100
90
80
5
6
7
8
9
0
1
2
3
4
5
6
7
8
9
9
9
9
9
9
0
0
0
0
0
0
0
0
0
0
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
Source: Board of Governors of the Federal Reserve System
Current Account Trade Balance
$ billions Imports slide much
$50
faster than
exports.
$0
-$50
-$100
-$150
-$200
-$250
80
81
83
85
87
88
90
92
94
95
97
99
01
02
04
06
08
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
Source: Bureau of Economic Analysis
Consumer Price Index
% change over year earlier
Deflationary threat
6
5
4
3
2
1
0
-11999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
-2
Source: Bureau of Labor Statistics
Oil Prices
$ per barrel West Texas Intermediate crude, spot price
Roller coaster ride resumes?
140
120
100
80
60
40
20
0
2000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: U.S. Department of Energy
Monetary Policy Response
Big injection
2.0
1.8
1.6
1.4
Trillions ($)
1.2
1.0 Little injection
0.8
0.6
0.4
0.2
0.0
19 0
81
83
85
87
88
90
92
94
95
97
99
01
02
04
20 6
08
8
0
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
Source: Board of Governors of the Federal Reserve System
Know your ABC’s: Part II
The Fiscal Policy Response
• American Recovery
and Relief Act of Tax Cuts
2009 Health care
– $787 Billion Unemployed
aid
Infrastructure
– Compares to $152
Energy
Billion for Economic
Stimulus Act of 2008 Research
Other
The Rationale--offset effect of
financial crisis on aggregate
demand
– Household Net Worth
• Net worth fell $12 trillion ($4 trillion home values and $8
trillion financial assets)
• Every $ decline in household net worth reduces
consumer spending by 5 cents (-$300 billion)
– Credit Market Tightening (-$325 billion)
– Energy Cost Decreases
• Every $1 per gallon decline results in savings to
consumers of $100 billion (+$200 billion)
– $425 Billion in Fiscal Stimulus needed in 2009
Source: Mark Zandi, economy.com
Initial Unemployment Claims
Are we there yet?
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
2005 2006 2007 2008 2009
Source: Bureau of Labor Statistics
Recession Comparisons
10 1948
1953
Percentage change
5 1957
1960
0 1969
0 1 2 3 4 5 6 1973
-5 1980
1981
-10
1990
-15 2001
2007
Quarters after Peak
1929
Source: National Bureau of Economic Research
When will U.S. GDP growth resume?
1. 2009, 2nd quarter 27%
2. 2009, 3rd quarter
21%
20%
3. 2009, 4th quarter 19%
4. 2010, 1st quarter
5. 2010, 2nd quarter
6%
6. 2010, 3rd quarter 4% 4%
7. 2010, 4th quarter 0%
8. 2011 or beyond
.
nd
.
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ar
ar
ar
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qu
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tq
be
d
d
d
rd
h
th
1s
or
2n
2n
3r
4t
,3
,4
Mean = 4.7037 ,
,
,
11
10
,
,
09
09
10
10
09
10
20
20
20
20
20
20
20
20
What will 4th quarter GDP growth be?
1. Greater than 4% 33%
2. 3 to 3.9%
3. 2 to 2.9% 23%
4. 1 to1.9% 19%
5. 0 to 0.9%
6. -.1 to -.9% 10%
7. -1 to -1.9% 4%
6% 6%
8. -2 to -2.9% 0% 0% 0%
9. -3 to -3.9%
%
%
%
%
%
9%
9%
9%
9%
..
.9
.9
.9
-4
- .9
4.
1.
3.
2.
0.
-1
-2
-3
an
an
to
to
to
to
to
to
to
to
th
th
1
-.1
3
2
0
10. Less than -4%
-1
-2
-3
ss
er
Le
at
re
G
Mean = 4.9643
Growth Predictions
Most economists predict third quarter growth.
6
4
2
Actual
0 FAIR
Phil. Fed
20 q1
20 q4
20 q3
20 q2
20 q1
20 q4
20 q3
20 q2
20 q1
20 q4
20 q3
q2
-2
04
04
05
06
07
07
08
09
10
10
11
12
WSJ
20
-4
-6
-8
Source: Wall Street Journal, Philadelphia Federal Reserve, Fair Model
Know your ABCs: Part III
• The Shape of Economic Recoveries
Roanoke Metropolitan Area
Trends
Housing Permits
% of 2000 Census housing units
0.18
0.16 Housing slowdown felt . . .
0.14
0.12
Roanoke MSA
0.1
Virginia
0.08
U.S.
0.06
0.04
0.02 . . . but impact is less than State and nation.
0
2004 2005 2006 2007 2008 2009
Source: U.S. Census Bureau
Housing Price Changes
% change
25 Housing price changes are moderate.
20
15
10 Roanoke MSA
Virginia
5 U.S.
0
97
98
99
00
01
02
03
04
05
06
07
08
-5
19
19
19
20
20
20
20
20
20
20
20
20
-10
Source: Federal Housing Finance Agency
Retail Trade
% change
6
4
Retail sales tank.
2
Roanoke MSA
0
Virginia
2007 2008 2009
-2
-4
-6
Source: Virginia Department of Taxation
Roanoke MSA Employment Growth, 1969-2007
% change
7
As the nation and state go, so goes the Roanoke MSA.
6
5
4
3
2
1
0
70
72
74
76
78
80
82
84
86
88
90
92
94
96
98
00
02
04
06
-1
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
-2
-3
Roanoke MSA Virginia U.S.
Source: Bureau of Economic Analysis
Employment Growth
% change
Roanoke MSA Virginia U.S.
4
Recent employment data confirms the pattern.
3
2
1
0
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
-1
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
-2
-3
-4
Source: Bureau of Labor Statistics (last point in April 2009)
Unemployment Rate Graph
% change The local unemployment rate tracks Virginia’s.
10
9
8
7
6 Roanoke
5 Virginia
4 U.S.
3
2
1
0
90
92
94
96
98
00
02
04
06
08
19
19
19
19
19
20
20
20
20
20
Source: Bureau of Labor Statistics (last point in April 2009)
September 2008
A darkening cloud over the Commonwealth.
Source: Bureau of Labor Statistics
October 2008
A darkening cloud over the Commonwealth.
Source: Bureau of Labor Statistics
November 2008
A darkening cloud over the Commonwealth.
Source: Bureau of Labor Statistics
December 2008
A darkening cloud over the Commonwealth.
Source: Bureau of Labor Statistics
January 2009
A darkening cloud over the Commonwealth.
Source: Bureau of Labor Statistics
February 2009
A darkening cloud over the Commonwealth.
Source: Bureau of Labor Statistics
March 2009
A darkening cloud over the Commonwealth.
Source: Bureau of Labor Statistics
Declining Employment Industries
Employment
. . . employment losses are widespread.
30,000
Natural Resources and Mining
and Constru
Manufacturing
25,000
Wholesale Trade
20,000 Retail Trade
Transportation Warehousing
15,000 and Utilities
Information
10,000 Finance
Professional and Business
5,000 Services
Leisure and Hospitality
0
90
92
94
96
98
00
02
04
06
19
19
19
19
19
20
20
20
20
Source: Bureau of Labor Statistics (last point in April 2009)
Growing Employment Industries
The local economy is
Employment
still adding jobs in a
25,000 few sectors . . .
Educational and
20,000 Health Services
Other Services
15,000
Federal
Government
10,000 State Government
5,000 Local Government
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Source: Bureau of Labor Statistics (last point in April 2009)
What’s Next?
How do you anticipate total employment at your location to change in
the three months to September 2009 compared to the current
quarter?
67%
1. Increase
2. Decrease
3. No Change
4. Don’t Know 20%
13%
0%
w
e
se
se
ng
o
ea
a
Kn
re
ha
cr
ec
C
’t
In
on
D
o
N
D
What will most likely negatively impact your establishment’s
growth during the next five years?
1. Raw material costs 19%
19%
2. Energy/transport costs
16%
3. Government policies/taxes
4. Labor availability/skills
5. Domestic competition 9%
9% 9%
8%
6. Foreign competition
7. Employee costs (wages, 5%
4%
workers comp, health care)
8. New technology 1%
9. Financing availability
ch s...
er
...
va l...
gy
co e...
.
...
...
...
t..
10. Other po
th
bi
lc
ai
o
lo
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st
p
tp
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av
ila
ns
om
no
co
ia
m
en
er
ov t ra
g
Fo i c c
ee
in
at
nm
ra
y/
te
oy
n
nc
m
t
rg
bo
ig
es
w
er
pl
na
w
re
e
Ne
La
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Em
Ra
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Fi
Do
G
Looking at Long-Term Trends
The two Virginia’s are growing further apart.
Virginia Performs
Demo
• http://vaperforms.virginia.gov
Acknowledgement
• The SRS system demonstrated at this
event was provided by the Teaching
Resource Center and funded by a grant
from the U.Va. Parents Committee