2017 mid-year economic update - mdm€¦ · • oil & gas • other consumer products •...

2017 Mid-YearEconomic Update

Featuring:

Brian Lewandowski, University of Colorado BoulderThomas P. Gale, Modern Distribution Management

June 8, 2017

Sponsored by:

• Introduction• Macroeconomic Overview• 2017 Economic Benchmarks for Wholesale Distribution• Q&A

Agenda

Analysis of 19 sectors

• Apparel & Piece Goods

• Agricultural Products

• Beer, Wine & Liquor

• Building Materials & Construction

• Chemicals & Plastics

• Commercial Equipment & Supplies

• Computer Equipment & Software

• Electrical & Electronics

• Furniture & Home Furnishings

• Grocery & Foodservice

2017 Economic Benchmarks for Wholesale Distribution

Discount Code: ECON10(Offer valid through June 22, 2017)

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• Hardware, Plumbing & Heating Equipment/Supplies

• Industrial

• Metal Service Centers

• Miscellaneous Durable Goods

• Motor Vehicle & Motor Vehicle Parts

• Office Products

• Oil & Gas

• Other Consumer Products

• Pharmaceuticals (not available as separate sector report)

2017 Economic Benchmarks for Wholesale Distribution

Analysis of 19 sectors

• Revenue Forecasts for 2017 & 2018

• Sector Growth vs. U.S. GDP Growth - 2009:Q1 to 2016:Q4

• Employment Size Distribution

• Actual Revenue Growth – Quarterly 2004 to Present

• Real Revenue Growth – Quarterly 2004 to Present

• Employment Growth – Quarterly 2004 to Present

• Inventory-to-Sales Ratio – 3-Month Moving Average with Trendline

Discount Code: ECON10(Offer valid through June 22, 2017)

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SpeakersBrian LewandowskiAssociate Director, Business Research DivisionLeeds School of Business, University of Colorado Boulder

Thomas P. GalePublisher/PresidentModern Distribution Management/MDM Analytics

Ranga BodlaHead of Industry MarketingOracle + NetSuite

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The 2017 Mid-Year Economic Update

Brian LewandowskiAssociate Director, Business Research DivisionJune 8, 2017

Economic Benchmarks for Wholesale Distribution and the Economic OutlookToday’s Discussion• Economic outlook• Sales and inventory trends• Specific industries• Highlights from the 2017 Economic Benchmarks report

About the Economic Benchmarks for Wholesale Distribution report data• Foundational data from U.S. Census Bureau, Bureau of Labor Statistics and Bureau of Economic

Analysis• Based on latest Wholesale Trade Survey and Economic Census• Include revenue growth forecasts

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

1993 1995 1998 2000 2003 2005 2008 2010 2013 2015 2018

YoY Percent Change

Wholesale Distribution Revenue Growth1993-2018

Note: Core excludes the agriculture and the oil and gas sectors.

CoreAll

Summary of 2016 Performance by Sector

Major Sector (Largest to Smallest Sector Revenues) Actual Revenues (2016)

Real Revenues*

(2016)

Revenue Gap(Actual - Real)

Pharmaceutical Wholesalers 6.4% 1.7% 4.7%Grocery and Foodservice Wholesale Distributors -0.5% 1.0% -1.5%Electrical and Electronics Wholesalers 0.8% 2.0% -1.2%Oil and Gas Products Wholesale Distributors -8.6% 13.6% -22.2%Motor Vehicles and Motor Vehicle Parts Wholesale Distributors -0.6% -0.4% -0.1%Industrial Distributors -1.7% -1.7% 0.0%Other Consumer Products Wholesale Distributors 1.4% 3.0% -1.6%Commercial Equipment and Supplies Wholesale Distributors 9.0% 10.7% -1.7%Computer Equipment and Software Wholesale Distributors -3.5% -0.8% -2.7%Miscellaneous Durable Goods Wholesale Distributors 0.2% 0.7% -0.5%Agricultural Products Wholesale Distributors -6.7% 3.4% -10.1%Apparel and Piece Goods Wholesale Distributors -1.7% -1.6% -0.1%Metal Service Centers -10.3% -5.7% -4.6%Beer, Wine and Liquor Wholesalers 2.0% 1.6% 0.4%Hardware, Plumbing, and Heating Equipment/Supplies Wholesalers 3.8% 3.4% 0.4%Building Material and Construction Wholesale Distributors 6.4% 5.5% 0.9%Chemicals and Plastics Wholesale Distributors -2.8% 0.2% -3.1%Office Product Wholesalers and Paper Merchants -0.1% 2.3% -2.4%Furniture and Home Furnishing Wholesale Distributors 4.4% 4.2% 0.2%Total -0.4% 2.2% -2.5%

Revisions to Wholesale Trade2016 and 2017 Estimates for the Year 2015

-20,000 -10,000 0 10,000 20,000

$Millions Change in Sales Estimates

-5% 0% 5%

Industrial DistributorsMotor Vehicle Aftermarket Parts and Supplies

PharmaceuticalSporting Goods, Toys/Hobby and Jewelry

Other Consumer ProductsChemicals and Plastics

Electrical and ElectronicsFurniture and Home Furnishings

Plumbing and HVACAgricultural Products

Office Product and Paper MerchantsApparel

Metal Service CentersBeer, Wine and Liquor

Building MaterialComputer and Computer Equipment and Software

Computer, Commercial and Medical EquipmentOil and Gas Products

Grocery and Foodservice

Percentage Change

Business Cycles

Business CyclesGDP and Recessions, 1947-2017

Sources: Bureau of Economic Analysis and the National Bureau of Economic Research.

-10

-5

0

5

10

15

20

1947 1950 1953 1957 1960 1963 1967 1970 1973 1977 1980 1983 1987 1990 1993 1997 2000 2003 2007 2010 2013 2017

Quarterly GDP Percentage Change, SAAR

Financial Tech Savings

and Loan Oil

EmbargoInterest

Rates

OPECPeace Time End of

Korean War Steel StrikeMonetary Policy

Monetary Policy

Employment Losses and Recovery

0 10 20 30 40 50 60 70 80

Peak to Trough Months to Recovery

Sources: Bureau of Labor Statistics (Seasonally Adjusted), National Bureau of Economic Research, and the Business Research Division.

1948-1949

1953-1954

1957-1958

1960-1961

1969-1970

1973-1975

1980

1981-1982

1990-1991

2001

2007-2009

-7% -6% -5% -4% -3% -2% -1% 0%Percentage Change Number of Months

-10

-8

-6

-4

-2

0

2

4

6

8

10

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Percent

Quarterly GDP

Annualized GDP 1990-1999

Annualized GDP2000-2009

Annualized GDP2010- Present

Sources: Bureau of Economic Analysis and Consensus Forecasts.

Real GDP GrowthQuarterly and Annualized Real GDP 1990-2018

Economic Growth

Sources: Bureau of Economic Analysis, the National Bureau of Economic Research, and the Business Research Division.

-6-4-202468

2000 2002 2004 2006 2008 2010 2012 2014 2016

Percent Change Personal Consumption Expenditures

SAAR

Year-over-Year

-25-20-15-10

-505

101520

2001 2003 2005 2007 2009 2011 2013 2015 2017

SAAR Goods Exports

-10

-5

0

5

10

2001 2003 2005 2007 2009 2011 2013 2015 2017

SAAR Government Spending

SAAR

Year-over-Year

-30

-20

-10

0

10

20

30

2001 2003 2005 2007 2009 2011 2013 2015 2017

Percent Change Fixed Business Investment

SAAR

Year-over-Year

National Employment

Sources: Bureau of Labor Statistics (Seasonally Adjusted), National Bureau of Economic Research, Moody’s Analytics, and the BRD.

-900

-700

-500

-300

-100

100

300

500

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Thousands, Month-over-Month

Rece

ssion

18 M

onth

s

Rece

ssion

8 Mo

nths

3-Month Moving Average

Employment Recovery10-Year Growth, April 2017

Source: Bureau of Labor Statistics, Current Employment Statistics (Seasonally Adjusted).

Employment Recovery1-Year Growth, April 2017


Employment Losses and Recovery3-Year Growth

Healthcare and Social AssistanceAccommodation and Food Services

Professional, Scientific, and TechnicalConstruction

Admin and Wastse ManagementRetail Trade

GovernmentTransportation and Utilities

Finance and InsuranceManufacturing

Educational ServicesArts, Entertainment, and RecreationOther Services

Real Estate and Rental and LeasingWholesale Trade

Management of Companies and EnterprisesInformation

Mining and Logging

-200,000 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000


Job Gains by Wholesale Distribution SectorFebruary 2010 – April 2016

Oil and Gas Products Wholesalers

Agricultural Products WholesalersComputer and Computer Peripheral Equipment and SoftwareOther Consumer Products (periodicals, tobacco + florist) Wholesalers

Computer, Commercial and Medical Equipment Wholesalers and DistributorsSporting Goods, Toys/Hobby and Jewelry Wholesaler-Distributors

Pharmaceutical Wholesalers Electrical and Electronics WholesalersChemicals and Plastics Distributors

Motor Vehicle Aftermarket Parts and Supplies WholesalersMetal Service CentersGrocery and Foodservice Wholesaler- Distributors

Industrial DistributorsPlumbing and HVAC Wholesalers

Apparel Wholesalers Building Material Wholesalers and DistributorsFurniture and Home Furnishings Wholesalers

Beer, Wine and Liquor Wholesaler-Distributors

-5% 0% 5% 10% 15% 20% 25% 30% 35% 40%Percent Change

Office Product Wholesalers and Paper Merchants


Jobs Deficit by Wholesale Distribution SectorFrom Pre-recession Peak (2006/2007) to Current

Other Consumer Products WholesalersBuilding Material Wholesalers and Distributors

Computer and Computer Peripheral Equipment and SoftwareIndustrial Distributors

Office Product Wholesalers and Paper MerchantsSporting Goods, Toys/Hobby and Jewelry Wholesaler-Distributors

Electrical and Electronics WholesalersMotor Vehicle Aftermarket Parts and Supplies Wholesalers

Computer, Commercial and Medical Equipment Wholesalers and DistributorsMetal Service Centers

Pharmaceutical Wholesalers Agricultural Products Wholesalers

Furniture and Home Furnishings WholesalersOil and Gas Products WholesalersPlumbing and HVAC Wholesalers

Chemicals and Plastics DistributorsApparel Wholesalers

Grocery and Foodservice Wholesaler- Distributors

Beer, Wine and Liquor Wholesaler-Distributors

-80 -70 -60 -50 -40 -30 -20 -10 0Thousands


Labor Underutilization

Source: Bureau of Labor Statistics (Seasonally Adjusted).

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

U-6

U-3

Percentage of Labor Force

8.4%

4.3%

Average U-6

Average U-3

Initial and Continuing Claims

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017

Initial ClaimsContinuing Claims

Initial Claims(Right Axis)

Continuing Claims(Left Axis)

Average Initial Claims

Source: Bureau of Labor Statistics.

U.S. Income and Consumption

Sources: Bureau of Economic Analysis and Consensus Forecasts.

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

2008 2010 2012 2014 2016 2018

Percent Change Real Personal Consumption

2.6%2.4%

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

2008 2010 2012 2014 2016 2018

Percent Change Real Disposable Income

2.2%

2.8%

Household Wealth2000-2016

0

20

40

60

80

100

120

2000 2002 2004 2006 2008 2010 2012 2014 2016

$ Trillions

Mutual Funds

Corporate EquitiesReal Estate

Other Assets

Source: Federal Reserve Board, Balance Sheet of Households and Nonprofit Organizations (B.101) (Not Seasonally Adjusted).

Household Debt Burden

Source: Federal Reserve Board, Z.1.

9

10

11

12

13

14

14

15

16

17

18

19

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Debt Service Ratio

Debt Service Ratio (Right Axis)

Financial Obligations Ratio

Financial Obligations Ratio (Left Axis)

Household Debt Growth

Source: U.S. Flow of Funds Account, Z.1 data release.

-500

0

500

1,000

1,500

Q11992

Q11993

Q11994

Q11995

Q11996

Q11997

Q11998

Q11999

Q12000

Q12001

Q12002

Q12003

Q12004

Q12005

Q12006

Q12007

Q12008

Q12009

Q12010

Q12011

Q12012

Q12013

Q12014

Q12015

Q12016

Consumer Credit Debt

$ Billions

Home Mortgage Debt

0

20

40

60

80

100

120

140

160

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

1985=100 Recession8 months

United States

Index of Consumer Confidence

Recession18 months

Sources: The Conference Board and National Bureau of Economic Research.

Vehicle Sales and Retail Sales

Sources: Bureau of Economic Analysis, Moody’s Analytics, U.S. Census Bureau (Seasonally Adjusted Annual Rate).

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

2004 2006 2008 2010 2012 2014 2017

Retail and Food Services SalesAnnual Percent Change

0

5,000

10,000

15,000

20,000

25,000

2003 2005 2007 2009 2011 2013 2015 2017

Vehicle SalesThousands, SAAR

Houses For Sale and Months of Supply

Source: New Houses Sold and For Sale, U.S. Census Bureau.

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

0

100

200

300

400

500

600

700

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Months of SupplyNew SF Home Inventory (thousands)

Housing SupplySF Homes for Sale

National FHFA Home Price GrowthYear-over-Year Q1 2017

Source: Federal Housing Finance Agency Home Price Index, All Transactions Index.

Interest Rates2000-2018 (Forecast)

Sources: Federal Reserve and Moody’s.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Percent

10-Year T-Note

3-Month T-Bill

U.S. Building Permits

0%

10%

20%

30%

40%

50%

60%

0

500

1,000

1,500

2,000

2,500

2001 2003 2005 2007 2009 2011 2013 2015 2017

Thousands

Single Family

Multifamily MF Share (Right Axis)

Seasonally Adjusted Annual Rate

Source : U.S. Census Bureau, New Privately Owned Housing Units Authorized by Building Permits in Permit-Issuing Places (SAAR).

ISM Indices

Source: Institute for Supply Management (ISM).

30

35

40

45

50

55

60

65

70

2003 2005 2007 2009 2011 2013 2015 2017

ISM Manufacturing Index

30

35

40

45

50

55

60

65

70

2003 2005 2007 2009 2011 2013 2015 2017

ISM Non-Manufacturing Index

Commercial Crude Oil Storage

Source: Energy Information Association (EIA), Weekly U.S. Ending Stocks excluding SPR of Crude Oil.

250

300

350

400

450

500

550

1984 1986 1989 1992 1994 1997 2000 2002 2005 2008 2010 2013 2016

Millions of Barrels

May 19, 2017:516.3

Average 1982-2017

WTI Oil Price

Source: Energy Information Association (EIA), Cushing, OK WTI Spot Price FOB.

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Dollars per Barrel

May 29, 2017:$50.81

May 27, 2016:$49.36

July 3, 2008:$145.31

May 29, 2015:$60.25

Average 2005-2017

May 29, 2014:$104.26

WTI Oil Price Forecast

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

2014 2015 2016 2017 2018 2019 2020 2021 2022

Historical PriceEIA ForecastLower CIUpper CIMoody's Baseline Forecast

Dollars per Barrel

May 2017

Source: Energy Information Association (EIA), SPEO, Cushing, OK WTI; Moody’s Analytics.

National Baker-Hughes Rotary Rig Count

0

500

1,000

1,500

2,000

2,500

1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

Rig Count

Gas

Oil

Source: U.S. Census Bureau.

U.S. Coal Production

0

200

400

600

800

1,000

1,200

1,400

1949 1952 1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018

Millions

Source: Energy Information Association (EIA), Annual Coal Report and the Short-Term Energy Outlook.

Thank You

2017 Mid-Year Economic UpdateQuestions?

June 8, 2017

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2017 mid-year economic update - mdm€¦ · • oil & gas • other consumer products •...

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