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Paul Traub Federal Reserve Bank of Chicago April 16, 2014
Economic Update CFA of West Michigan
Billions Chained $2009, % Change Q/Q at SAAR
!10.0%
!5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
12,000%
12,500%
13,000%
13,500%
14,000%
14,500%
15,000%
15,500%
16,000%
16,500%
'00% '01% '02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%
$%Billions%
Q4%‘07%$14,996%
Q4%‘13%$15,942%
Q2%‘09%$14,357%
April 16, 2014 1 Federal Reserve Bank of Chicago
Q4%‘13%2.6%%
U.S. Real GDP
Q4%‘08%!8.3%%
Percent%
Source:%U.S.%Bureau%of%Economic%Analysis%
April 16, 2014 2 Federal Reserve Bank of Chicago
Real U.S. GDP Q3%&%Q4%2013%!%Percent%Change%Q/Q%!%SAAR%
GDP%grew%2.6%%!%Q4/Q3%‘13%ContribuSon%to%%%Change%!%SAAR%
!1.0%
!0.3%
0.7%
1.0%
2.2%
2.6%
!2.0% !1.0% 0.0% 1.0% 2.0% 3.0%
Government%
Res.%Investment%
Nonres.%Invest.%
Net%Exports%
PCE%
Real%GDP%
Source:%U.S.%Bureau%of%Economic%Analysis%
!5.2%
1.3%
9.5%
5.7%
!7.9%
3.3%
2.6%
0.4%
2.4%
3.9%
4.8%
10.3%
2.0%
4.1%
!10.0% !5.0% 0.0% 5.0% 10.0% 15.0%
Government%
Imports%
Exports%
Nonres.%Invest.%
Res.%Invest.%
PCE%
GDP%
Q3%'13% Q4%'13%
But%the%Growth%Rate%Decelerated%Q4%‘13%vs.%Q3%‘13%
April 16, 2014 3 Federal Reserve Bank of Chicago
21.6% 23.5%
29.5%33.8%
45.2%
16.1%
6.3% 7.5%
1.5%
20.2%
5.1%
!2.4%!10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
GDP% ConsumpSon% Investment% Exports% Imports% Government%
Average%'60%!%'01% 2007%Recession%
Recession Comparisons – GDP by Sector Percent Change 24 Quarters After the Start of the Recession
Percent%
Source:%Author’s%calculaSons%using%data%from%the%BEA%
April 16, 2014 4 Federal Reserve Bank of Chicago
23.5%
42.4%
16.6%
23.9%
7.5%
18.4%
5.9% 6.8%
!10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
ConsumpSon% Durables% Nondurables% Services%
Average%'60%!%'01% 2007%Recession%
Recession Comparisons – PCE by Category Percent Change 24 Quarters After the Start of the Recession
Percent%
Source:%Author’s%calculaSons%using%data%from%the%BEA%
April 16, 2014 5 Federal Reserve Bank of Chicago
29.5% 28.3%23.1%
1.5% 1.2%
!16.7%!20.0%
!10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
Investment% NonresidenSal% ResidenSal%
Average%'60%!%'01% 2007%Recession%
Recession Comparisons – Private Investment Percent Change 24 Quarters After the Start of the Recession
Percent%
Source:%Author’s%calculaSons%using%data%from%the%BEA%
April 16, 2014 6 Federal Reserve Bank of Chicago
16.1%11.3%
29.5%
18.8% 18.4%
!2.4%
3.6%
!1.0% !3.0%
!14.8%!20.0%
!10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
Total%Government%
Federal%ConsumpSon%
Federal%Investment%
State%&%Local%ConsumpSon%
State%&%Local%Investment%
Average%'60%!%'01% 2007%Recession%
Recession Comparisons – Government Percent Change 24 Quarters After the Start of the Recession
Percent%
Source:%Author’s%calculaSons%using%data%from%the%BEA%
April 16, 2014 7 Federal Reserve Bank of Chicago
U.S. Energy Trade Gas, Oil and Petroleum & Coal Products - Index, 2002 = 100 and Ratio
12.7%
7.1%
3.4% 3.1%2.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
0%
200%
400%
600%
800%
1,000%
1,200%
1,400%
1,600%
'02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% Feb%'13%
Feb%'14%
Imports%/%Exports%RaSo%(Right)% Exports%(Le`)% Imports%(Le`)%
YTD%
1,399%
333%
April 16, 2014 8 Federal Reserve Bank of Chicago
Retail Sales
Source:%U.S.%Census%Bureau,%InflaSon%adjusted%using%CPI%!%All%Urban%Consumers%
Retail Sales and Food Services - Billions of Dollars, Percent Change M/M
!1.00%
!0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
410.0%
415.0%
420.0%
425.0%
430.0%
435.0%
440.0%
Jan%'13%
Feb% Mar% Apr% May% Jun% Jul% Aug% Sep% Oct% Nov% Dec% Jan%'14%
Feb% Mar% Apr%
M/M%%%Chg.% Real%Retail%Sales%
$Billions%
Mar ’14 433.9
1.1
Percent%
April 16, 2014 9 Federal Reserve Bank of Chicago
U.S. Light Vehicle Sales Millions of Units - SAAR
15.2%
15.8%16.0%
16.3%
15.3% 15.2% 15.3%
16.3%
12.0%
13.0%
14.0%
15.0%
16.0%
17.0%
Jan%'13%
Feb% Mar% Apr% May% Jun% Jul% Aug% Sep% Oct% Nov% Dec% Jan%'14%
Feb% Mar%
Millions%
Source:%Ward’s%Auto%Data%and%BEA%Seasonal%Factors%
April 16, 2014 10 Federal Reserve Bank of Chicago
Industrial Production Index
Source:%U.S.%Census%Bureau,%InflaSon%adjusted%using%CPI%!%All%Urban%Consumers%
Index 2007 = 100, Percent Change M/M
!0.6%
!0.3%
0.0%
0.3%
0.6%
0.9%
1.2%
96.0%
97.0%
98.0%
99.0%
100.0%
101.0%
102.0%
Jan%'13%
Feb% Mar% Apr% May% Jun% Jul% Aug% Sep% Oct% Nov% Dec% Jan%'14%
Feb% Mar%
M/M%%%Chg.% Industrial%ProducSon%Index%
Index%Feb ‘14 101.6
0.6
Percent%
11 Federal Reserve Bank of Chicago
30.0
35.0
40.0
45.0
50.0
55.0
60.0
65.0
70.0
'07 '08 '09 '10 '11 '12 '13 '14
Index%
PMI Composite Index
Mar%’14%53.7%
April 16, 2014
ISM Manufacturing
Source:%InsStute%for%Supply%Management%
May%’13%49.0%
Nov%’13%57.3%
12 Federal Reserve Bank of Chicago
30.0
35.0
40.0
45.0
50.0
55.0
60.0
65.0
70.0
'07 '08 '09 '10 '11 '12 '13 '14
U.S.% Southeast%Michigan% Western%Michigan%
Index
Manufacturing & Nonmanufacturing – 12 MMA
Mar ’14 57.6 55.5 53.9
April 16, 2014
ISM – PMI Composite Index
Source: Institute for Supply Management Note: The actual WMI is not seasonally adjusted.
Actuals Feb ‘14 Mar ’14 WMI 58.2 60.6 SEMI 47.7 50.1 U.S. 53.2 53.7
Existing Home Sales
13 Federal Reserve Bank of Chicago April 16, 2014
Thousands%of%Units,%SAAR%Thousands%
Source:%NaSonal%%AssociaSon%of%REALTORS®%
4,190%
4,660%
5,090%5,380%
5,130%4,870%
4,600%
2,000%
2,500%
3,000%
3,500%
4,000%
4,500%
5,000%
5,500%
6,000%
'10% '11% '12% '13% Jul%'13% A% S% O% N% D% Jan%'14% F%
Annual% Monthly%
New Private Housing
14 Federal Reserve Bank of Chicago April 16, 2014
Starts,%Permits%and%Under%ConstrucSon%
Source:%U.S.%Census%Bureau%
400%
500%
600%
700%
800%
900%
1,000%
1,100%
1,200%
'13% F% M% A% M% J% J% A% S% O% N% D% '14% F%
Starts% Permits% ConstrucSon%
Thousands%of%Units%Annualized,%SA%
April 16, 2014 15 Federal Reserve Bank of Chicago
Job Growth Nonfarm%Payroll,%Monthly%Job%Change,%3%–%12%MMA%
!50.0%
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
300.0%
Jan%'13%
Feb% Mar% Apr% May% Jun% Jul% Aug% Sep% Oct% Nov% Dec% Jan%'14%
Feb% Mar%
Job%Change% Revisions% 3%!%12%MMA%
Thousands%
Source:%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%
192
197 (+22)
144 (+15)
274 280
April 16, 2014 16 Federal Reserve Bank of Chicago
NFIB Small Business Optimism Index Based on 10 Survey Indicators, 1986 = 100 - SA
Source:%NaSonal’%FederaSon%of%Independent%Business%
75.0%
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
110.0%
'00% '01% '02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%
Index%
Mar%’09%81.0%
Nov%’04%107.7%
Mar%‘14%93.4%
April 16, 2014 17 Federal Reserve Bank of Chicago
NFIB Small Business Survey Select Questions - April 2014 Report
4.0%
7.0%
29.0%
36.0%
9.0%
17.0%
8.0%
5.0%
30.0%
41.0%
14.0%
19.0%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%
Credit%Was%Harder%to%Get%
Borrowing%Needs%Not%SaSsfied%
Borrowing%Needs%SaSsfied%
Few%or%No%Qualified%Applicants%
Planning%to%Raise%CompensaSon%
Planning%to%Raise%Selling%Price%
Mar%'14% Mar%'13%
Source:%NaSonal%FederaSon%of%Independent%Businesses%%April%Report%
Percent%of%%Firms%Surveyed%
Note:%Percent%calculated%as%higher%minus%lower.%
April 16, 2014 18 Federal Reserve Bank of Chicago
NFIB Small Business Survey Single Most Important Small Business Problem
6%
5%
8%
17%
21%
23%
8%
9%
10%
14%
21%
21%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
CompeSSon%from%Large%Business%
Quality%of%Labor%
Cost%/%Availability%of%Insurance%
Poor%Sales%
Government%RegulaSon%&%Red%Tape%
Taxes%
Mar%'14% Mar%'13%
Source:%NaSonal%FederaSon%of%Independent%Businesses%%April%Report%
Percent%of%%Firms%Surveyed%Historical%High%/%Low%
High%%32%%27%%34%%29%%24%%14%
Low%%8%%4%%2%%4%%3%%4%
April 16, 2014 19 Federal Reserve Bank of Chicago
2.5%
2.8%2.9%
3.0%
2.8%
2.2%
1.9%
1.7%
3.0% 3.0%3.1%
2.7%
3.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Q1%'14% Q2%'14% Q3%'14% Q4%'14% 2014%Q4/Q4% 2015%Q4/Q4%
January%Consensus% February%Consensus% March%Consensus% April%Consensus%
Percent Change From Prior Period at Annual Rate
U.S. Real GDP Projections
Percent% Consensus of the Blue Chip by Month
Source:%Blue%Chip%Economic%Indicators%–%March%10,%2014%
April 16, 2014 20 Federal Reserve Bank of Chicago
1.6%1.2% 1.2%
2.2%2.6%
6.4%
5.1% 5.3%5.7% 6.0%
4.0%
3.2% 3.3%4.0%
4.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
2011% 2012% 2013% 2014% 2015%Advanced%Economies% Emerging%and%Developing%Economies% World%
Global Outlook IMF%Forecast%for%Growth%(April%‘14),%Percent%Change%Yr./Yr.%Percent%
Difference from January 2014 Outlook 2014 0.0 0.6 0.3 2015 0.3 0.6 0.5
April 16, 2014 Federal Reserve Bank of Chicago 21
Inflation & Employment
Inflation – PCE Price Index
22 Federal Reserve Bank of Chicago April 16, 2014
!3.0%
!2.0%
!1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
'07% '08% '09% '10% '11% '12% '13% '14%
Percent%Change%Yr.%/%Yr.%–%2009%=%100%
Core%Feb%‘14%1.1%%
All%Items%Feb%‘14%0.9%%
Percent%
Source:%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%
April 16, 2014 23 Federal Reserve Bank of Chicago
Inflation – PCE Price Index Quarterly%Percent%Change,%2009%=%100%
1.8%2.0%
!0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
'10% '11% '12% '13% 14% '15%Q1%
PCE%All%Items%InflaSon%Percent%
Q4%’13%1.1%%
1.8% 1.9%
!0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
'10% '11% '12% '13% '14% 15%Q1%
PCE%Core%InflaSon%Percent%
Q4%’13%1.3%%
‘15%‘16%Annual%Q4%/%Q4%
Source:%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%and%%FRB%Philadelphia%!%Q1%2014%Survey%of%Professional%Forecasters%
‘15%‘16%Annual%Q4%/%Q4%
April 16, 2014 24 Federal Reserve Bank of Chicago
U.S. Employment Unemployment%Rate%and%ParScipaSon%Rate%
60.0%
61.0%
62.0%
63.0%
64.0%
65.0%
66.0%
67.0%
68.0%
69.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
'07% '08% '09% '10% '11% '12% '13% '14%
Unemployment%Rate%(Le`)% PatricipaSon%Rate%(Right)%
Percent%
Mar%’14%6.7%%%
63.2%
Oct%’09%10.0%%%%%
65.0%
Percent%
Source:%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%
April 16, 2014 25 Federal Reserve Bank of Chicago
!600.0%
!500.0%
!400.0%
!300.0%
!200.0%
!100.0%
0.0%
100.0%
200.0%
'07% '08% '09% '10% '11% '12% '13% '14%
Employment, Labor Force & Population
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
1950's% 1960's% 1970's% 1980's% 1990's% 2000's% 2010's%
PopulaSon%1/% Labor%Force%
1/%Civilian%non!insStuSonalized%populaSon%over%16%years%of%age.%
Source:%Author’s%calculaSons%using%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%data.%
Average%Percent%Change%by%Decade%Chg.%in%HH%Emp.%–%Chg.%in%L.F.%–%12%MMA%Thousands% Percent%
Thousands%of%Persons%!%SA%
April 16, 2014 26 Federal Reserve Bank of Chicago
U.S. Population 65 to 80 Years Old Percent%of%PopulaSon%16%to%80%Years%of%Age%
58.0%
60.0%
62.0%
64.0%
66.0%
68.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
'60% '65% '70% '75% '80% '85% '90% '95% '00% '05% '10% '15% '20% '25%
Pre!Boomers%(le`)% Baby%Boomers%(Le`)% ParScipaSon%Rate%(Right)%
Source:%U.S.%Census%Department%and%BLS%
Percent% Rate%
April 16, 2014 27 Federal Reserve Bank of Chicago
U.S. Unemployment Rate Month%Before%/%A`er%Recession%Trough%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
!10% !5% Trough% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%
Current%Recovery% Average%Recovery%
Percent%
Month 57 6.7
5.3
Source:%Author’s%calculaSons%using%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%data.%
Note:%Average%includes%%1960,%1973,%1981,%1990%and%2001%recessions.%
April 16, 2014 28 Federal Reserve Bank of Chicago
6.1%5.7%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
'10% '11% '12% '13% 14% '15%Q1%
Unemployment%Rate%Percent%
Q4%’13%1.1%%
187.7%206.9%
!50.0%
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
300.0%
'10% '11% '12% '13% '14% 15%Q1%
Payrolls%(000)s/month%Percent%
Q4%’13%1.3%%
‘14%‘15%Annual%Average%
Source:%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%and%%FRB%Philadelphia%!%Q1%2014%Survey%of%Professional%Forecasters%
‘15%‘16%Annual%
Unemployment Rate & Payroll Employment Quarterly%and%Annual%Averages%
April 16, 2014 29 Federal Reserve Bank of Chicago
Employee Wages Employee%Cost%Indexes%,%Percent%Change%Yr./Yr.%!%SA%
0.0%
2.0%
4.0%
6.0%
8.0%
'02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13%
Total%CompensaSon% Wages%&%Salaries% Benefits%
Source:%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%
Percent%
April 16, 2014 30 Federal Reserve Bank of Chicago
Employee Wages Employee%Cost%Index%%!%Total%CompensaSon,%Percent%Change%Yr./Yr.%!%SA%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
'02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13%
Source:%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%
Percent%
Averages%for%2002%–%2007%InflaSon%2.3%%
ProducSvity%2.6%%CompensaSon%3.5%%
Averages%for%Q3%’09%–%2013%InflaSon%1.8%%
ProducSvity%1.6%%CompensaSon%1.9%%
U.S.%Consumer%
April 16, 2014 Federal Reserve Bank of Chicago 31
Real Disposable Personal Income
!6.0%
!4.0%
!2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
'00% '01% '02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%
Income%
32 Federal Reserve Bank of Chicago
Percent%
Percent%Change%Year/Year%!%$2009%
April 16, 2014
Feb%’14%2.1%%
May%‘09%!2.6%%
Pre!recession%Average%3.1%%
Post%recession%average%1.4%%
Source:%U.S.%Bureau%of%Economic%Analysis%
Nov%’12%3.3%%
Dec%’12%5.9%%
April 16, 2014 33 Federal Reserve Bank of Chicago
Personal Savings Rate
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
'00% '01% '02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%
Savings%Rate%
Pre!recession%Average%4.0%%
Post%recession%average%5.3%% Feb%’14%4.3%%
Dec%’12%8.7%%
Savings%as%a%Percent%of%Disposable%Income%
Source:%U.S.%Bureau%of%Economic%Analysis%
10.0%
13.0%
16.0%
19.0%
22.0%
25.0%
28.0%
'60% '65% '70% '75% '80% '85% '90% '95% '00% '05% '10%
Total Consumer Credit
34 Federal Reserve Bank of Chicago
Percent%
April 16, 2014
Revolving%and%Non!revolving%Credit%as%%%of%DPI%
Feb%‘14%24.6%%
1960%–%1995%Average%17.3%%
1996%to%Present%Average%23.0%
Source:%Board%of%Governors%of%the%Federal%Reserve%System%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
'80% '82% '84% '86% '88% '90% '92% '94% '96% '98% '00% '02% '04% '06% '08% '10% '12%
Debt%Service%RaSo% Financial%ObligaSon%RaSo% Last%DSR% Last%FOR%
Debt Service & Financial Obligation Ratios
35 Federal Reserve Bank of Chicago
15.4%%
Percent%
10.0%%
April 16, 2014
Percent%of%Disposable%Personal%Income%
Q4%‘13%
Source:%Federal%Reserve%Bank%of%St.%Louis%
April 16, 2014 36 Federal Reserve Bank of Chicago
Initial Unemployment Claims Thousands%of%Claims%–%Monthly%Average%
200.0%
300.0%
400.0%
500.0%
600.0%
700.0%
'00% '01% '02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%
Source:%U.S.%Department%of%Labor:%Employment%and%Training%AdministraSon%
Oct%‘01%481%
Mar%‘09%659%
Mar%‘14%322%
April 16, 2014 37 Federal Reserve Bank of Chicago
Household Net Worth
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
'80% '82% '84% '86% '88% '90% '92% '94% '96% '98% '00% '02% '04% '06% '08% '10% '12%
Home%Equity% Financial%and%Other%
$11.8
Trillions%of%Dollars,%Q1%‘80%to%Q3%‘13%
Total Decline Q2 ‘07 – Q1 ‘09 -$13.2
Q2 ‘07 $68.8
Source:%Federal%Reserve%Z.1%StaSsScal%Release%,Table%B100,%Households%and%Nonprofit%OrganizaSons%
Q4 ‘13 $80.6
Q1 ‘09 $55.6
April 16, 2014 38 Federal Reserve Bank of Chicago
Household Owner’s Equity
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
'00% '01% '02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%
As%Percent%of%Household%Real%Estate%
Percent%
Q1%‘01%61.2%
Q1%‘09%36.5%
Q4%‘13%51.7%
Consumer Sentiment
39 Federal Reserve Bank of Chicago April 16, 2014
University%of%Michigan%Index%
20%
40%
60%
80%
100%
120%
140%
'00% '02% '04% '06% '08% '10% '12% '14%
Apr%’14%Preliminary%
82.6%
Jan%‘00%112.0%
Source:%Thomson%Reuters%/%University%of%Michigan%
Pre!Recession%Average:%90.8%
Post!Recession%Average:%73.5%
Michigan%Economy%
April 16, 2014 Federal Reserve Bank of Chicago 40
!0.10%
!0.05%
0.00%
0.05%
0.10%
0.15%
0.20%
Jan%'13%
F% M% A% M% J% J% A% S% O% N% D% Jan%'14%
F% M%
Manufacturing% ConstrucSon%&%Mining% Services% Consumer%Spending% Index%
41 Federal Reserve Bank of Chicago
Index%
Michigan’s Contribution
Feb%‘14%!0.06%
April 16, 2014
Midwest Economic Index
Source: FRB of Chicago
!0.15%
!0.10%
!0.05%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
Jan%'13%
F% M% A% M% J% J% A% S% O% N% D% Jan%'14%
F% M%
Manufacturing% ConstrucSon%&%Mining% Services% Consumer%Spending% Index%
42 Federal Reserve Bank of Chicago
Index%
Michigan’s Contribution
Feb%‘14%!0.07%
April 16, 2014
Relative Midwest Economic Index
Source: FRB of Chicago
Michigan Real Personal Income
!6.0%
!4.0%
!2.0%
0.0%
2.0%
4.0%
6.0%
'02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%
43 Federal Reserve Bank of Chicago
Percent%
Percent%Change%Year/Year%!%$2009%
April 16, 2014
Q1%’11%5.1%%
Source:%BEA%
Q4%‘09%!4.6%%
2002%to%2009%Average%!0.6%%
Post%recession%average%1.1%%
Q4%’13%0.6%%
Q4%‘03%2.1%%
April 16, 2014 44 Federal Reserve Bank of Chicago
88.0%
90.0%
92.0%
94.0%
96.0%
98.0%
100.0%
102.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
'07% '08% '09% '10% '11% '12% '13% '14%
Unemployment%Rate%!%SA%(Le`)% Labor%Force%Index%(Right)%
Michigan Employment
Feb ‘14 4.7%
93.7
Unemployment Rate & Labor Force Index, Jan ‘07 = 100 – S.A.
Source:%BLS%
Percent Index
April 16, 2014 45 Federal Reserve Bank of Chicago
Michigan Job Growth Nonfarm%Payroll,%Monthly%Job%Change,%3%–%12%MMA%
(50.0)%
(40.0)%
(30.0)%
(20.0)%
(10.0)%
0.0%%
10.0%%
20.0%%
30.0%%
'09% '10% '11% '12% '13% '14%
Job%Change%M/M% 3%MMA%!%12%MMA%
Thousands%Nov ’13 YTD – 65.4
Feb ’14 4.1
Source:%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%
Jan ’09 -107.5
April 16, 2014 46 Federal Reserve Bank of Chicago
36.5%%
31.3%%
0.6%%
(2.1)%
(4.4)%
(5.8)%
(6.4)%
(28.2)%
(32.6)%
(38.2)%
(40.4)%
(60.0)% (40.0)% (20.0)% 0.0%% 20.0%% 40.0%%
EducaSon%&%Health%Services%
Professional%Business%Services%
Mining%&%Logging%
Leisure%&%Hospitality%
Other%Services%
Financial%
InfromaSon%
ConstrucSon%
Manufacturing%
Government%
Trade,%TransportaSon%&%USliSes%
Michigan Nonfarm Payroll Employment by Sector Employment%Change%Jan%‘08%–%Feb%‘14,%Thousands%of%Jobs%
Source:%Author’s%calculaSons%using%data%from%U.S.%Department%of%Labor%%
Total%H/(L)%!89.7%Total%Nonfarm%Employment%4,056%
April 16, 2014 47 Federal Reserve Bank of Chicago
Michigan Home Prices Index%!%2000%=%100,%Percent%Change%M/M%
60%
70%
80%
90%
100%
110%
120%
130%
'00% '02% '04% '06% '08% '10% '12% '14%
Michigan% Detroit%Area% Grand%Rapids%!%Wyoming% Kalamazoo%
Source:%Author’s%calculaSons%using%U.S.%Census%Bureau%%and%FHFA%Data.%
Index%
Q4%’13%%
115.06%%
107.6%%
98.1%%%
83.4%
!50%
0%
50%
100%
150%
200%
250%
300%
350%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
'10% '11% '12% '13% '14%
%%Change%(Right)% Starts%(le`)%
48 Federal Reserve Bank of Chicago
Thousands%
Feb%’14%7.0%%
!42.9%%
April 16, 2014
Michigan Housing Starts
Source: U.S. Census / Haver Analytics
Units and Percent Change Yr./Yr. - SAAR
Percent%
April 16, 2014 49 Federal Reserve Bank of Chicago
16,948%16,504%
16,089%
13,195%
10,401%
11,554%
12,735%
14,440%
15,532%16,000%
16,400%
8,000%
10,000%
12,000%
14,000%
16,000%
18,000%
'05% '06% '07% '08% '09% '10% '11% '12% '13% '14% '15%
Thousands of Units – Calendar Year
U.S. Light Vehicle Sales
Thousands%
Source:%Ward’s%AutomoSve%and%BEA%and%IHS%AutomoSve.%
April 16, 2014 Federal Reserve Bank of Chicago 50
F.O.M.C. Projections
April 16, 2014 51 Federal Reserve Bank of Chicago
FOMC Overview – March 19, 2014
1. Information received since the FOMC met in January indicates that growth in economic activity slowed during the winter months.
2. Labor market indicators were mixed but on balance showed further improvement.
3. The unemployment rate, however, remains elevated. 4. Household spending and business fixed investment continued to
advanced, while recovery of the housing sector remained slow. 5. Fiscal policy is restraining economic growth, although the restraint is
diminishing. 6. Inflation has been running below the Committee’s longer-run objective,
but long-term inflation expectations have remained stable 7. Beginning in April, the purchase pace of mortgage-backed securities will
be reduced to $25 billion and the pace of longer-term Treasury securities will be reduced to $30 billion.
8. Federal Funds rate was kept at the 0 to ¼ percent target range.
April 16, 2014 52 Federal Reserve Bank of Chicago
F.O.M.C. GDP Projections
3.0%3.2%
3.0%
2.3%2.8%3.0%
2.5%
2.2%1.9%
2.9%3.1%
2.8%
2.3%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
2013% 2014% 2015% 2016% Long%Run%
Change%in%Real%GDP%Percent%
Source:%Federal%Reserve%Board%Members%and%Federal%Reserve%Bank%Presidents,%March%2014%
Percent Change Q4/Q4 in $2009 - SAAR
Note:%Central%tendency%projecSons%exclude%three%highest%and%three%lowest%projecSons.%
April 16, 2014 53 Federal Reserve Bank of Chicago
Closing the Output Gap
13,500%
14,500%
15,500%
16,500%
17,500%
18,500%
'05% '06% '07% '08% '09% '10% '11% '12% '13% '14% '15% '16%
PotenSal% Actual% Low% Middle% High%
$%Billions%
Q4%’16%80.8%%81.2%%81.7%%
Actual%/%Projected%Growth%Rate%Scenarios%
Revised'Co
ngressiona
l'Budget'O
ffice'Projec7o
n'
Source:%Author’s%calculaSons%using%data%from%the%BEA%,%FOMC,%and%CBO%
December%18,%2013%FOMC%Economic%ProjecSons1%
1.%ProjecSons%based%on%Federal%Reserve%Board%Members%and%Presidents%range%%of%forecasts%.%
CAGR%‘13%–%16%%%%%%2.8%%%%%%%%%%%%%%%%%%%%%%%%%%3.0%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%3.1%%
April 16, 2014 54 Federal Reserve Bank of Chicago
F.O.M.C. Inflation Projections
1.6%
2.0% 2.0%
1.5% 1.5%1.7%
1.0%
1.6%1.8% 1.9%
2.0%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
2013% 2014% 2015% 2016% Long%Run%
PCE%InflaSon%
1.8%
2.4%
2.0%
1.3%1.5% 1.6%
1.2%
1.6%
2.0%1.8%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
2013% 2014% 2015% 2016%
Core%PCE%InflaSon%Percent% Percent%
Source:%Federal%Reserve%Board%Members%and%Federal%Reserve%Bank%Presidents,%March%2014%
Percent Change Yr./Yr. – 2009 = 100
Note:%Central%tendency%projecSons%exclude%three%highest%and%three%lowest%projecSons.%
April 16, 2014 55 Federal Reserve Bank of Chicago
F.O.M.C. Unemployment Projections
6.3%
5.9%5.6% 5.6%6.1%
5.6%
5.2% 5.2%
7.0%
6.2%
5.8%5.4% 5.4%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
2013% 2014% 2015% 2016% Long%Run%
Unemployment%Rate%Percent%
Source:%Federal%Reserve%Board%Members%and%Federal%Reserve%Bank%Presidents,%March%2014%
Percent Change Yr./Yr.
Note:%Central%tendency%projecSons%exclude%three%highest%and%three%lowest%projecSons.%
April 16, 2014 56 Federal Reserve Bank of Chicago
1%
13%
2%
0%
2%
4%
6%
8%
10%
12%
14%
2014% 2015% 2016%
Appropriate Timing of Policy Firming FOMC%ParScipants%–%March%19,%2014%
Source:%Federal%Reserve%%Board%of%Governors%
April 16, 2014 57 Federal Reserve Bank of Chicago
Federal Funds Rate
Percent%
Source:%Federal%Reserve%%Bank%&%CME%Group%
Effective Rate and 30 Day Futures
0%
1%
2%
3%
4%
5%
6%
'07% '08% '09% '10% '11% '12% '13% '14% '15% '16%
Fed%Funds%Rate% Futures%
Thank'You!'
April 16, 2014 59 Federal Reserve Bank of Chicago
Persons Unemployed 15 Weeks or Longer As%%%of%Labor%Force%!%Month%Before%/%A`er%Recession%Trough%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
!10% !5% Trough% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%
Current%Recovery% Average%Recovery%
Percent%
Month 57 3.5
1.4
Source:%Author’s%calculaSons%using%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%data.%
Note:%Average%includes%%1960,%1973,%1981,%1990%and%2001%recessions.%
April 16, 2014 60 Federal Reserve Bank of Chicago
Persons Unemployed by Reason Job%Losers%!%Month%Before%/%A`er%Recession%Trough%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
!10% !5% Trough% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%
Current%Recovery% Average%Recovery%
Percent%
Month 57 3.5
2.6
Source:%Author’s%calculaSons%using%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%data.%
Note:%Average%includes%%1960,%1973,%1981,%1990%and%2001%recessions.%
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