u.s. & centerstate ny economic outlook keith u.s. and... · jan 1990 to dec 2007 source: u.s....
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M&T BankUnderstanding what’s important
U.S. & CenterState NY
Economic Outlook Gary D. Keith – Regional Economist
January 13, 2016
2.4%
1.5%
2.2%1.6%
2.5%
-2.8%-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
U.S. Real Gross Domestic Product Growth
2009 2010 2011 2012 2013 2014
Sources: U.S. Bureau of Economic Analysis, Consensus estimate for Q4 2015
3.0% annual average
from 1990-2007
Growth Has Ramped Up Slightly—But Remains Highly Volatile
Real GDP has expanded at a 3.0% or higher rate in 5 of the past 10 quarters but has
averaged just 2.5% for the entire period—only slightly above the 2.1% pace from 2010-14
2.1% average 2.5% average
2©2016 M&T Bank, Member FDIC
2.0% 1.8%
3.9%
0.6%
2.1%
4.3%4.6%
-0.9%
3.8%
3.0%
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2013 2013 2014 2014 2014 2014 2015 2015 2015 2015
Past Five Years Past Ten Quarters
Est.
105
110
115
120
U.S. Private Sector Employment
Source: U.S. Bureau of Labor Statistics
RECESSION
On the Other Hand:
Job Growth Remains Remarkably Consistent
2.5 million new jobs have been added annually since 2010,
pushing employment 4.5% above the pre-recession peak
05 06 07 08 09 10 11 12 13 14 15
Millions
©2016 M&T Bank, Member FDIC
121.2
Feb 2010
107.2
Dec 2007
116.0
3
3.5
4.0
4.5
5.0
5.5
6.0
6.5
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O
Seasonally Adjusted Annual Rate
Number of U.S. Nonfarm Job Openings
2013 2014 2015
3.9 million annual
average from 2000-07
Millions
5.4
Even More Encouraging:
Hiring Momentum Should
Continue Into 2016
Employers continue to ramp up
hiring plans, setting the stage for
faster income & spending growth
Source: U.S. Bureau of Labor Statistics©2016 M&T Bank, Member FDIC 4
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
2.7%
R
E
C
E
S
S
I
O
N
Inflation-Adjusted Year-Over-Year Percentage Change
U.S. Personal Consumption Spending Growth
90 92 94 96 98 00 02 04 06 08 10 12 15 Oct
3.3% average
Jan 1990 to Dec 2007
Source: U.S. Bureau of Economic Analysis
R
E
C
E
S
S
I
O
N
R
E
C
E
S
S
I
O
N
Net Result—Spending Picks Up Steam
With consumer spending representing 70%
of GDP, faster growth in this key sector will
ripple through the economy
5
1.9% average
July 2009 to Oct 2015
©2016 M&T Bank, Member FDIC
U.S. Real Gross Domestic Product Growth
2.5%2.4%
3.3%
2.7%
1.8%
-0.3%
-2.8%
2.5%
1.6%
2.2% 2.4%
1.5%
2.4%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
04 05 06 07 08 09 10 11 12 13 14 15 16
2016 Growth Should Continue to Modestly Improve
The economy is expected to expand at a solid if unspectacular
pace in 2016, moving closer to its long-term potential
Sources: U.S. Bureau of Economic Analysis, Consensus Forecast
F
O
R
E
C
A
S
T
F
O
R
E
C
A
S
T
6
3.0% annual average
from 1990-2007
©2016 M&T Bank, Member FDIC
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
2010 2011 2012 2013 2014 2015 2016 2017
Interest Rate Forecast
Forecast
2.39%
1.38%
1.87%
2 Year LIBOR swap
1 Month LIBOR
10 Year LIBOR swap
7
Monetary Policy Will Slowly Tighten Even
As Long-Term Rates Remain Relatively Flat
Short-term rates are expected to rise 100bp through year-end 2017 while weak
global growth will keep downward pressure on medium- and long term rates
©2016 M&T Bank, Member FDIC
So, the Economy’s
Getting Back to
“Normal”…Right?
57%
58%
59%
60%
61%
62%
63%
64%
65%
74%
75%
76%
77%
78%
79%
80%
81%
82%
94 96 98 00 02 04 06 08 10 12 14 15
94 96 98 00 02 04 06 08 10 12 14 15
59.3%
77.2%
Not By a Long Shot:
Labor Market Participation
Is Still Way Too Low…
While demographics account for
half of the decline, 8.5 million more
workers would be employed if the
ratio were equal to 1990-2007 norms
…Even Among Prime
Working Age Individuals
If the ratio were equal to the 1994
to 2007 average, 3.6 million more
workers would be employed
U.S. Employment-to-Population Ratio
16+ Years of Age
25 to 54 Years of Age
62.8% average
Jan 1994 to Dec 2007
80.1% average
Jan 1994 to Dec 2007
©2016 M&T Bank, Member FDIC 9Source: U.S. Bureau of Labor Statistics
The Economy Looks Very Different Depending on Where You Stand
10
The recovery has proceeded at sharply different
rates for different sectors—with “goods producers”
(30% of the economy) lagging “service providers”
Even among goods producers, growth rates are
diverging—with construction on the upswing and
manufacturing and mining trending downward
©2016 M&T Bank, Member FDIC
3.9% 3.9%5.3% 5.9%
-1.2%
2.0%0.5%
Q4 Q1 Q2 Q3 Q4 Q1 Q2
13 14 14 14 14 15 15
0.5% 1.7%3.9%
-0.6%
7.5%5.5%
21.7%
Q4 Q1 Q2 Q3 Q4 Q1 Q2
13 14 14 14 14 15 15
ConstructionGrowth in Real Output From Previous Quarter at Annualized Rate
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Goods Producing
Service Providing
2007 2008 2009 2010 2011 2012 2013 2014 ‘15 Q2
Manufacturing & MiningGrowth in Real Output From Previous Quarter at Annualized Rate
Relative Change in Output Since 2007
Source: U.S. Bureau of Economic Analysis
11
“IMF Cuts Global Growth Forecasts”
“The International Monetary Fund cut
its global growth forecasts for a second
time this year…saying the world
economy would grow at 3.1 percent –
0.2 percentage points below the
July prediction.”
The U.S. is expected to grow
2.6 percent – up from the 2.5 percent
forecast in July.”
Martin Barraud | OJO Images | Getty Images
“There is a shift between emerging
countries and developed countries.
The first ones, who were driving a
global recovery not so long ago,
are slowing down.”
©2016 M&T Bank, Member FDIC Source: Reuters—October 6, 2015
How’s the
CenterState NY
region performing?
Relative Change in Inflation-Adjusted GDP 2007
CenterState NY Real GDP Growth
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
2007 2008 2009 2010 2011 2012 2013 2014 2015est
* Syracuse, Utica-Rome, Ithaca and Watertown metro areas
13
CenterStateMetro Areas*
9.2%
3.0%
©2016 M&T Bank, Member FDIC Sources: U.S. Bureau of Economic Analysis, M&T estimates for 2015
Less Bust—But Also Less Boom
After outperforming the U.S. from 2009-12,
regional GDP growth once again has
fallen behind the national norm
All U.S.Metro Areas
-0.7%
-0.5%
-0.2%
0.9%
1.3%
1.5%
1.6%
2.1%
2.5%
2.8%
Source: U.S. Bureau of Labor Statistics
New York City
United States
Buffalo-Niagara
Rochester
Albany
UTICA-ROME
SYRACUSE
ITHACA
Binghamton
WATERTOWN
99,300
2,873,90
09,800
6,900
5,400
1,300
2,200
-100
-400
-200
Absolute Change
Year-Over-Year Percentage Change
Private Sector Job Growth – 2015*
Job Growth
Trails the
Upstate Norm
Regional hiring
pace lags well
behind Buffalo,
Rochester &
Albany
©2016 M&T Bank, Member FDIC 14* November year-to-date
4%
5%
6%
7%
8%
9%
10%
Seasonally Adjusted
CenterState NY Unemployment Rate
5.4%
5.0%
CenterState NY
UnitedStates
Note: CenterState data seasonally adjusted by M&T
15
Cayuga, Cortland, Herkimer, Jefferson,
Lewis, Madison, Oneida, Onondaga,
Oswego, Seneca, St. Lawrence &
Tompkins counties
Nov 2014
6.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015Nov
“But Isn’t Labor
Stress Continuing
to Decline?”
The regional jobless
rate is down 3+ points
since mid-2012
June 2012
8.8%
Sources: U.S. Bureau of Labor Statistics, NYS Department of Labor©2016 M&T Bank, Member FDIC
92%
94%
96%
98%
100%
102%
104%
106%
108%
110%
Relative Change Since January 2007
CenterState NY Labor Force
95.2%
102.7%
CenterState NY
16
Cayuga, Cortland, Herkimer,
Jefferson, Lewis, Madison,
Oneida, Onondaga, Oswego,
Seneca, St. Lawrence &
Tompkins counties
Nov 2015
683,700
2007 2008 2009 2010 2011 2012 2013 2014 2015
Note: CenterState region data seasonally adjusted by M&T
Nov 2013
694,600
Jan 2007
718,200UnitedStates
NovSources: U.S. Bureau of Labor Statistics, NYS Department of Labor©2016 M&T Bank, Member FDIC
Shrinking Labor Pool Raises Questions About Future Growth Potential
The regional workforce has contracted by nearly 11,000 over the past 24 months
(and by nearly 35,000 since January 2007), distorting the decline in jobless rate
75%
80%
85%
90%
95%
100%
105%
80.1%
Drag From Industrial Job
Losses Continues
Regional manufacturing
employment is down by over
12,000 since the start of 2007
87.9%
Cayuga, Cortland, Herkimer,
Jefferson, Lewis, Madison,
Oneida, Onondaga, Oswego,
St. Lawrence, Seneca &
Tompkins counties
Nov
CenterState NY
UnitedStates
17
2007 2008 2009 2010 2011 2012 2013 2014 ‘15
Sources: U.S. Bureau of Labor Statistics, NYS Department of Labor©2016 M&T Bank, Member FDIC
Note: CenterState region data seasonally adjusted by M&T
Relative Change Since January 2007
CenterState NY Manufacturing Employment
3.3%3.1%3.0%3.0%
2.7%
2.1%
50%
54%
58%59%
62% 62%
Utica- Syracuse Buffalo Albany Rochester All U.S.
Rome Metro Areas
©2016 M&T Bank, Member FDIC Sources: U.S. Bureau of Economic Analysis, M&T estimates
Diversification and Investment
in “New Economy” Sectors is
Critical to Future Growth
Utica- Syracuse Albany Rochester Buffalo All U.S.
Rome Metro Areas
Personal Income Growth
Follows a Similar Pattern
“Economy 2.0” Industry Share of GDP - 2014
Average Annual Growth in
Per Capita Personal Income 2010-14
“Cracking the Code” For Economic Growth
18
Economy 2.0 = “Eds & Meds,” Advanced Manufacturing, Information, Business Services, Finance, Insurance, Real Estate, Construction, Retail, Leisure & Hospitality
Economic Restructuring—A Tale of Two Regions
“Economy 2.0” sectors now make up 58% of Buffalo area output (up from
52% in 2007) versus 52% for CenterState metros (up from 51% 2007)
-5%
0%
5%
10%
15%
20%
2007 2008 2009 2010 2011 2012 2013 2014
All U.S.
Metro
Areas
19.4%
10.6%
Net Change in
Buffalo Output
Since 2007:
$4.7 Billion Buffalo-Niagara
Relative Change Since 2007
Real GDP From “Economy 2.0” Industries
Economy 2.0 = “Eds & Meds,” Advanced Manufacturing, Information, Business Services, Finance, Insurance, Real Estate, Construction, Retail, Leisure & Hospitality
-5%
0%
5%
10%
15%
20%
2007 2008 2009 2010 2011 2012 2013 2014
All U.S.
Metro
Areas
5.4%
10.6%
Net Change in
CenterState Output
Since 2007:
$1.3 Billion
CenterState
19Sources: U.S. Bureau of Economic Analysis, M&T Bank estimates©2016 M&T Bank, Member FDIC
-1,100
-500
-300
-200
-200
700
1,300
2,800
Year-Over-Year Absolute Change
CenterState Job Gain/Loss—Second Half of 2015*
Private Education &Health Care Services
Trade, Transportation & Utilities
Leisure & Hospitality
Government
Financial Activities
Manufacturing
Professional &Business Services
Construction
+1.8%
+1.0%
+1.2%
(0.1%)
(0.7%)
(0.5%)
(1.0%)
(4.6%)
% Change
Encouraging Trend—
But Still Not Firing
on All Cylinders
Solid growth in
education, health care,
trade and hospitality
employment is offset by
cuts in other sectors
20* June to NovemberSources: U.S. Bureau of Labor Statistics, NYS Department of Labor©2016 M&T Bank, Member FDIC
Total investment: $1.3 billion
Total expected jobs: 420
Total investment: $3.5 billion+
Total expected jobs: 2,500+
“The state, through the SUNY Polytechnic Institute, will build an 82,500-square-foot facility in DeWitt. Construction has started
and is expected to be completed in the second half of 2016.”
Syracuse Post Standard October 29, 2015
“Hooray! seems quite inadequate. So does woo-hoo! Or yippee! Traditional cheers are pretty lame when it comes to the announcement that two companies
will invest billions of dollars and bring roughly 1,500 additional jobs to Nano Utica.”
Utica Observer-Dispatch August 20, 2015
21©2016 M&T Bank, Member FDIC
Syracuse Post Standard
December10, 2015
“The Central New York region will
receive $500 million over five years
— doled out in roughly equal
installments of $100 million a year —
to help fund development projects
and programs designed to generate
long-term job growth.”
Upstate Revitalization Initiative
22©2016 M&T Bank, Member FDIC
M&T BankUnderstanding what’s important
U.S. & CenterState NY
Economic Outlook Gary D. Keith – Regional Economist
January 13, 2016
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