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Barings/UNC CharlotteEconomic Forecast

May 8th, 2019

Outline for Today

• U.S. Economic Trends

• U.S. Long Term Growth

• U.S. Economic Forecast

• Regional GDP Growth Patterns

U.S. Economic Trends

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Current Expansion

• Began July 2009

• 119 months

• 2nd longest of 33 total expansions since December 1854

• Mar 1991-Mar 2001 120

• Feb 1961-Dec 1969 106

• Nov 1982-Jul 1990 92

• Jun 1938-Feb 1945 80

History of Expansions

Average (all cycles) Length of Contraction Length of Expansion

1854‐2009 (33 cycles) 17.5 38.7

1854‐1919 (16 cycles) 21.6 26.6

1919‐1945 (6 cycles) 18.2 35.0

1945‐2009 (11 cycles) 11.1 58.4

Annual GrowthRates in RGSP

2010-2018

U.S. Annual Average 2.3%

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Actual vs. Potential U.S. Real GDP

Bil

lion

s of

Dol

lars

2018 IV Gap $115.4 Billion

U.S. Job Growth During Expansion

Description 2009‐2018

U.S. Jobs Lost 8,693,000

U.S. Jobs Gained 20,167,000

U.S. Jobs Added Annually: 2010-2018

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Number of Job Openings per

Unemployed Persons: 2003-2018

Average Annual U.S. Wage Increase:

2010-2018

Nominal Wage Increase

Real Wage Increase

U3, U4, U5, U6: 1994-2018

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Long Term Growth

The 2 Percent Problem

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Only Two Things Increase Potential GDP

• Labor Force Growth

• Productivity

1950 - 2017Average Annual

Productivity and Labor Force Growth Rates

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0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

Population by Age Cohort: 2015 

Future LaborForce Growth

Social NetworkUsage

Ten-YearU.S. Economic Forecast

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CBO Potential RGDP Projections

August 2018 Projection: 2019-2028 Average: 1.9%

January 2019 Projection: 2019-2028 Average: 1.8%

Year 2017 2018 2019f 2020f 2021f 2022f 2023f 2024f 2025f 2026f 2027f 2028fJan‐19 2.22% 2.90% 2.67% 1.89% 1.59% 1.60% 1.68% 1.84% 1.82% 1.69% 1.83% 1.80%

Aug‐18 2.30% 3.00% 2.80% 1.90% 1.60% 1.60% 1.60% 1.70% 1.80% 1.60% 1.80% 1.80%

What You Do and Where You Live Matters!

Industry Change

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US IndustryGrowth Rates:

2000- 2017

US Industry Percent of Total 2000-2009-2017

U.S. MSA Growth

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Per Capita Personnel Income

Rank MSA1969-2017

Rank Change2017 PCPI

1969-2017 MSA PCPI Growth/U.S PCPI Growth

- United States (Metropolitan Portion) $53,617 100.01 Fayetteville-Springdale-Rogers, AR-MO (Metropolitan Statistical Area) 338 $59,425 173.82 Charlottesville, VA (Metropolitan Statistical Area)* 257 $58,767 142.03 Bismarck, ND (Metropolitan Statistical Area) 231 $54,606 131.04 Austin-Round Rock, TX (Metropolitan Statistical Area) 197 $54,817 125.95 Santa Fe, NM (Metropolitan Statistical Area) 192 $55,553 126.46 The Villages, FL (Metropolitan Statistical Area) 183 $43,464 143.47 Nashville-Davidson--Murfreesboro--Franklin, TN (Metropolitan Statistical Area) 182 $55,944 125.68 Lake Charles, LA (Metropolitan Statistical Area) 180 $46,451 119.59 Winchester, VA-WV (Metropolitan Statistical Area)* 177 $46,036 119.3

10 Birmingham-Hoover, AL (Metropolitan Statistical Area) 176 $48,105 116.311 Durham-Chapel Hill, NC (Metropolitan Statistical Area) 175 $52,277 120.212 Flagstaff, AZ (Metropolitan Statistical Area) 172 $46,266 117.513 Wausau, WI (Metropolitan Statistical Area) 172 $47,617 115.214 Daphne-Fairhope-Foley, AL (Metropolitan Statistical Area) 166 $44,079 123.315 Sioux Falls, SD (Metropolitan Statistical Area) 166 $55,947 122.916 Fort Collins, CO (Metropolitan Statistical Area) 164 $50,539 116.617 Baton Rouge, LA (Metropolitan Statistical Area) 160 $45,775 115.618 Grand Forks, ND-MN (Metropolitan Statistical Area) 157 $48,176 113.419 St. Cloud, MN (Metropolitan Statistical Area) 154 $43,894 118.120 Burlington-South Burlington, VT (Metropolitan Statistical Area) 152 $55,785 121.121 State College, PA (Metropolitan Statistical Area) 149 $44,152 115.122 Knoxville, TN (Metropolitan Statistical Area) 147 $43,903 116.023 Raleigh, NC (Metropolitan Statistical Area) 145 $52,444 116.524 Sebastian-Vero Beach, FL (Metropolitan Statistical Area) 145 $73,274 152.725 Charlotte-Concord-Gastonia, NC-SC (Metropolitan Statistical Area) 143 $49,758 112.8

Top 25 MSAs by PCPI Rank Change:

1969 - 2017

383 U.S. Metro Areas

Rank MSA2009-2017 Rank

Change2017 PCPI

1969-2017 MSA PCPI Growth/U.S PCPI Growth

- United States (Metropolitan Portion) $53,617 100.01 El Centro, CA (Metropolitan Statistical Area) -245 $36,206 72.42 Lake Havasu City-Kingman, AZ (Metropolitan Statistical Area) -236 $30,865 63.73 Jackson, MI (Metropolitan Statistical Area) -235 $38,069 74.44 Fayetteville, NC (Metropolitan Statistical Area) -233 $36,369 73.45 Elizabethtown-Fort Knox, KY (Metropolitan Statistical Area) -232 $40,805 72.16 Flint, MI (Metropolitan Statistical Area) -228 $39,636 75.27 Battle Creek, MI (Metropolitan Statistical Area) -218 $38,683 76.18 Bakersfield, CA (Metropolitan Statistical Area) -217 $38,560 76.19 Wichita Falls, TX (Metropolitan Statistical Area) -209 $40,617 76.9

10 Riverside-San Bernardino-Ontario, CA (Metropolitan Statistical Area) -207 $39,052 76.911 Hanford-Corcoran, CA (Metropolitan Statistical Area) -201 $35,326 74.412 Mansfield, OH (Metropolitan Statistical Area) -199 $37,977 77.113 Sierra Vista-Douglas, AZ (Metropolitan Statistical Area) -196 $39,294 78.114 Merced, CA (Metropolitan Statistical Area) -195 $38,716 77.615 Kokomo, IN (Metropolitan Statistical Area) -190 $40,135 78.516 East Stroudsburg, PA (Metropolitan Statistical Area) -182 $40,706 79.617 Killeen-Temple, TX (Metropolitan Statistical Area) -182 $40,773 79.418 Danville, IL (Metropolitan Statistical Area) -180 $37,387 78.319 Lansing-East Lansing, MI (Metropolitan Statistical Area) -175 $40,148 79.920 Rockford, IL (Metropolitan Statistical Area) -174 $42,192 79.021 Springfield, OH (Metropolitan Statistical Area) -174 $39,289 79.322 Yuba City, CA (Metropolitan Statistical Area) -171 $41,673 79.223 Palm Bay-Melbourne-Titusville, FL (Metropolitan Statistical Area) -166 $43,592 75.324 Yuma, AZ (Metropolitan Statistical Area)* -166 $34,752 76.625 Columbus, GA-AL (Metropolitan Statistical Area) -165 $40,247 80.4

Bottom 25 MSAsby PCPI Rank Change:

1969 - 2017

383 U.S. Metro Areas

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Gross Domestic Product

Distribution of GDP Gains Across MSA and Non‐MSA Region 2007‐2016  

Area GDP Increase  2007‐2016*  GDP 2007*  GDP 2016* 

Share of  U.S. GDP Growth

US  $1,842,500 $14,873,700 $16,716,200

MSAs  $1,444,451 $13,419,428 $14,863,879 78.40%

Non‐Metro  $398,049 $1,454,272 $1,852,321 21.60%

 

US GDP Growth By Area 2007 - 2016

79%

93%

8%

3%0.1%

‐5%

50%

69%

13%

8%5% 6%

‐20%

0%

20%

40%

60%

80%

100%

Top 30 1‐76 77‐153 154‐229 230‐306 307‐382

GDP Growth Average Population

US GDP Growth in MSAs 2007 - 2016

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US GDP Growth 2007 - 2016

62%

73%

6%2% 0.1% ‐4%

22%

43%

59%

11%6% 4% 5%

15%

‐20%

0%

20%

40%

60%

80%

Top 30 1‐76 77‐153 154‐229 230‐306 307‐382 Non‐Metro

GDP Growth Average Population

95% of U.S. GDP Growth Accounted for by the Top MSA Quintile and the Non-Metro Areas

Percent Population

      GDP Increase  % Change  Population  Population 

Rank  Area  2007‐2016  2007‐2016  2007  2016 

   United States   $1,842,500  12.39%  301,231  323,128 

   United States (Metropolitan Portion)  $1,444,451  10.76%  255,359  277,080 

1  New York‐Newark‐Jersey City, NY‐NJ‐PA    $116,567  8.90%  19,236  20,154 

2  Dallas‐Fort Worth‐Arlington, TX    $116,559  32.86%  6,082  7,233 

3  Los Angeles‐Long Beach‐Anaheim, CA    $111,341  14.39%  12,632  13,310 

4  San Jose‐Sunnyvale‐Santa Clara, CA    $79,464  50.49%  1,766  1,979 

5  Houston‐The Woodlands‐Sugar Land, TX    $72,195  19.50%  5,541  6,772 

6  San Francisco‐Oakland‐Hayward, CA    $67,320  19.86%  4,184  4,679 

7  Boston‐Cambridge‐Newton, MA‐NH    $51,834  16.21%  4,448  4,794 

8  Seattle‐Tacoma‐Bellevue, WA    $48,307  19.70%  3,304  3,799 

9  Washington‐Arlington‐Alexandria  $47,298  11.77%  5,373  6,132 

10  Austin‐Round Rock, TX    $43,030  51.98%  1,578  2,056 

11  Philadelphia‐Camden‐Wilmington, PA‐NJ‐DE‐MD    $35,984  10.42%  5,882  6,071 

12  Denver‐Aurora‐Lakewood, CO    $33,435  22.74%  2,419  2,853 

13  Portland‐Vancouver‐Hillsboro, OR‐WA    $30,989  25.65%  2,138  2,425 

14  Atlanta‐Sandy Springs‐Roswell, GA    $29,531  10.16%  5,066  5,790 

15  San Antonio‐New Braunfels, TX    $28,510  35.27%  2,012  2,430 

 

Top 30 MSAs by GDP Growth

2007-2016

(GDP in $ millions, population in 000s)

Top 30 MSAs by GDP Growth

2007-2016      GDP Increase  % Change  Population  Population 

Rank  Area  2007‐2016  2007‐2016  2007  2016 

16  Nashville‐Davidson‐‐Murfreesboro‐‐Franklin, TN    $27,939  34.31%  1,592  1,865 

17  Charlotte‐Concord‐Gastonia, NC‐SC    $21,301  17.82%  2,086  2,474 

18  Pittsburgh, PA    $18,757  17.38%  2,359  2,342 

19  Columbus, OH    $17,477  18.01%  1,842  2,042 

20  Minneapolis‐St. Paul‐Bloomington, MN‐WI    $17,243  8.61%  3,270  3,551 

21  Midland, TX    $16,945  133.99%  133  168 

22  Baltimore‐Columbia‐Towson, MD    $16,772  11.35%  2,668  2,799 

23  Chicago‐Naperville‐Elgin, IL‐IN‐WI    $15,834  2.86%  9,337  9,513 

24  Raleigh, NC    $14,302  25.34%  1,034  1,303 

25  Oklahoma City, OK    $12,243  22.92%  1,200  1,373 

26  Tulsa, OK    $11,628  25.33%  906  987 

27  Cincinnati, OH‐KY‐IN    $10,545  9.99%  2,084  2,165 

28  Kansas City, MO‐KS    $10,344  9.94%  1,955  2,105 

29  Salt Lake City, UT    $10,297  16.31%  1,038  1,186 

30  Indianapolis‐Carmel‐Anderson, IN    $8,810  8.10%  1,827  2,004 

   Top 30 MSA Totals  $1,142,801  114,990  126,355 

   Top 30 MSAs as a % of US Total  62.02%  38.17%  39.10% 

   Top 30 MSAs as a % of MSA Total  79.12%  45.03%  45.60% 

 (GDP in $ millions, population in 000s)

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• Centralization– Shifting of population from non-metro to metro

• Concentration– Metro population growing faster in central city than

in suburbs

Centralization vs. Concentration

• Period of increasing centralization and increasing concentration 1900-1970

• Period of increasing centralization and decreasing concentration 1970-2000

• Period of increasing centralization and increasing concentration 2000-present

Centralization vs. Concentration

Take Aways

• U.S. population and economic growth will be slower over the next two decades

• Aging population and tight labor markets will dominate the U.S. economy over the next two decades

• For the most part, a small number of highly successful MSAs along with non-metro areas account for almost 90 percent of U.S. GDP growth so far in this century.

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Keys to Watch

• Interest Rates (June 18-19, 2019)*

• Consumer Confidence

• Possible Trade War

• U.S. Monthly Job Growth (1st Friday)

• Second Quarter GDP (July 26, 2019)

Barings/UNC CharlotteEconomic Forecast

May 8th, 2019

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