calhoun county 2013-14 economic forecast

7/30/2019 Calhoun County 2013-14 Economic Forecast

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20132014 Forecast for

Calhoun County

2012 was not a good year.

George A. Erickcek

Brian Pittelko

W.E. Upjohn Institute for Employment Research

January 17, 2013


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Thanks to Our Sponsors

1


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Agenda

Looking at the usual suspects for economic growth

The state economy continues to be driven by the carindustry.

Employment in Calhoun County was at a standstill in2012.

Stepping into the skill gap vs. wage gap debate.

Comparison analysis with similar areas Review of last years forecasta very quick review

Forecast for 2013 and 2014

2


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Nationwide, GDP grew at a strong 3.1% rate

during the third quarter. However, the forecast is

pretty boring.

3Source: BEA, University of Michigan RSQE forecast.

If this forecast holds, productivity will generate much of the nations output.

-2,500

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13Q1 14Q1

Employmentchange

(000s)

Percentchangein

GDP

Gross Domestic Product and Nonfarm Employment

GDP Nonfarm employment

Forecast


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There are still three job seekers for every job

opening, up from less than two before the recession.

0

1

2

3

4

5

6

7

8

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2006 2007 2008 2009 2010 2011 2012

Unem

ployedperopening

Thousands

Job Openings

Job seekers per

opening

Job openings at end of month

4

Source: BLS, JOLTS, and LAUS.


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Looking for a power source:

the usual suspects

Consumers

BusinessInvestment

Export

Market

Government

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Looking for a power source

Consumers

6

Consumer confidence is at a low

level.

Debt levels have increased.

Employment growth is

improving.

The housing market is

improving but prices are still

low.


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Consumer confidence is growing

but still weak.

0

20

40

60

80

100

120

140

160

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Consumer Confidence 1999 to Present

Recession Consumer confidence

7Source: Conference Board and NBER.


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Consumer spending is not as robust as

previous recoveries.

100

102

104

106

108

110

112

114

0 1 2 3 4 5 6 7 8 9 10 11 12 13

Quarters Since Recessions End

Post Recession Index, Last Quarter of Recession = 100:

Consumer Expenditures

1991 Recession 2001 Recession Great Recession

8Source: BEA and NBER.


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Consumers appear to be

unhappily in debt.

0

20

40

60

80

100

120

-25

-20

-15

-10

-5

0

510

15

20

25

2007 2008 2009 2010 2011 2012

Index:1995=1

00

Billions($)

Consumer Confidence and Change in Consumer Debt

Consumer debt Consumer confidence

9Source: Conference Board and the Federal Reserve


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Conditions appear to be improving:

employment is on the rise.

Employment In December 155,000 net jobs werecreated, and we need 150,000 jobs per month just

to break even.

In 2012, employment gains have averaged157,000 per month, compared with an average

monthly gain of 153,000 in 2011.

Nationwide, the unemployment rate is now 7.8.However, the labor participation rate is down to

63.6% from a low of 64.1% last year.

10


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Being unemployed for more than six months is bad

for your health. The good news is that it is

going down.

11

0

5

10

15

20

25

30

35

40

45

50

1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012

Percent Unemployed for More Than 27 Weeks


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Looking for a power source

BusinessInvestment

12

Depends upon consumer

spending and was down in the

third quarter

The Fed has been extremelyaggressive lowering interest

rates and increasing liquidity.

Loan activity appears to be

normal.


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Business investment is up but dipped

in the 3rd Quarter.

90

95

100

105

110

115

120

0 1 2 3 4 5 6 7 8 9 10 11 12 13

Quarters Since Recessions End

Post Recession Index, Last Quarter of Recession = 100:

Nonresidential Private Investment

2001 Recession Great Recession

13Source: BEA and NBER.

*Includes residential


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Credit: Banks are still holding more than a trillion

dollars in excess reservesbut it is going down.

0

200400

600

800

1,000

1,200

1,400

1,600

1,800

1996 1998 2000 2002 2004 2006 2008 2010 2012

$Billions

Total and Required Reserves at the Federal Reserve

Total reserves Required reserves

14Source: Federal Reserve.


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Interest rates must matter

15

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2007 2008 2009 2010 2011 2012

Annual%rate

Interest Rates and Inflation

30-year mortgages

10-year Treasury bill

3-month Treasury

12-month change in CPI-U


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Manufacturing activity has slowed but

capacity utilization rates are tightening.

50

55

60

65

70

75

80

85

90

30

35

40

45

50

55

60

65

2006 2007 2008 2009 2010 2011 2012

Perc

entutilization(%)

PMI(>50=ex

pansion;

calhoun county 2013-14 economic forecast

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