looking for the bottom presented by: mark m. zandi, chief economist presented by: mark m. zandi,...
TRANSCRIPT
Looking For the Bottom
Presented by:
Mark M. Zandi,Chief Economist
Presented by:
Mark M. Zandi,Chief Economist
March 31, 2009
2
A Very Severe Economic Downturn…
Recessions since World War II
Recession Expansion Real NonfarmPeak Trough Peak to Trough Trough to Peak GDP Employment Low High Change
Dec 2007 December 2009 24 73 -3.9 -5.1 4.4 9.8 5.4Mar 2001 Nov 2001 8 120 -0.4 -2.0 3.8 6.3 2.5Jul 1990 Mar 1991 8 92 -1.3 -1.5 5.0 7.8 2.8Jul 1981 Nov 1982 16 12 -2.9 -3.1 7.2 10.8 3.6Jan 1980 Jul 1980 6 58 -2.2 -1.3 5.6 7.8 2.2Nov 1973 Mar 1975 16 36 -3.1 -2.7 4.6 9.0 4.4Dec 1969 Nov 1970 11 106 -1.0 -1.4 3.4 6.1 2.7Apr 1960 Feb 1961 10 24 -1.3 -2.3 4.8 7.1 2.3Aug 1957 Apr 1958 8 39 -3.8 -4.4 3.7 7.5 3.8Jul 1953 May 1954 10 45 -2.7 -3.3 2.5 6.1 3.6Nov 1948 Oct 1949 11 37 -1.7 -5.1 3.4 7.9 4.5
Average for past recessions 10 57 -2.0 -2.7 4.4 7.6 3.2
Sources: NBER, BEA, FRB, BLS, Moody's Economy.com
Jobless Rate
Peak-to-Trough% ChangeDuration in Months
3
Expansion
Recovery
At Risk
In Recession
…From Coast-to-Coast
4
Federal Reserve’s balance sheet, $ bil
0
500
1,000
1,500
2,000
2,500
3,000
Dec-07 Feb-08 Apr-08 Jul-08 Sep-08 Nov-08 Feb-09
OtherSwap LinesPDCFTerm Auction FacilityDiscount WindowRepurchase AgreementsSecurities Lent to DealersSecurities Held Outright
Printing Money
5
5
6
7
8
9
10
11
12
08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4
Economic stimulus
No economic stimulus
Unemployment rate
Fiscal Stimulus Will Shore Up the Job Market
6
Fannie/Freddie Mortgages Outstanding, $ bil, year-end ‘08
0
200
400
600
800
1,000
4 4.5 5 5.5 6 6.5 7 7.5 Over8
Coupon
FreddieFannie
More Refinancings and Modifications On the Way
7
Projected losses on U.S. credit market instruments, $ bil
0
200
400
600
800
1,000
1,200
Banks Other financial Government
At risk mortgages20,000,000Foreclosure rate 50%
Foreclosed mortgages 10,000,000Loss rate 50%
Mortgage loss $1 trillion
Residential mortgages
Consumer loans
Commercial mortgages
Corporate
The Financial Stability Plan Addresses This…
8
A Massive Global Policy Response
Stimulus as a % of GDP, 2009, Source: IMF
0.0 0.5 1.0 1.5 2.0 2.5
SpainAustralia
U.S.China
S. AfricaRussia
S. KoreaMexico
GermanyCanada
J apanU.K.
I ndonesiaArgentina
FranceI ndiaBrazilI taly
9
30
35
40
45
50
55
60
65
70
75
80
85
08 09 10 11 12 13 14 15 16 17 18 19
Federal debt to GDP ratio under the President’s budget
A Looming Fiscal Crisis
Source: OMB
10
20
40
60
80
100
120
140
69 74 79 84 89 94 99 04 09
Restoring Faith
Consumer confidence, 1985 = 100
Source: Conference Board
11
A Timeline to Recovery
’08q1 ’08q2 ’08q3 ’08q4 ’09q1 ’09q2 ’09q3 ’09q4 ’10q1 ’10q2 ’10q3 ’10q4
Stock MarketBottoms
Oil PricesPeak Home Sales
Bottom
Housing StartsBottom
EmploymentBottoms
House PricesBottom
ForeclosuresPeak
Jobless RatePeaks
House PricesResume Rising
Major Financial Failures Abate
Self SustainingExpansion Begins
Fed Tightens
$ Rises
12
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