tennessee's gdp forecast - chase

Economic Forecast

OUTPUT AND EMPLOYMENT WHAT THE TABLE SHOWS:

Tennessee’s GDP forecast is derived from

the national forecast by allocating output to

each of the 50 states based on employment

shares. So, forecast misses reflect surprises

in the aggregate forecast as well as

unexpected shifts in a state’s GDP share.

Tennessee’s economy has fared quite well

in the last couple of years.

KEY MESSAGES:

The state’s economy is forecast to do even

better in 2013.

Note: GDP figures are based on quarterly values that are

interpolated from annual GDP estimates using quarterly

employment changes. Unbolded figures are reported actual

values and bold figures represent forecasts.

Sources: US Department of Commerce;

US Department of Labor.

February 17, 2013

Regional Perspectives: Tennessee Economic Outlook

Commercial Banking 2

2007 2008 2009 2010 2011 2012 2013 2014

United States

Real GDP

$ billions (fourth quarter) $13,326 $12,884 $12,873 $13,181 $13,441 $13,648 $14,090 $14,654

% change over the four quarters 2.2% -3.3% -0.1% 2.4% 2.0% 1.5% 3.2% 4.0%

Nonfarm employment

Job count (fourth quarter) 137,943,000 135,153,333 129,526,667 130,283,667 132,286,667 134,455,000 136,189,659 138,513,010


Average monthly change 99,750 -232,472 -468,889 63,083 166,917 180,694 180,694 180,694

Tennessee

Real GDP

$ billions (fourth quarter) $230 $227 $224 $231 $236 $240 $247 $257


Nonfarm employment

Job count (fourth quarter) 2,804,200 2,729,633 2,595,700 2,626,933 2,671,867 2,702,933 2,739,050 2,787,423


Average monthly change 1,581 -6,214 -11,161 2,603 3,744 2,589 3,010 4,031

The Economy’s Structure

PERCENT OF TOTAL GDP DERIVED FROM SELECTED INDUSTRIES WHAT THE CHART SHOWS:

The figure compares the relative importance

of selected industries to the state’s economy

with the national footprint of each industry

(state and national figures reflect the value

added of each industry as a percent of

aggregate state or US nominal GDP,

respectively).

Tennessee’s economy depends more

heavily on durable manufacturing (vehicles)

and health care, compared with the national

economy.

KEY MESSAGES:

The outsized footprint of the real estate and

financial services industries is a challenge.

Source: US Department of Commerce. Updated through

2011.

February 17, 2013



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US industry mix Tennessee industry mix

Bankruptcies

RATIO OF BANKRUPTCY FILINGS TO THE 2007 Q4 NUMBER WHAT THE CHART SHOWS:

The ratio of bankruptcy filing by businesses

and persons to filings in 2007 Q4.

Bankruptcy filings are receding.

KEY MESSAGES:

Indicators of financial stress are a useful

coincident indication of economic distress.

The recession took a toll on the state’s

businesses but financial pressures are

easing.

Source: Administrative Office of the U.S. Courts; Updated

through December 2012.

February 17, 2013



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Business bankruptcy filingsNonbusiness bankruptcy filings

All US bankruptcy filings (shaded area)

FRB Atlanta Business Survey

REAL GDP (% CHANGE 12 MONTHS EARLIER) DIFFUSION INDEXES (0 = NO CHANGE) WHAT THE CHART SHOWS:

The figure compares an index of business activity

produced by the Federal Reserve Bank of Atlanta

with Tennessee’s real GDP growth. The activity

index, the D6 Factor, is an estimate of the trend

common to 25 distinct monthly series of economic

data for the six states in the Atlanta Federal

Reserve Bank District (the 6th district) that

includes Alabama, Florida, Georgia, Louisiana,

Mississippi, and Tennessee. The D6 Factor filters

out idiosyncratic shocks that disproportionately

affect individual states. A “0” value for the index

appears to match trend-like growth for the

national economy.

The Atlanta FRB index stands at a level

consistent with growth that is slightly subpar.

KEY MESSAGES:

The Southeast region of the country is recovering

but at a slow pace.

Sources: Federal Reserve Bank of Atlanta; US Department

of Commerce. Updated through December 2012 (surveys)

and 2012 Q4 (GDP).

February 17, 2013



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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

FRB Atlanta D6 Factor, columns (left)

Tennessee real GDP, line (right)

Private Business Surveys

REAL GDP (% CHANGE 12 MONTHS EARLIER) DIFFUSION INDEXES (50 = NO CHANGE) WHAT THE CHART SHOWS:

Selected business conditions indexes based

on a survey of purchasing managers and

real GDP growth in the region.

Business activity in the Midwest has

moderated a little.

KEY MESSAGES:

Diffusion indexes, like those based on

responses from purchasing managers, are a

timely indicator of activity in the state and

these may be moderating.

Business surveys have rebounded from a

slowdown late last year.

Sources: Institute of Supply Management; US Department

of Commerce. Updated through December 2012 (diffusion

indexes) and 2012 Q4 (GDP).

February 17, 2013

Regional Perspectives: Indiana Economic Outlook


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Real GDP in the Great Lakes region (left scale)

Business Barometer Index, Mid-America Purchasing Managers (right scale)

Initial Jobless Claims

RATIO OF INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE TO THE 2007 Q4 LEVEL WHAT THE CHART SHOWS:

The figure tracks layoffs in Tennessee and

the national level of claims.

Weekly layoffs, both the state and national

tallies, are illustrated in the figure as a ratio

to the level of layoffs in the fourth quarter of

2007, prior to the recession.

Layoffs have fallen back to pre-recession

levels.

KEY MESSAGES:

Layoffs, because they are reported so

promptly, are a useful indicator of changing

economic trends.

The falling layoff pace points to a gradual

economic recovery.

Source: US Department of Labor. Updated through

February 2, 2013 (state) and February 9, 2013 (US).

February 17, 2013



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TennesseeUS (solid area)

Economic Growth

REAL GDP GROWTH (PERCENT CHANGE FROM FOUR QUARTERS EARLIER) WHAT THE CHART SHOWS:

Real GDP growth in Tennessee (the line in

the figure) is superimposed on top of US

real GDP growth (bars in the figure).

Tennessee’s economy has recovered in line

with the national economy’s recovery.

KEY MESSAGES:

Tennessee’s economy is expected to

continue to grow in the next several years.


2012 Q4.

February 17, 2013



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Economic Output

REAL GDP LEVEL (RATIO TO 2000 Q4) WHAT THE CHART SHOWS:

The figure illustrates the evolution of real

GDP of the state and the overall US

economy since the fourth quarter of 2000,

the peak of the previous business cycle—

that is, at any point in time the lines trace the

ratio of real GDP to its level in 2000 Q4.

Tennessee paced the national level of

economic activity in the earlier expansion

but the loss of momentum in the last couple

of years has brought the level of activity

back in line with the national economy’s

growth pace.

KEY MESSAGES:

Tennessee’s economy is largely paralleling

the national economy.


2012 Q4.

February 17, 2013



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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Tennessee

US

Employment Growth

NONFARM PAYROLL EMPLOYMENT (PERCENT CHANGE FROM 12 MONTHS EARLIER) WHAT THE CHART SHOWS:

Tennessee’s employment trend, compared

with the nation’s.

Employment growth in Tennessee had been

relatively steady in the latter half of the

2000s, but the recession took a heavy toll on

the state.

Recent acceleration in job growth is

encouraging.

KEY MESSAGES:

Job gains are expected to improve in 2013.

Source: US Department of Labor. Updated through January

2013.

February 17, 2013



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Employment

NONFARM PAYROLL EMPLOYMENT (RATIO TO THE 2000 Q4 LEVEL) WHAT THE CHART SHOWS:

The figure illustrates the evolution of

employment in the state compared with the

nation since 2000 Q4, the peak of the

previous business cycle. The lines trace out

the ratio of employment at the time to

employment in 2000 Q4.

Tennessee’s businesses have recovered or

replaced 61 percent of the jobs lost during

the recession.

KEY MESSAGES:

The recession took a heavy toll on

Tennessee’s economy, reflecting the

outsized footprint of the motor vehicle

industry, but that is now in the past.

Source: US Department of Labor. Updated through January

2013.

February 17, 2013



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Tennessee

Intrastate Employment

NONFARM PAYROLL EMPLOYMENT IN SELECTED COMMUNITIES (RATIO TO 2000 Q4 LEVEL) WHAT THE CHART SHOWS:

Employment trends in local communities

across the state.

Lines are the cumulative percent change in

employment since 2000 Q4, the peak of the

previous business expansion.

All regions are beginning to stabilize.

KEY MESSAGES:

The recovering national economy is lifting

business activity across the state.


December 2012 (state) and January 2013 (US).

February 17, 2013



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US forecast

US

Clarksville

Knoxville

Nashville

Johnson City

Chattanooga

Cleveland

Kingsport-Bristol

Memphis

Jackson

Morristown

Tennessee forecast

Tennessee

Unemployment

UNEMPLOYMENT (PERCENT OF THE LABOR FORCE) WHAT THE CHART SHOWS:

Trends in Tennessee’s unemployment rate,

compared with the national average.

Typically, Tennessee’s economic

performance parallels the US economy’s but

unemployment rose by more in this

recession than the national average.

Tennessee’s unemployment rate topped out

around 11 percent, but is plunging and has

fallen below the national unemployment rate.

KEY MESSAGES:

The unemployment rate is the single best

indicator of the relative economic

performance of a region and by this

standard the local economy is faring worse

than the national economy.

Tennessee appears on the road to recovery,

judging by the declining unemployment rate.


December 2012 (state) and January 2013 (US).

February 17, 2013



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Tennessee

US (shaded)

Relative House Prices

RATIO OF THE STATE’S HOUSE PRICES TO THE NATIONAL AVERAGE (1995 Q2 = 1.0) WHAT THE CHART SHOWS:

The figure tracks the relative price of houses

in the state versus the nation—that is, it

reflects the ratio of the state price index to

the national house price index, with that ratio

set to unity in the summer of 1995. A drop

in the line means that house prices in the

state lag the national trend. States that did

not suffer from speculative conditions saw a

decline in the relative price of houses in this

last decade.

Tennessee saw little of the speculative fury

found in many other real estate markets in

the last decade.

KEY MESSAGES:

Tennessee’s housing values are in normal

alignment with the rest of the nation,

following corrections of inflated values

elsewhere.

Source: FHFA. Updated through 2012 Q3.

February 17, 2013



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Real Estate Markets

HOUSE PRICES IN SELECTED COMMUNITIES (RATIO TO THE 1995 Q2 LEVEL) WHAT THE CHART SHOWS:

The figure tracks the cumulative percentage

deviation in house prices since 1995 in

selected local markets and compares those

with the national average.

Tennessee’s housing markets don’t look

speculative, based on the steady trends in

each community but some markets match

the rise in the national average.

KEY MESSAGE:

The softer economy may dampen housing

prices in the state.

Sources: FHFA; Standard & Poor’s. Updated through

2012 Q3.

February 17, 2013



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Jackson

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New Home Building

HOUSING STARTS (RATIO TO THE JULY 1990 LEVEL) WHAT THE CHART SHOWS:

The pace of new home building (housing

starts) in Tennessee, compared with the

national trends.

New home construction in Tennessee is

beginning to rebound.

KEY MESSAGES:

Tennessee’s home building industry is

expected to continue to recover.

Source: Census Department. Updated through December

2012.

February 17, 2013



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Office Markets

PERCENT OF OFFICE SPACE THAT IS VACANT WHAT THE CHART SHOWS:

Office market conditions in Nashville,

compared with the national commercial real

estate market.

Vacancy rates in Nashville are beginning to

come down, reflecting the building strength

of the state’s economy.

KEY MESSAGES:

Tennessee’s commercial real estate markets

should continue to strengthen in 2013.

Source: CB Richard Ellis (formerly CB Commercial Property

Information Systems), Office Vacancy Index of the United

States. Updated through 2012 Q3.

February 17, 2013



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Nashville

All metropolitan areas (shaded area)

tennessee's gdp forecast - chase

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