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Revisions, Shocks and Legacies

Revisions, Shocks and Legacies. OSIA Wilsonville, Oregon January 27, 2012 John W. Mitchell. 2011Up But Full of Surprises. Revisions can be a BIG Deal Earthquakes and Floods Half a World Away A Dysfunctional Fiscal System Interest Rates Lowest Ever European Chaos Commodity Shocks.

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Revisions, Shocks and Legacies

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  1. Revisions, Shocks and Legacies

    OSIA Wilsonville, Oregon January 27, 2012 John W. Mitchell
  2. 2011Up But Full of Surprises Revisions can be a BIG Deal Earthquakes and Floods Half a World Away A Dysfunctional Fiscal System Interest Rates Lowest Ever European Chaos Commodity Shocks
  3. Worse-Better-WorseRevised GDP Growth (7/29) and Current Estimates
  4. Uneasy Feeling Long Term Unemployed (40.8 Weeks Mean) Youth Unemployment 10th Anniversary of the Euro, the 11th? Underwater Homeowners-More than 1/5-Prices back to Mid 2003 Case-Shiller-$7 Trillion Gone Short Term Rates Near Zero-All Federal Paper Under 5 Years Yields less than 1% Who holds Greek Bonds? Policy Uncertainty Will Your Children be Better Off ? Things of Another Time and Place Apple’s iPad Kodak/Twinkies Bankruptcies
  5. Real GDP (SAAR) Commerce DepartmentQ4-2010 to Q3-2011
  6. 2011 Nonfarm Payroll Employment Change Private and Government(,000 SAAR) Source: BLS
  7. Annual Job Change December, 2010-December, 2011 (1.3%)
  8. Consumer Price Index Monthly Changes 2011 December 3% TotalCore 2.2%, Annual Average 3.2%
  9. Interest Rates Source: US Treasury
  10. Moving Parts-Things to Watch Consumers-Weak Earnings Growth, Deleveraging, Employment Rising, Wealth Declines, Increasing Confidence Residential Investment-Signs of Life, Fed Concerns Business Investment- Recent Strength Equipment and Software, Energy Related, Good Earnings, Uncertain Outlook State and Local-Weakness Trade Strength-Concern about Europe, China Federal-Auto Pilot, Uncertainty, Negative Outlook
  11. Prospects GDP Growth Fed Central Tendency 2011 1.6-1.7%, 2012 2.5-2.9% and 2013 3-3.5%, Consensus Slightly Lower Inflation Range .1% to 3.2% in 2012 (BCC) with a 2.1% Mean, 3.2% in 2011 Fed on Hold Until at Least Mid 2013
  12. Questions The Impact of European Events, Strait of Hormuz, North Korea ? Wither the Consumer? The Endgame for Housing? What is Going to Happen to Fiscal Policy? Auto Pilot and Polarization State and Local Fiscal Problems ? Revisions? National and State Will Any Long Term Problems Addressed in 2012?
  13. “Over There” Trade Connection-Direct and Indirect Financial Market Linkage-Exposure? Confidence Deer in the Headlights International Transactions and Reserves Primarily The Dollar and the Euro-”The essential lubricants of global trade and finance” B. Eichengreen (2012)
  14. Changes in Net Worth Households and Non Profits($Billions) Source: Federal Reserve
  15. Residential Permits (SAAR) Census Bureau 2005 to November , 2011Bouncing Along Above the Bottom 2011 up 1.2% from 2010
  16. Residential Permits 2004 to 2011 Oregon Residential Permits Source: Census
  17. Housing Data Points 17% of Oregonians With Mortgages Underwater as of Q3- CoreLogic Case Shiller Portland Prices Down 4.7% October FHFA Oregon -4.87% Bend -2.13% Corvallis -4.93% Eugene Springfield -7.78%, Medford -10.32% Portland -7.18% Salem -10.84% Bismarck 5.52%, Las Vegas -15.6% FHFA Strongest North Dakota 5.4% Weakest Nevada at 12.33% Increasing Transactions-Prices Falling- Affordability Soaring Fed Urged More Action-Via GSEs
  18. Policy December 2012-What happens at the end of 2012 if payroll tax holiday extended ? Scheduled Expirations and Sequesters Peter Domenici: Lawmakers who refuse to consider tax increases and those who rule out cutting safety net programs “are both complicit in letting America destroy itself.” Super Committee-Simpson/Bowles, Rivlin/Domenici-Blueprints Ignored What happens if the markets say enough? Fed Rate Forecasts
  19. Job Growth Update –November 2011 Data-Year over Year Change-46 States Up North Dakota 1 Wyoming 2 Oklahoma 3 Utah 4 Louisiana 5 Texas 6 Washington 7 Arizona 8 Massachusetts 9 South Carolina 10 California 11 Vermont 12 Nebraska 13 Michigan 14 Ohio 15 New Hanpshire16 Florida 17 Tennessee 18 Kentucky 19 Oregon 20 Nevada 22 Illinois 23 New York 24 Montana 25 Idaho 28 New Mexico 29 Hawaii 34 South Dakota 37 Connecticut 40 Minnesota 41 Wisconsin 44 Missouri 45 Alaska 46 Rhode Island 47 Indiana 48 Georgia 49 Delaware 50
  20. Recent Oregon Data Personal Income in Third Quarter Oregon -.1% on a drop in Transfer Payments US .1% Census Population Estimates April 1, 2010 to July 1, 2011 1.1% US .9% PSU Population Estimates July 2010 to July 2011 .5%
  21. Oregon Net Farm Income 2000-2010
  22. Year over Year Change Oregon Nonfarm Wage and Salary Employment
  23. Year over Year Percent Change Washington Nonfarm Employment
  24. Oregon Wage and Salary Employment ( ,000-SAAR) Employment Department February, 2008 to December, 2009 -148,100 Jobs
  25. Oregon Job Change Year to December 2011 (1.1%) Employment Department
  26. Around the StateNovember Source: Employment Department
  27. Changes in Annual Average Wage and Salary Employment
  28. Oregon Preliminary Growth in 2011 1.5%-Should Continue in 2012-Will Take Years to Get Back The Long Term Fiscal Issues-Volatility in Tax Structure without Large Reserves Has Not Been Resolved-Fallout from 66 and 67? Regulatory Process and Issues
  29. 2012 Continued Expansion Most Likely Diminished Inflationary Pressures Global Risks Policy Risks Legacies-Behavior, Attitudes, Financial Condition “The Wildness lies in Wait.” GK Chesterton
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