National financial trends and their effects on southern utah
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National Financial Trends and Their Effects on Southern Utah. Alan Hamlin, Ph.D. Chair, Dept. of Management Southern Utah University. Current Macro-Economic Trends. Declining GDP: Factory orders down 4 th straight month in Nov 08 (US Commerce Dept.)

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National Financial Trends and Their Effects on Southern Utah

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National financial trends and their effects on southern utah

National Financial Trends and Their Effects on Southern Utah

Alan Hamlin, Ph.D.

Chair, Dept. of Management

Southern Utah University


Current macro economic trends

Current Macro-Economic Trends

  • Declining GDP: Factory orders down 4th straight month in Nov 08 (US Commerce Dept.)

  • Declining Employment- 693,000 jobs lost in December

  • Declining Interest Rates- Fed funds rate 0.09% 1/6/09

  • Declining Interbank lending (2009 commercial lending will not improve- Moody’s 12/08)

  • Declining Consumer lending (November Consumer Conf. Index=38, lowest in history)

  • Increasing defaults and foreclosures- highest since 1930s

  • Declining personal consumption- 73,000 stores to close in next 6 months (Int. Council of Shopping Ctrs.)

  • Declining state and local revenue


  • Federal rescue efforts

    Federal Rescue Efforts

    • Recent actions include:

      • Increase the money supply to reduce interest rates, currently 0-0.5%

      • Allow non-banks to borrow from Fed

      • Convert non-banks to bank status to allow access to bailout monies- ex. GMAC

      • Borrow extensively from EU banks to fund emergency measures

      • Buy lower-quality mortgage-backed securities from FNMA and others


    Us treasury efforts

    US Treasury Efforts

    • Recent actions include:

      • Obtaining $700B in TARP funds to buy “toxic” assets from troubled banks and non-banks

      • Shut down failed banks & investment banks

      • Guarantee share prices of all publicly offered money market funds that desire to participate, inc. those w/NAV below zero.

      • Take over FHLMC and FNMA, guarantee their debts and assume stock ownership.


    Current state and local data

    Current State and Local Data

    • State of Utah statistics

      -19,000 jobs w/b lost in 2009 (DWS 1/7/2008)

      - Heavy losses in const. & mfg.

      • Iron County statistics 2008

        -Sales tax down 11% yr. over yr. (12/15 SL Tribune)

        -Residential bldg. permit valuation down over 61%

        -Projected unemployment rate for 2009= 5% (DWS)

    • Washington County statistics 2008

      -Retail sales tax down 12%- SG budget cut 15%

      -Residential building permits down from 982 in 2005

      to 156 in 2008, $183M to $24M.

      • Defaults & foreclosures up significantly

      • Projected unemployment rate for 2009= 6% (DWS)


    Prognostications

    Prognostications

    • What does this year look like for Southern Utah?

      • Unemployment higher

      • Construction and mfg. lower

      • Consumer and commercial spending

      • Housing estimates

      • Low interest income for retirees

      • Continued volatility in equity & capital mkts.


    Who will this affect

    Who Will This Affect?

    • Real Estate: builders, lenders, realtors, appraisers, all others.

    • Tourism: hotels, restaurants, golf, airlines.

    • All luxury retailers: upscale malls, automobiles, RV/Boat retailers, etc.

    • Local and State Governments

    • Education


    What can be done

    What Can Be Done?

    • Governments, businesses and households must:

      • Cut spending

      • Increase revenues if possible

      • Refinance debt

      • Change habits and thinking

      • Ride out the storm- 18 months is normal, this recession will probably be longer and deeper.


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