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From Emergency Room To Recovery Room To Leaving the Hospital :  

From Emergency Room To Recovery Room To Leaving the Hospital :   The Oregon Economy is Healed (with a Few Lingering Ailments). 2015 RETIREMENT ASSOCIATION OF PORTLAND STATE UNIVERSITY JANUARY 15, 2015. Dr. Tom Potiowsky Director, Northwest Economic Research Center. About NERC.

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From Emergency Room To Recovery Room To Leaving the Hospital :  

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  1. From Emergency Room To Recovery Room To Leaving the Hospital:   The Oregon Economy is Healed (with a Few Lingering Ailments) 2015 RETIREMENT ASSOCIATION OF PORTLAND STATE UNIVERSITY JANUARY 15, 2015 Dr. Tom Potiowsky Director, Northwest Economic Research Center

  2. About NERC Establishedin 2011 Hostedby the College of Urban and Public Affairs (CUPA) Directedby Dr. Thomas Potiowsky Assisted by Dr. Jenny H Liu Photo Credit: www.wheretowillie.com

  3. Economic Forecasting is NOT Easy… May 7, 2008 "I do believe that the worst is likely to be behind us." —Treasury Secretary Henry Paulson in an interview in The Wall Street Journal

  4. U.S. ECONOMY

  5. State Coincidence Index(October 2014) • Coincident Index Components • Nonfarm Employment • Average Hours Worked Manufacturing • Unemployment Rate • Inflation Adjusted Wages and Salaries • Long-term growth trended to state GDP. Source: Federal Reserve Bank of Philadelphia

  6. State Coincidence Index(November 2014) • Coincident Index Components • Nonfarm Employment • Average Hours Worked Manufacturing • Unemployment Rate • Inflation Adjusted Wages and Salaries • Long-term growth trended to state GDP. Source: Federal Reserve Bank of Philadelphia

  7. Quarterly Real GDP Year over Year Percentage Change (1948 Q1 – 2014 Q3) Q2: 4.6% Q3: 5.0% Relatively Slower Expansions Relatively Longer Expansions Source: Federal Reserve Bank of St. Louis

  8. Real Trade Weighted Exchange Assisting Exports 1973 = 100 (January 1973 – November 2014) Source: Federal Reserve Bank of St. Louis

  9. U.S. Top 10 Export Trading Partners (2010–2013) . In goods only Source: U.S. Census Bureau

  10. U.S. Exports of Goods by Principal End-Use Category (2010–2013) . Source: U.S. Census Bureau

  11. U.S. Economy Brief Summary Source: Federal Reserve Bank of St. Louis

  12. U.S. Employment Loss by RecessionPercent Employment Loss Since December 2007 to March 2014 (Monthly)

  13. U.S. Duration of UnemploymentMonthly Seasonally Adjusted (January 1968 to December 2014) December 2014: Average = 32.8 Median = 12.4 Source: Bureau of Labor Statistics

  14. Emergency Room to Recovering Room to leaving the Hospital Federal Rescue Packages have been over for some time. Congress has little stomach for anything that moves spending or taxes. Even the Federal Reserve is pulling the life-line plug, ending quantitative easing last October.

  15. Milton Friedman’s Helicopter Source: http://gaianeconomics.blogspot.com

  16. Bernankellen? Source: http://www.freakingnews.com

  17. “Taper” is Such a Non-Threatening Word $25 Billion per month (late July 2014) $15 Billion of Longer-Term Treasury securities and $10 billion of Agency Mortgage-Backed securities QEIII ended in October 2014. Appears that Fed is going to shrink their portfolio, finally ushering in some rising interest rates. Ending QEIII is baked into the numbers, do not expect volatile moves in financial markets. This pending rise in interest rates will not be smooth (no surprise here). Ups, downs, spurts, and stall outs due to all sorts of events from European Union, to geopolitical risks, to other central bank policy changes, to exchange rate movements, can influence the flow of funds in and out of the US. Source: Board of Governors of the Federal Reserve System and NERC Federal Reserve issues FOMC statement, July 30,2014

  18. Effective Federal Funds RateDaily Percent (July 1954 – January 12th 2015) Fed cannot manipulate funds rate to stimulate economy as it is effectively zero. Source: Federal Reserve Bank of St. Louis

  19. Excess Reserves of Depository Institutions Billions of Dollars (January 1959 – December 2014) Source: Federal Reserve Bank of St. Louis

  20. “The outlook for growth in the U.S. economy over the next four years is little changed from the survey of three months ago, according to 42 forecasters surveyed by the Federal Reserve Bank of Philadelphia. On the jobs front, the panelists have revised upward their estimates for job gains in the next two quarters.” (November 17, 2014) Source: Federal Reserve Bank of Philadelphia

  21. REGIONAL ECONOMY(mostly Oregon)

  22. Oregon Employment Loss by Recession Employment Since January 2007 Peak to Nopvember 2014 Source: Oregon Office of Economic Analysis

  23. Oregon UnemploymentSeasonally Adjusted (Jan 1976 – Nov 2014) November 2014 at 7.0% Source: Bureau of Labor Statistics

  24. Recent Oregon Economic Facts 7.0% unemployment rate for November 2014 (November 2014 U.S. rate was 5.8%) is down from 7.3% a year ago in November 2013 and down roughly 4.6 percentage points from the recession high (11.6% in 2009).1 Total nonfarm employment increased 2.6% year-over-year for November 2014, which was the 6th fastest for all states. Total nonfarm up 43,800 since November 2013 with the private sector up 36,100 through November 2014.2 4.4% personal income growth for 3rd quarter of 2014 over 3rd quarter of 2013. Annual 2013 growth at 4.47%. 3 Oregon 2013 GDP in millions of dollars $219,590 and GDP per capita $55. For 2013 Oregon ranks 14th for all states4. • Sources: • 1Oregon Employment Department; • 2Oregon Employment Department and W. P. Carey School of Business at Arizona State University; • 3Oregon Office of Economic Analysis, • 4Federal Reserve Bank of St. Louis, Bureau of Economic Analysis

  25. Oregon Population Growth by RegionPopulation Forecast 2015-2035 Central 18.23% Metro 30.40% Northwest 15.77% Valley 15.77% Eastern 0.84% Southwest 10.89% Source: Oregon Geospatial Enterprise Office (GEO), County Boundaries; Oregon Office of Economic Analysis; 2013 Release Long Range County Demographic Forecast

  26. Population Growth by StatePopulation Forecast 2010-2030 *Note: Idaho 2030 projection was released in 2005 Source: (Oregon) Oregon Office of Economic Analysis. 2013 Release Long Range County Demographic Forecast. (Washington) Washington Office of Financial Management. 2013 Release State Population Forecast. (California) California Department of Finance. P-2: State and County Population Projections by Race/Ethnicity and Age (5-year groups), 2010-2060. (Idaho) U.S. Census Bureau. 2005 Interim State Population Projections.

  27. Nonfarm EmploymentYear Over Year Change (Jan 1991 – Nov 2014) Source: Bureau of Labor Statistics

  28. Oregon’s Industrial Winners Percent Change in Employment Since Jan 2008 through Nov 2014 Source: Bureau of Labor Statistics

  29. Oregon’s Industrial Losers Percent Change in Employment Since Jan 2008 through Nov 2014 Source: Bureau of Labor Statistics

  30. Unemployment RateSeasonally Adjusted (Jan 1976 – Nov 2014) Source: Bureau of Labor Statistics

  31. Employment Loss: Oregon and Washington Percent Change from Jan 2008 (Jan 2008 – Sep 2014) Source: Bureau of Labor Statistics; Current Employment Statistics

  32. Percent Change in Manufacturing EmploymentQuarterly Data Indexed to 1990 Q1 (1990 Q1 – 2024 Q1) December 2014 Forecast Source: Oregon Office of Economic Analysis

  33. HOUSING

  34. Housing and Government Were Drags on the Recovery.But Housing is Now Contributing to Growth but from a Very Low Base and Government is Slowly Gaining Revenues and Turning the Corner on Hiring.

  35. U.S. One Unit Housing StartsSeasonally Adjusted Annual Rate, Monthly Data (January 1990 – November 2014) Source: Federal Reserve Bank of St. Louis

  36. WHY DIDN’T CANADA HAVE A BANKING CRISIS IN 2008 (OR IN 1930, OR 1907, OR ...)? Michael D. Bordo, Angela Redish, Hugh Rockoff Working Paper 17312 http://www.nber.org/papers/w17312 NATIONAL BUREAU OF ECONOMIC RESEARCH

  37. WHY DIDN’T CANADA HAVE A BANKING CRISIS IN 2008 (OR IN 1930, OR 1907, OR ...)? Michael D. Bordo, Angela Redish, Hugh Rockoff Working Paper 17312 http://www.nber.org/papers/w17312 NATIONAL BUREAU OF ECONOMIC RESEARCH

  38. Purchase Only Housing Price Index - % Change Pacific and Mountain Regions (1991 - 2014 Q3) Source: Federal Reserve Bank of St. Louis

  39. Forecast: Oregon Housing Starts and Price Index December 2014 Forecast December 2014 Forecast Source: Oregon Office of Economic Analysis Note: *FHFA House Price Index, 1980 Q1 = 100

  40. US and Region Expansions: Going Forward Will Be Slower The Region will follow the US economy with slower growth compared to past expansions • Slow growth following major financial crisis • Slowing of population growth • Falling labor participation rate Manufacturing and exports have lead the way. Traditional boost from housing is finally coming around. Government taking longer to stem the tide of declining tax revenues, but the corner has been turned. Pothole versus Falling Off the Cliff. This recession is somewhat of a game changer. We are not on the same road, but the road at the bottom of the Cliff is gradually rising. Changing spending behavior, savings rates, home ownership rates, need to be taken into account. Job growth to be subdued but picking up steam. Employment In California has recently reached its previous peak. Oregon rises up to previous peak of early 2008 sometime in early to mid 2015.

  41. HEADWINDS (AND TAILWINDS)

  42. Short Term and a Few Long Term Risks – An Incomplete List:Rosier Outlook or Dimmer Prospects? Ukraine Geopolitical Risks Fiscal and Monetary Policy (Dodd-Frank, Health Care,…) China Economic Growth Financial Overhang (Stalled Housing Recovery for one) Europe Sovereign Debt Issues Energy Prices (Rapidly Falling Oil Prices is a Problem – Really?) Cyber Attacks, Income Disparity, Climate Change

  43. Total Debt Balance Composition Trillions of Dollars (2003 Q1 to 2014 Q3) Source: Federal Reserve Bank of New York

  44. Rising Cost of College Tuition and Fees (January 2003 to April 2014) Source: Bureau of Labor Statistics

  45. Home Ownership Trends US home ownership peaked at 69.2% in 2004. Oregon home ownership peaked at 70.1% in the 4th quarter of 2005. Dropped down to 63.3% in the first quarter of 2013. First quarter 2014 at 63.7%. Washington home ownership peaked at 69.2% in the 4th quarter of 2005. Dropped down to 62.3% in the fourth quarter of 2013. First quarter 2014 at 63.5% California home ownership peaked at 60.7% in the 3rd quarter of 2006. Dropped down to 54.0% in the 2nd quarter of 2013. First quarter 2014 at 54.5%. What is the trend going forward? Source: Current Population Survey/Housing Vacancy Survey, U.S. Census Bureau, Washington, DC 20233

  46. Income Inequality Source: Oregon Office of Economic Analysis

  47. Income Inequality Source: Oregon Office of Economic Analysis

  48. Income Inequality Source: Oregon Office of Economic Analysis

  49. Income Inequality Source: Oregon Office of Economic Analysis

  50. Income Inequality Source: Oregon Office of Economic Analysis

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