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# NMTA Economic Forecast - PowerPoint PPT Presentation

NMTA Economic Forecast. November 9, 2011. Jim Hebert Hebert Research, Inc. 2011 Nobel Prize Winners Thomas Sargent and Christopher Sims. Structural Macroeconomic Model (X,Y) = (Y,X) Mathematical Model - Rate of Change Statistical Model - Historical Variables that do not change:

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Economic Forecast

November 9, 2011

Jim Hebert

Hebert Research, Inc.

2011 Nobel Prize WinnersThomas Sargent and Christopher Sims

• Structural Macroeconomic Model

(X,Y) = (Y,X)

• Mathematical Model - Rate of Change

• Statistical Model - Historical Variables that do not change:

X= el+allX-1 + a21X-2 +BllYl + b21Y-2 + cllZ-1 + CZ ~ Z+ -el

Y= c2 + aEX-1 + a22X-2 + buy1 + b22Y-2 + CEZ-+ ~c22Z-2 + e2

Z= c3 + a13X-1 + ~ 2 ~X+- 2b i3Y-I + b23x2 + c ~ ~ + Z c2-3Z~-2 + e3

• Where P(Xi │Yj) = Pij / (∑ Pij)

• X1 = Ability to purchase

X2 = Willingness

X2 = Delayed Decision

• d = f {Hp + Eu}

• Where beta home price – 0.297

• Employment – 0.685

• R2 = 0.878

More Foreclosures Can Be Expected Construction in 30 years

Housing Indicators Construction in 30 years

Income and Employment Construction in 30 years

Nonfarm Payroll Employment Construction in 30 years

WA Employment is Still in the Hole Construction in 30 years

WA State Businesses Construction in 30 yearsFull Time Employees

Unemployment Rate (% of Labor Force) Construction in 30 years

Education and Unemployment Construction in 30 years

Manufacturing Employment Construction in 30 years

WA State Businesses Construction in 30 yearsAnnual Gross Revenue

Stock Market Volatility has Spiked Construction in 30 years

M2 Money Stock Construction in 30 years

Current Market Conditions Construction in 30 years

Confidence in Overall Economy Construction in 30 years

Future Health of the Economy Construction in 30 years

Total Revenue Construction in 30 years

Total Revenue Construction in 30 years

Expenses and Costs Construction in 30 years

Overall Business Climate Construction in 30 years

Federal Debt and Recovery Construction in 30 years

Consumer Price Index Construction in 30 years

US LMV Sales are Recovering Slowly Construction in 30 years

Consumer Confidence is Very Weak Construction in 30 years

2011 Crisis of Confidence – C Construction in 30 years5

• Consumer Confidence