AFTER THE STORM (s): Average sustained growth, with risks - PowerPoint PPT Presentation

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AFTER THE STORM (s): Average sustained growth, with risks

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  1. AFTER THE STORM (s): Average sustained growth, with risks Ken Goldstein WWW.CONFERENCE-BOARD.ORG

  2. Overview: • Global economy edging lower (3.7% in ’06 after 4.4% in ’05 and 5.1% in ’04). • Longer-term prospect is closer to 3%, only partly related to oil shock. • US economy remains the linchpin. • Euro strength could be recovering; Japan finally on board; China cooling off • Higher energy costs plus storms weaken domestic growth. Recovery by mid ‘06. • Back to trend by 2nd half of ‘06.

  3. A HEALTHY GLOBAL ECONOMY CONTINUES

  4. TREND PRODUCTIVITY GROWTH IS SLOWER NOW GDP PER EMPLOYEE Source: The Conference Board

  5. HOURS WORKED SLOWER NOW, BUT? HOURS WORKED Source: The Conference Board

  6. It’s not just the domestic trendGlobal growth is slowing Note: Shaded areas represent U.S. recessions Source: The Conference Board

  7. All regions are weakening simultaneously Note: Shaded areas represent U.S. recessions Source: The Conference Board

  8. Moderate Growth Even in Germany THE CONFERENCE BOARD’S LEADING ECONOMIC INDEXES

  9. The industrial core takes the hit Note: Shaded areas represent U.S. recessions Sources: FRB, The Conference Board

  10. Slower Growth and Inflation (not oil or Katrina) Make Consumers Worry About Jobs

  11. Environment Weakened And Expectations Eroded

  12. Home Values Still Rising

  13. Whacky Oil Will Come Back to Balance Note; Shaded areas represent U.S. recessions Sources; EAI, The Conference Board

  14. Risk: Financial Imbalances

  15. Dollar on strengthening trend…

  16. …as well as against the yen

  17. Katrina and Energy prices shocks weaken consumer spending Sources: BEA, The Conference Board

  18. Shocks weaken consumer spending, Investment ? Sources: BEA, The Conference Board

  19. After the storm(s)

  20. WHAT IF WAGES RISE AS PRODUCTIVITY SLOWS

  21. COSTS WOULD RISE BUT STILL NOT MUCH PRICING POWER

  22. RECIPE FOR LESS PROFIT (AND LESS GROWTH?)

  23. LABOR FORCE GROWTH HUGE IN EMERGING WORLD

  24. AND IT WILL CONTINUE TO DO SO