1 / 20

The State of the U.S. economy

The State of the U.S. economy. Florence Pisani December 6, 2013. The contrast with the euro area is striking: in the US, the recovery did not stopped in mid-2011…. GDP (2007 = 100). Cumulative fiscal tightening since 2010 (% of region’s potential GDP). 108. 5. United States.

sadie
Download Presentation

The State of the U.S. economy

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The State of the U.S. economy Florence Pisani December 6, 2013

  2. The contrast with the euro area is striking: in the US, the recovery did not stopped in mid-2011… GDP (2007 = 100) Cumulative fiscal tightening since 2010 (% of region’s potential GDP) 108 5 United States United States 106 4 Euro area 104 3 8% gap 102 2 100 1 0 98 Euro area -1 96 2010 2011 2012 2013 07 08 09 10 11 12 13 Sources: Thomson Datastream, IMF, Dexia-AM

  3. Financial surplus (+) or deficit (-) (2 quarters moving average, % of GDP) 8 Business sector 6 4 2 0 -2 Private sector Households -4 -6 00 02 04 06 08 10 12 Business sector’s saving and investment (% of GDP) Rest of the World (-) 16 Saving Government 14 12 10 Investment 8 00 02 04 06 08 10 12 … as the government has adjusted the pace of fiscal consolidation to the private sector spending behavior Financial surplus (+) or deficit (-) by sector (% of GDP) 10 5 0 -5 -10 -15 80 83 86 89 92 95 98 01 04 07 10 13 Sources: Thomson Datastream, Dexia-AM

  4. US private balance sheet’s healing process is almost over

  5. Household debt (% of GDP) 100 90 80 70 60 50 40 80 84 88 92 96 00 04 08 12 Household financial obligation ratio (% of disposable income) Non financial corporations interest paid / cash-flows (%) 19.5 19 35 18 30 25 17 20 15 16 10 15 5 80 84 88 92 96 00 04 08 12 0 55 60 65 70 75 80 85 90 95 00 05 10 Households have deleveraged and non financial corporations’ financial health is good Sources: Thomson Datastream, Dexia-AM

  6. Share of young adults (18-31) living with their parents (%) 38 36 2.4 millions adults 34 Home sales (thousands, annual rate) 32 1600 6500 30 1400 6000 Existing homes [R.H.S.] 28 1200 5500 1968 1981 2007 2013 1000 5000 Stock of seriously delinquent loans (millions of homes) Inventory of homes available for sale (thousands) 800 4500 4.5 600 4000 3400 600 4 400 3500 New homes 3000 500 New homes 200 3000 3 00 02 04 06 08 10 12 90+ days delinquent 2600 400 2 2200 300 1 1800 200 Foreclosure inventory Existing homes [R.H.S.] 1400 0 100 82 86 90 94 98 02 06 10 00 02 04 06 08 10 12 Despite the recent rise in mortgage rates, residential investment should continue to increase… Sources: Thomson Datastream, Dexia-AM

  7. CS home prices by metropolitan area (January 2000 = 100) “Bubble” areas 300 Washington New York 250 Phoenix Las Vegas Case Shiller home prices by metropolitan area (% year on year) Home prices (Case Shiller, existing homes, % year on year) Los Angeles 200 San Diego San Francisco 150 Miami 25 Tampa 100 20 National trend 50 15 10 0 87 90 93 96 99 02 05 08 11 5 “No bubble” areas 0 300 -5 30 Dec. 2012 Sep. 2013 250 -10 25 Seattle -15 200 Dec. 2011 20 Boston National trend -20 Chicago 150 15 Denver 92 94 96 98 00 02 04 06 08 10 12 Minneapolis 10 Cleveland 100 Charlotte Atlanta 5 Detroit 50 0 Portland 0 -5 11 87 90 93 96 99 02 05 08 -10 -15 … and home prices to recover (although at a more “reasonable” pace) Sources: Thomson Datastream, Dexia-AM

  8. Less tightening… more growth!

  9. From now on, fiscal policy should weigh less on growth Fiscal restriction (change in structural balance, general government, % of GDP) 3 2 restriction 1 0 -1 Budget balance of States and Local entities (% of GDP) Contribution to GDP growth (%) Government employment (annual change, thousands) stimulation -2 400 0.4 0.5 Local entities -3 Lower deficit 300 States 0.0 Stable deficit -4 0.2 Federal* 200 -0.5 08 10 12 14 07 09 11 13 Total 100 -1.0 0.0 0 -1.5 -100 -0.2 -2.0 -200 -2.5 -0.4 -300 -3.0 -400 -0.6 13 07 08 09 10 11 12 80 85 90 95 00 05 10 07 09 11 13 (*) Corrected for the 2010 Census Sources: CBO, Thomson Datastream, Dexia-AM

  10. Private employment (3mo3m change, monthly rate, thousands) Contribution to private wages growth (% year on year) 400 170 200 8 0 6 -200 4 -400 2 Household disposable income (contribution, %) -600 0 -800 02 04 06 08 10 12 14 -2 5 Calculated wages Average weekly hours worked -4 4 Hours worked 35.0 -6 2012 2014 Employment 3 -8 2013 Hourly earnings 34.5 34.5 -10 2 06 07 08 09 10 11 12 13 14 1 34.0 0 33.5 -1 02 04 06 08 10 12 14 -2 Hourly earnings (% 3mo3m, annual rate) Taxes 5 Income on assets Disposable income Wages and supplements Social benefits less contribution 4 3 2.0% 2 1 0 02 04 06 08 10 12 14 Disposable income will cease being affected by tax increases and help consumption grow faster Sources: Thomson Datastream, Dexia-AM

  11. Household borrowing and saving rates (% of disposable income) 14 7 12 6 10 5 Household borrowing (% of disposable income) 8 4 6 3 4 2 ? 2 1 0 0 Net financial saving rate [R.H.S.] -2 -1 -4 -2 Net borrowing rate -6 -3 94 97 00 03 06 09 12 14 Credit market borrowing 12 10 8 6 4 2 0 -2 Other Home mortgages -4 Consumer credit -6 94 97 00 03 06 09 12 Wealth effects should push the saving rate lower, but for this to happen, favorable financial conditions are necessary Source: Thomson Datastream

  12. After a slowdown in 2013, growth should accelerate towards 2.5% in 2014 GDP growth (%, year on year) GDP growth in the United States 6 4 12 Q4 13 Q1 13 Q2 13 Q3 2009 2010 2011 2012 2013 2014 Q/Q annual rate (%) 2 Consumption 1.7 2.3 1.8 1.5 -1.6 2.0 2.5 2.2 1.9 2.7 0 Investment 11.5 -1.4 7.7 4.0 -16.7 7.0 6.3 8.3 4.5 7.4 -2 - Residential 19.8 12.5 14.2 14.6 -21.2 -2.5 0.5 12.9 14.1 13.5 -4 • Equipment & • artistic originals 7.6 2.5 4.0 -1.4 -14.3 9.4 9.2 5.9 2.4 4.8 -6 95 97 99 01 03 05 07 09 11 13 - Structures 17.5 -25.7 17.6 12.3 -18.9 -16.4 2.1 12.7 1.8 9.9 Unemployment rate (%) Inventory changes (contribution) -1.8 0.9 0.4 0.8 -0.8 1.4 -0.2 0.2 0.0 -0.1 12 Government -6.5 -4.2 0.0 0.0 3.1 0.1 -3.2 -1.0 -2.0 -0.9 10 External balance (contribution) 0.6 -0.3 -0.1 0.3 1.0 -0.5 0.1 0.1 0.1 -0.2 8 - Exports 1.1 -1.3 8.0 4.6 -9.1 11.5 7.1 3.5 2.6 6.1 6 - Imports -3.1 0.6 6.9 1.8 -13.7 12.8 4.9 2.2 1.7 6.1 4 GDP 0.1 1.1 2.5 2.8 -2.8 2.5 1.8 2.8 1.7 2.6 2 95 97 99 01 03 05 07 09 11 13 Sources: Thomson Datastream, Dexia-AM

  13. Some issues still unsolved

  14. Employment rate (%) 65 64 63 Unemployment rate (%) 62 11 61 10 60 Employment to population aged 16 & over 9 59 58 8 90 93 96 99 02 05 08 11 7 Involuntary part-time employment (% of labor force) 6 5 7 4 6 3 93 96 99 02 05 11 90 08 5 4 3 2 56 63 70 77 84 91 98 05 12 The return to a more “normal” labor market will take more time (I) Sources: Thomson Datastream, BLS, Dexia-AM

  15. Change in employment by earnings category and sector (2008-10, millions) 1 Employment by earnings category (millions) 0 -1 47 -2 Higher -3 45 Lower -4 43 -5 41 -6 Lowerearnings Medium earnings Higher earnings 39 Medium 37 Manufacturing Construction 35 Retail trade 05 06 07 08 09 10 11 12 Administrative and support and waste management and remediation services Educational services, health care and social assistance Other net jobs losing sectors Other net jobs creating sectors Polarization of job market creations has increased… Sources: Thomson Datastream, BLS, Dexia-AM

  16. Top 10% income share in the United State (%, including capital gains, 1917-2012) Poverty rate (%) 24 22 55 Poverty thresholds in 2012 : 1 adult : 11 945 $ 1 family with 2 children = 23 283$ 20 50 18 45 16 40 14 12 35 10 59 69 79 89 99 09 30 1917 1927 1937 1947 1957 1967 1977 1987 1997 2007 Poverty rate by age (%) Top 0.1% income share (excluding capital gains, %, 1913-2012) 30 12 25 10 Under 18 years United States 8 20 6 United Kingdom 15 4 18-65 years 2 France 10 0 > 65 years 1913 1923 1933 1943 1953 1963 1973 1983 1993 2003 5 68 73 78 83 88 93 98 03 08 … inequalities have continued rising and poverty rates are elevated Source: Emmanuel Saez’s website at University of California, Berkeley, Census Bureau

  17. US federal Budget: CBO forecasts (% of GDP) Receipts and outlays 26 Outlays 24 +3% 22 Budget balance Debt held by the public 20 4 120 2 18 100 0 16 80 Receipts -2 14 -4 60 80 84 88 92 96 00 04 08 12 16 20 24 28 -6 40 -8 Outlays 20 -10 14 7 -12 0 Social Security + health 80 84 88 92 96 00 04 08 12 16 20 24 28 80 88 96 04 12 20 28 36 6 12 Social Security Discretionary 10 5 4 8 6 3 Medicare Other mandatory spending 2 4 2 1 Medicaid & exchange subsidies Net interest 0 0 80 88 96 04 12 20 28 80 88 96 04 12 20 28 The Budget debate is not over yet, but the ongoing political drama is distracting attention from longer term fiscal issues Sources: CBO, Dexia-AM

  18. Conclusions • Most of the fiscal restraint has now been absorbed by the US economy: from now on, the pace of growth should pick up. • While a “grand fiscal bargain” seems out of reach, some compromise should be found that would fix the current budget issues (i.e. raise the debt ceiling and vote a budget for FY2014). But the weakening of both the Tea Party and President Obama is making the outcome more uncertain. • Should growth surprise on the upside, bond rates would be under pressure, but monetary policy should still remain accommodative.

  19. Adresses Luxembourg Dexia Asset Management Luxembourg S.A. 136, route d’Arlon 1150 Luxembourg Tel.: + 352 2797-1Belgique Dexia Asset Management Belgium SA Avenue des Arts 58 1000 Brussels Tel.: + 32 2 222 11 11 France Dexia Asset Management S.A. 40, rue Washington 75408 Paris Cedex 08 Tel.: + 33 1 53 93 40 00 Allemagne Dexia Asset Management Luxembourg SA Zweigniederlassung Deutschland Grüneburgweg 58 - 62 60322 Frankfurt Tel.: + 49 69 2691 903 50 Australie Ausbil Dexia Ltd Veritas House – Level 23 207 Kent Street Sydney NSW 2000 Tel.: + 61 2 925 90 200 BahreïnDexia Asset Management Luxembourg S.A. Middle East Representative Office Al Moayyed Tower 21st Office # 2108 Bldg. 2504 Road 2832 Blk 428 Al Seef District, PO Box 75766 Tel.: + 973 1750 9900 Émirats arabes unis Dexia Asset Management Luxembourg S.A. MENA Representative Office Dubai International Financial Office 24, The Gate Village, Dubai Tel.: +971 4 401 97 36Espagne Dexia Asset Management Luxembourg S.A. Sucursal en España Calle Ortega y Gasset, 26 28006 Madrid Tel.: + 34 91 360 94 75Italie Dexia Asset Management Luxembourg S.A. Succursale Italiana Corso Italia 1 20122 Milano Tel.: + 39 02 31 82 83 62 Pays-Bas Dexia Asset Management Nederlands bijkantoor Gustav Mahlerplein 3, 26th floor 1082 MS Amsterdam Tel.: +31 20 798 13 71 Royaume-Uni Dexia Asset Management Luxembourg S.A. UK Establishment 200 Aldersgate 13th Floor EC1A 4HD London Tel.: + 44 2074707345Suisse Dexia Asset Management Luxembourg S.A., succursale de Genève 2, rue de Jargonnant 1207 Genève Tel.: + 41 22 707 90 00

  20. Disclaimer • Le présent document a un caractère purement informatif, il ne comporte aucune offre de vente ou d'achat d'instruments financiers, il ne constitue pas un conseil en investissement et ne confirme aucune transaction, quelle qu'elle soit, sauf convention contraire expresse. Les informations reprises dans ce document nous ont été transmises par différentes sources. Dexia Asset Management apporte le plus grand soin dans le choix des sources de données ainsi que dans la transmission de ces informations. Toutefois, des erreurs ou omissions dans ces sources ou dans ces processus ne peuvent pas être exclues à priori. Dexia AM ne peut être tenue responsable de dommages directs ou indirects résultant de l'utilisation du présent document. Le contenu de celui-ci ne peut être reproduit que moyennant l'accord écrit préalable de Dexia AM. Les droits de propriété intellectuelle de Dexia AM doivent être respectés à tout moment. • Attention : Si le présent document mentionne des performances passées d’un instrument financier ou d’un indice financier ou d’un service d’investissement, fait référence à des simulations de telles performances passées ou comporte des données relatives à des performances futures, le client est conscient que ces performances et/ou prévisions ne sont pas un indicateur fiable des performances futures. • De plus, Dexia AM précise que : • dans le cas où il est précisé qu’il s’agit de performances brutes, la performance peut être influencée par des commissions, redevances et autres charges. • dans le cas où la performance est exprimée en une autre monnaie que celle du pays de résidence de l’investisseur, les gains mentionnés peuvent se voir augmentés ou réduits en fonction des fluctuations du taux de change. • Si le présent document fait référence à un traitement fiscal particulier, l’investisseur est conscient qu’une telle information dépend de la situation individuelle de chaque investisseur et qu’elle est susceptible d’être modifiée ultérieurement. • Le présent document n’est pas une recherche en investissement telle que définie à l’article 24, §1 de la directive 2006/73/CE du 10 août 2006 portant mesures d'exécution de la directive 2004/39/CE du Parlement européen et du Conseil. Si la présente information est une communication publicitaire, Dexia AM tient à préciser qu’elle n’a pas été élaborée conformément aux dispositions légales arrêtées pour promouvoir l'indépendance de la recherche en investissements, et qu’elle n'est soumise à aucune interdiction prohibant l'exécution de transactions avant la diffusion de la recherche en investissements. • Dexia AM invite les investisseurs à toujours consulter le prospectus avant d'investir dans un de ses fonds. Le prospectus et d'autres informations relatives aux fonds sont disponibles sur le site www.dexia-am.com. Money does not perform. People do.

More Related