Embed Size (px)
DESCRIPTION
SPG Trend Advisors and its affiliate, Sage Policy Group, have made presentations on local and regional economies, the national economy, international and geopolitical issues and capital market events. We offer these presentations for our readers to gain additional information from our commentaries and further explanation of our analyses and forecasts.
Citation preview
The Economy: Getting Through theRecession
Offit-Kurman, Executive Dialogue January 9th, 2009
Presented by: Morris Segall, President SPG Trend Advisors
To:
THE ECONOMY
Gross Domestic Product2001Q1 - 2008Q3
Source: Bureau of Economic Analysis
Contributions to GDP Growth by Component
2007Q3-2008 Q3
Source: Bureau of Economic Analysis
Corporate Profits (before tax)2003Q1 - 2008Q3
Source: Bureau of Economic Analysis
Industrial Production January 2007-November 2008
Source: Federal Reserve
Net Change in U.S. JobsJune 2005 – December 2008
Source: Bureau of Labor and Statistics
National Nonfarm Employment by Industry Sector Groups
December 2007 – December 2008
Source: Bureau of Labor Statistics
Continued Unemployment Claims January 2006 - December 27th, 2008
Source: Department of Labor
Source: (Left) Census Bureau (Right) Federal Reserve
Retail Sales Less Food and Fuel April 2007- November 2008
Consumer CreditQ4 2005 – November 2008
Existing Home SalesOctober 2001-November 2008
Source: (Left) National Association of Realtors, (Right) Census Bureau
New Home Sales Units Sold vs. Length on Market
February 2006-November 2008
S&P/Case-Shiller Home Price Index 2006 – October 2008
Source: Standard and Poors
Commercial Mortgage Delinquency Rates among Major Investor Groups
2005 Q4-2008Q3
Source: Mortgage Bankers Association
Changes in Consumer Price Index in Percentage Terms
2006 v. 2005
2007 v. 2006
6 months ended in Sep. 2008
6 months ended in Nov. 2008
All items 2.5% 4.1% 5.2% -1.9%Food at Home 1.4% 5.6% 8.6% 7.5%Food Away Home 3.2% 4.0% 5.4% 5.8%Rent of Primary Res 4.3% 4.0% 3.5% 3.9%Owners Equiv of Rent of Prim Res 4.3% 2.8% 2.0% 2.3%Household Energy 2.4% 5.3% 12.7% -4.4%Water/Sewer/Trash 4.8% 5.4% 7.1% 8.5%Houshold Ops 4.4% 2.2% 7.2% 2.1%Car Repair 3.8% 3.3% 6.8% 6.1%Pub. Transp 0.1% 7.2% 13.8% -3.0%Medical 3.6% 5.2% 2.3% 2.5%Education 6.3% 5.6% 6.1% 5.6%Energy 2.9% 17.4% 20.9% -36.1%Source: Bureau of Labor and Statistics
Average Hourly Compensation2004 – December 2008
Source: Bureau of Labor Statistics
Source: Energy Information Administration
NYMEX Crude Oil Future Prices in U.S. Dollars
February 2001– January 6th 2009
How do I get through it?Manage business on cash flow basisIncrease efficiency of asset turnover; increase liquidity Intensify customer service initiativesBecome innovative in controlling costs
Outsource where appropriate
Join Co-ops to spread costs over larger group
Look for new ways to leverage existing employees and infrastructure by investigating new sources of revenue from new products and markets. BE A SOLUTIONS PROVIDERSecure access to bank credit; firm up bank lines
How do I get through it? (cont.)Spend to increase productivity and market share
Take advantage of accelerated equipment write offs as part of government’s economic stimulus packageTake advantage of soft demand in economy to build for future by aggressive bargain purchasingIf access to capital and liquidity are not detriments, look to acquire troubled companies and/or strategic assets of other companiesTrain employees to be more productive and increase their value by enabling them to do more tasks
Increase networking and take advantage of trade associations for additional contacts and leadsPartner with other firms
What’s on the other side? 2009 - Recession Bottoms with Housing and Unemployment
Housing bottoms late this yearBank loan losses abate late this yearUnemployment peaks in the second half of this yearLower Energy Prices alleviate pressure on consumer spending – but virtually no economic growth or recovery
New Obama Administration Increased economic “bailout” and middle class spending programs. Increased federal budget deficits.
What’s on the other side? (cont.)2009 – Business
Cost of goods declines from current levels as interest rates, labor costs and commodity prices decline but business is facing zero consumer and business demand. Corporate profits in decline for most of this year despite easy year/year comparisons.Weak consumer spending but pent-up demand building
2010 – Economy Makes Gradual Cyclical Recovery
Increased employment = increased consumer spendingIncreased Corporate Sales = increased corporate profits = increased capital spendingIncreased interest rates and rising prices from higher demand and continuing federal budget deficits
Where are the opportunities?Healthcare – National ProgramEducationAgricultureEnergy ConservationEnvironmental Solutions Electric PowerTransportation – Increase Mass TransitExports
Water Conservation – New Supplies and RecyclingU.S. Government Procurement and Outsourcing – Base Realignment Program (BRAC)Real Estate – Recycle and Rehab Existing Commercial and Residential Property
ConclusionsWe are in a deep and protracted recession that began in the fourth quarter of 2007. It began in housing and has spread through the entire U.S. and overseas economies. Economic weakness has intensified through 2008 and will worsen through the first half of 2009. Increased near term economic and market pressures include:
stubbornly high inflation in food and basic serviceslower corporate profitsincreased unemploymentcontinued weak levels of corporate capital and consumer spending
Conclusions continuedSevere reductions in State and Local Government spendingWeak exports as overseas economies fall into recessionContinued credit pressures in residential housing and consumer lending spreading to commercial real estate markets and corporate lending
Conclusions continued
However, a bottoming of the housing cycle and an abatement in bank credit losses in the second half of this year, could set the stage for cyclical capital markets and economic improvements in 2009 and 2010. After an expected cyclical recovery in 2010-2012, we believe the longer term socio-economic issues facing this country will result in slower future economic growth for the United States. The availability and cost of credit, particularly to consumers, will be more restricted and expensive in the future.
Thank You
You can always reach me at [email protected], if you need us in a hurry, we are at 410.522.7243 Please contact us when you require economic and capital markets research & policy analysis.Further information available at www.spgtrend.com
Appendix: Maryland Economic Data
Nonfarm Employment by Industry Sector Groups in Maryland:
December 2007-November 2008
Source: Bureau of Labor and Statistics
Change in Maryland Housing Units Sold January 2002 - November
2008
Source: Maryland Association of Realtors
Change in Average Home Price by Maryland Jurisdiction November 2007 - November 2008
Source: Maryland Association of Realtors
County 2008 2007 % change County 2008 2007 % changeAllegany 116,111 122,347 -5.1% St. Mary's 300,193 340,130 -11.70%Somerset 116,750 144,200 -19.00% Charles 301,918 341,455 -11.60%
Dorchester 143,767 203,046 -29.20% Carroll 307,168 341,319 -10.00%Caroline 166,490 193,210 -13.80% MARYLAND 309,337 346,513 -10.70%
Baltimore City 179,716 177,753 1.10% Worcester 363,293 371,858 -2.30%
Washington 180,898 207,827 -13.00% Garrett 365,253 379,882 -3.90%
Wicomico 218,784 241,291 -9.30%Queen Anne's 370,731 491,195 -24.50%
Cecil 243,825 282,557 -13.70%Anne
Arrundel 376,320 415,771 -9.50%Harford 258,544 274,688 -5.90% Howard 386,426 428,685 -9.90%Prince
George's 264,885 314,577 -15.80% Montgomery 425,742 518,474 -17.90%Frederick 276,594 341,285 -19.00% Talbot 806,577 623,564 29.30%Baltimore
County 278,591 317,622 -12.30% Kent 821,650 210,277 290.70%
Calvert 297,748 391,194 -23.90%
Change in Home sales by Maryland JurisdictionNovember 2007 – November 2008
Source: Maryland Association of Realtors
County 2008 2007%
change County 2008 2007%
changeSomerset 3 11 -72.70% St. Mary's 63 62 1.60%
Kent 6 13 -53.80% Charles 75 117 -35.90%Caroline 10 20 -50.00% Carroll 76 89 -14.60%
Dorchester 12 24 -50.00% Howard 124 216 -42.60%Talbot 13 49 -73.50% Frederick 136 152 -10.50%Queen Anne's 16 32 -50.00% Harford 143 186 -23.10%
Garrett 19 35 -45.70%Anne
Arrundel 266 346 -23.10%
Allegany 27 44 -38.60%Baltimore
City 320 496 -35.50%
Calvert 29 69 -58.00%Prince
George's 333 418 -20.30%
Wicomico 41 46 -10.90%Baltimore
County 341 559 -39.00%Cecil 42 68 -38.20% Montgomery 528 587 -10.10%
Worcester 57 106 -46.20% MARYLAND 2,740 3813 -28.10%
Washington 60 68 -11.80%
