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First in Forecasts Since 1948
BRIAN BEAULIEU
First in Forecasts Since 1948
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First in Forecasts Since 1948
ITR Economics provides the best economic intelligence to reducerisk and drive practical and profitable business decisions.
2018 Preliminary Forecast ResultsIf you heard ITR around two years prior… 3
Duration AccuracyUS GDP 24 99.9%US Ind. Production 34 99.4%Europe Ind. Production 24 99.2%Canada Ind. Production 27 97.1%China Ind. Production 30 99.9%Retail Sales 28 99.6%Housing (Single Family Units) 26 99.2%Employment (Private Sector) 30 99.4%
First in Forecasts Since 1948
US Economy Stalls in 2019 and Into 2020US Real Gross Domestic Product
Source: BEA3MMA Data Trend
14
15
16
17
18
19
20
13
14
15
16
17
18
19
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
GDP - 3MMA Before Data Revision
Sep '15 Forecast
GDP - 3MMA
June '18 Forecast
First in Forecasts Since 1948
US and Wisconsin GDP Growth Rate
-6
-4
-2
0
2
4
6
'06 '08 '10 '12 '14 '16 '18 '20U.S. Wisconsin
Source: BEA3/12 Rates-of-Change
First in Forecasts Since 1948
2.2%
4.7% 4.6%
6.4% 6.1%
2.7%
1.3%
-0.8%
2.8%
4.0%3.3% 3.3% 3.2%
-0.7%
3.4%2.6%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Milwaukee GDP Growth Rate
Milwaukee Gross Domestic ProductMilwaukee-Waukesha-West Allis, MSA
Source: BEAYear-over-Year Percent Change
6
First in Forecasts Since 1948
Manufacturing: A Growing Part of AmericaUS Industrial Production Index to US Total Manufacturing Production Index
105.7108.3
30
45
60
75
90
105
120
30
45
60
75
90
105
120
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
ManufacturingUS IP
US IP
Manufacturing
Source: FRBAnnual Data Trends
7
First in Forecasts Since 1948
Manage the Business Cycles to Maximize ProfitsUS Industrial Production to Gross Domestic Product
-6.9%-2.9%
-5.2%
-15.5%
3.9%
-16
-12
-8
-4
0
4
8
12
-16
-12
-8
-4
0
4
8
12
'82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
GDPUS IP
GDPUS IP
Sources: FRB, BEAYear-over-Year, Quarter-to-Quarter (3/12)
8
First in Forecasts Since 1948
Lower Taxes Likely to Provide a Temporary BoostUS Top Marginal Individual Tax Rates to Real GDP Growth Rate
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-4%
-2%
0%
2%
4%
6%
8%
10%
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020Real GDP Growth Rate - 3/12 Top Marginal Tax Rate
Sources: Tax Foundation, BEA Tax Rate - Percent, GDP - 3/12
Rea
l GD
P G
row
th R
ate Top M
arginal Tax Rate
First in Forecasts Since 1948
Not All Freed Up Money Went to CapexUS Corporate Tax Rate and Gross Business Investment
0%
10%
20%
30%
40%
50%
60%
70%
0%
10%
20%
30%
40%
50%
60%
70%
'60 '64 '68 '72 '76 '80 '84 '88 '92 '96 '00 '04 '08 '12 '16
Corporate Tax Rate %
Gross Business Investment (% of GDP)
Linear (Gross Business Investment (% of GDP))
Sources: Tax Policy Center, FREDPercent
10
Atlanta Federal Reserve Survey W.S. SurveyHard Data
First in Forecasts Since 1948
50
200
350
500
650
800
-180
-120
-60
0
60
120
'06 '08 '10 '12 '14 '16 '18 '20 '22
MMTR-O-C
12MMT
3/1212/12
Rate-of-Change – A Management Tool
11
First in Forecasts Since 1948
Global Issues• Business Cycle• Tariffs
First in Forecasts Since 1948
United States
China
Japan
Australia
Percent of 2017 World GDP by Country
13Source: IMF, *67% are IMF Estimated Figures
24.3%
15.0%
6.1%4.6%3.3%3.3%
3.2%2.6%
2.4%2.1%
1.9%
1.9%
1.7%1.6%1.4%1.3%1.1%1.0%
0.9%0.8%
19.4%
United States
China
Rest of World
Japan
Mexico
*Total 2017 World GDP: $79.865 Trillion US$
First in Forecasts Since 1948
Trade Stress Becomes Acute on the Downside of the CycleWorld Industrial Production Index to G7 Leading Indicator
-6
-4
-2
0
2
4
6
-15
-10
-5
0
5
10
15
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
World IP
Indicator
IndicatorWorld IP
1/1212/12
Sources: CPB Netherlands Bureau For Economic Policy Analysis, OECDRates-of-Change
Fair Trade
Competition
First in Forecasts Since 1948
Brands That Have or Will Be Increasing Prices Due to Tariffs
Source: Business Insider, “These popular brands say Trump's tariffs will force them to raise prices”
TOYOTAWHIRLPOOLCOCA-COLAWINNEBAGOMILLER COORSSAMUEL ADAMSCAMPBELL SOUPLG ELECTRONICSGENERAL MOTORSKLEENEX & HUGGIESPOLARIS INDUSTRIESNEWELL BRANDS (Crock-pot, Rubbermaid, Yankee Candle, & Sharpie)
“I can't just go to the shareholders and say, 'You're just going to have to accept my profit's going to be $40 million less. It doesn't work that way…”
- Gavin Hattersley, CEO MillerCoors
First in Forecasts Since 1948
Leading Indicators
First in Forecasts Since 1948
ITR’s Leading Indicator™ Says Problems AheadUS Industrial Production to ITR Leading Indicator™
-15
-10
-5
0
5
10
15
-15
-10
-5
0
5
10
15
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
IndicatorUS IP
Indicator - Monthly
US IP - 12/12
Sources: FRB, ITR EconomicsUSIP – 12/12 Indicator - Monthly
Reported in ITR Trends Report – ITR Advisor
First in Forecasts Since 1948
Leading Indicator System as a Powerful ToolUS Industrial Production Index to Leading Indicators
-60
-40
-20
0
20
40
60
-15
-10
-5
0
5
10
15
'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
US IP - 12/12US IP ForecastG7 Indicator - 1/12PMI - 1/12Wilshire Market Cap - 3/12JP Morgan Indicator - 3/12
PMI, Wilshire, G7US IP, JP Morgan
Sources: FRB, OECD, ISM, Yahoo Finance, IHS MarkitRates-of-Change
First in Forecasts Since 1948
Copper is Signaling a Slowdown in SpendingUS Copper Futures Prices to
US Nondefense Capital Goods New Orders(excluding aircraft)
-1.2%
6.1%
-30
-20
-10
0
10
20
-150
-100
-50
0
50
100
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
Capital GoodsCopper
Copper Futures Prices
Capital Goods
Sources: WSJ, Census Bureau12/12 Rates-of-Change
19
First in Forecasts Since 1948
Financial Markets
Back to the USA
First in Forecasts Since 1948
10
100
1000
10000
10
100
1000
10000
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
Raw
12MMA
Perilous Height Is Not the Issue S&P500 Stock Prices Index
Source: Wall Street JournalData Trends
21
First in Forecasts Since 1948
Analysis of the CAPE RatiosJanuary 1900 – January 2019
Analysis prepared by : Baird Family Wealth Group January 2019Source: Robert Shiller – Yale University
First in Forecasts Since 1948
All Except for SteelCommodity Prices
Source: WSJ, London Metal Exchange, BLS3/12 Rates-of-Change
-22.8% Zinc-14.8% Alum
14.5% Steel
-12.6% Copper
-60
-30
0
30
60
90
120
150
-60
-30
0
30
60
90
120
150
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
All Others Copper & Steel
First in Forecasts Since 1948
US Mortgage Rate Will Be Heading HigherUS 30-Year Mortgage Rate
0
1
2
3
4
5
6
7
8
0
1
2
3
4
5
6
7
8
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Source: Wall Street Journal30-Year, Percent
First in Forecasts Since 1948
People
First in Forecasts Since 1948
State Population Growth Rates
Source: US Census BureauPercent Change from Population Estimates 2010 to 2018
First in Forecasts Since 1948
Retail Sales Ultimately Drive Filling, Packing, Stacking, Moving, Shipping, etc.
US Retail Sales
Source: US Census Bureau12/12 Rates-of-Change
27
10.67.5
7.14.8
4.73.63.5
3.43.2
1.10.8
-6 -4 -2 0 2 4 6 8 10 12
Online Retailers
Jewelry Stores
Furniture Stores
Clothing Stores
Beer, Wine & Alcoholic Beverage
Health and Personal Care Stores
Bldg Materials, Garden, Supplies
Grocery Stores
General Merchandise Stores
Automotive Parts Stores
Light Vehicle Sales
First in Forecasts Since 1948
Searching for a RecessionUS Search Interest for "Recession" on Google to US Retail Sales
Sources: Google, US Census BureauRates-of-Change (Search Interest has a 16 month lead time)
-24
6
36
66
96
126-12
-8
-4
0
4
8
'06 '08 '10 '12 '14 '16 '18 '20 '22 '24
Retail Sales
Retail Sales - 12/12
Search Interest - 3/12
3/12
12/12
Search Interest
First in Forecasts Since 1948
Decline for WI Single-Family Housing Building Permits
Source: Census BureauThousands of Units
29
-5.7%-1.6%
11.70
15
30
45
60
75
90
-120
-90
-60
-30
0
30
60
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
MMTR-O-C
3/1212/12
3MMT
12MMT
First in Forecasts Since 1948
Multi-Family on the Rise in WIWisconsin Multi-Family Housing Unit Building Permits
-1.6%15.4%
6.7
0
7
14
21
28
35
-225
-150
-75
0
75
150
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
MMTR-O-C
3/12
12/12
3MMT12MMT
Source: Census BureauThousands of Units
First in Forecasts Since 1948
Milwaukee Housing Unit Building PermitsMilwaukee-Waukesha-West Allis, MSA
-10.4%0.9%
3.4
0
3
6
9
12
15
18
21
-200
-150
-100
-50
0
50
100
150
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
MMTR-O-C
12MMT3MMT
3/12 12/12
Source: US Census BureauThousands of Units
First in Forecasts Since 1948
Wisconsin Housing Price Index
Source: Federal Housing Finance AgencyRaw Data, 1991 = 100
32
150
175
200
225
250
275
150
175
200
225
250
275
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
Raw
First in Forecasts Since 1948
Milwaukee to Wisconsin Housing Price IndexMilwaukee-Waukesha-West Allis, MSA
0
70
140
210
280
350
420
0
70
140
210
280
350
420
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018Milwaukee Wisconsin
Source: Federal Housing Finance AgencyAnnual Data Trend, 1991 = 100
33
First in Forecasts Since 1948
ITR’s Leading Indicator Says Cyclical Rise in 2019US Private Nonresidential Construction to ITR Leading Indicator
-15
-10
-5
0
5
10
-45
-30
-15
0
15
30
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
ConstructionConstruction ForecastIndicator
IndicatorConstruction
Sources: US Census Bureau, ITR Economics Rates-of-Change
ITRLI Leads by 20 months
First in Forecasts Since 1948
2
3
4
5
6
7
8
9
10
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18US Wisconsin
US to Wisconsin Unemployment Rates
Source: BLSPercent
35
Dec 2018US 3.9%WI 3.0%
First in Forecasts Since 1948
County Unemployment Rates
Source: BLSRaw Data, %
3.0%
2.1%2.2%2.3%
0
2
4
6
8
10
12
0
2
4
6
8
10
12
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
MilwaukeeOzaukeeWashingtonWaukesha
First in Forecasts Since 1948
In Search of More and More LaborUS Private Sector Employment
88
98
108
118
128
85
95
105
115
125
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
Employment Mils of Jobs
Private Sector Employment GrowthJob Openings 6.6 million 13.5% B
1.9% B
Source: BLSAnnual Data Trend
37
First in Forecasts Since 1948
Wisconsin to County Average Annual Wages
1.4%
2.4%2.6%
2.4%
4.1%
-6
-3
0
3
6
9
-4
-2
0
2
4
6
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
OzaukeeAll Others
Milwaukee Wisconsin
Washington Waukesha
Ozaukee
Source: BLS12/12 Rates-of-Change
38
First in Forecasts Since 1948
Cyclical Rise in Prices IndicatedConsumer Price Index for Health Insurance
Source: Bureau of Labor Statistics2005 = 100
6.5%1.6%
136.2
100
115
130
145
160
175
-24
-16
-8
0
8
16
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
MMAR-O-C
1/12 12/12
Raw
12MMA
First in Forecasts Since 1948
Automation/Robots Do Not Hurt Mfg EmploymentRIA Shipments to US Total Manufacturing Employment
Sources: Robotics Industries Association, Bureau of Labor StatisticsAnnual Data Trends
11
13
15
17
0
1
2
3
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
RIA Shipments
Employment
EmploymentRIA Shipments
Mfg Employment 2.0% B 12.7m Highest in 11 yrs
Mfg Job Openings 19.3% B 493,000 Near Record High
Mfg Hourly Wage $27.36 Near Record High
First in Forecasts Since 1948
Rising as ExpectedUS National Defense Expenditures to US Defense Capital Goods New Orders
-45
-30
-15
0
15
30
45
60
75
-12
-8
-4
0
4
8
12
16
20
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
OrdersExpenditures
ExpendituresOrders
Obama
Source: Bureau of Economic Analysis, US Census Bureau12/12 Rates-of-Change
41
Reagan Bush Clinton BushCarter Trump
First in Forecasts Since 1948
The Long ViewProsperity in the Age of Decline
First in Forecasts Since 1948
A Model for the FutureUS Industrial Production Index
2
4
6
8
10
12
2
4
6
8
10
12
'20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36 '37 '38 '39 '40
12MMA3MMA
12MMA
3MMAGreat Depression
Roaring 20s (3 recessions)
Source: FRBData Trends
First in Forecasts Since 1948
Issues Government Will and Won’t TackleUS Federal Government Receipts and Payments
$0
$375
$750
$1,125
$1,500
$1,875
$2,250
$2,625
$3,000
$0
$375
$750
$1,125
$1,500
$1,875
$2,250
$2,625
$3,000
Current Tax Receipts
Consumption Expenditures
Current Transfer Payments
Interest Payments
Source: BEABillions of Dollars
44
First in Forecasts Since 1948
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