Two Steps Forward One Step Back
Daraius Irani, PhD
November 9, 2011
National Economy
Two Steps Forward?
-10%
-5%
0%
5%
10%
15%
Ann
ual R
ate
of E
xpan
sion
Bureau of Economic Analysis
Real Gross Domestic Product, Seasonally Adjusted 1981Q1 through 2011Q3
© Towson University, Division of Economic and Community Outreach
2.5 %
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
0.6%
$8,200
$8,400
$8,600
$8,800
$9,000
$9,200
$9,400
$9,600
Consumption Exp. Percent change
Two Steps Forward?
Bureau of Economic Analysis
Personal Consumption, Seasonally Adjusted, Jan 2005 through Sept 2011
Pers
onal
Con
sum
ptio
n Ex
pend
iture
s Bi
llion
s of C
hain
ed 2
005
Dol
lars
Ann
ual P
erce
nt C
hang
e
© Towson University, Division of Economic and Community Outreach
0.5 %
Consumers are Spending but…..
US May June July August September Personal Income
0.3% 0.2% 0.1% -0.1% 0.1%
Disposable Personal Income
0.2% 0.1% 0.0% -0.4% -0.1%
Personal Consumption
0.0% -0.1% 0.5% 0.0% 0.5%
© Towson University, Division of Economic and Community Outreach Bureau of Economic Analysis
Percent Change from Previous Month
The Employment Situation
2,440
2,450
2,460
2,470
2,480
2,490
2,500
2,510
128,000
128,500
129,000
129,500
130,000
130,500
131,000
131,500
132,000
132,500
133,000
US Maryland
2,400
2,450
2,500
2,550
2,600
2,650
124,000
126,000
128,000
130,000
132,000
134,000
136,000
138,000
140,000
US Maryland
Mar
ylan
d To
tal N
onfa
rm E
mpl
oyee
s, in
Tho
usan
ds
US
Tota
l Non
farm
Em
ploy
ees,
in T
hous
ands
U
S To
tal N
onfa
rm E
mpl
oyee
s, in
Tho
usan
ds
Mar
ylan
d To
tal N
onfa
rm E
mpl
oyee
s, in
Tho
usan
ds
Post – Recession Employment Picture
Bureau of Labor Statistics
2001 Recession
2007 Recession
© Towson University, Division of Economic and Community Outreach
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
Aggregate Weekly Hours Average Hourly Earnings
Ave
rage
Hou
rly
Wag
es
Year
-Ove
r-Ye
ar P
erce
nt C
hang
e
Agg
rega
te W
eekl
y H
ours
Ye
ar-O
ver-
Year
Per
cent
Cha
nge
U.S. Stalled Job Creation and Wages ? Hours, Production and Nonsupervisory Employees, Jan 2006 through Aug 2011
© Towson University, Division of Economic and Community Outreach Federal Reserve Bank
Manpower Hiring Survey
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Expect increase Expect decrease Net Change
Hiring Plans, All Industries, Not Seasonally Adjusted, 2007Q1 through 2011Q4
Inde
x
Moody’s Analytics © Towson University, Division of Economic and Community Outreach
Job Hires vs. Job Separations
© Towson University, Division of Economic and Community Outreach
2.5%
2.7%
2.9%
3.1%
3.3%
3.5%
3.7%
3.9%
4.1%
4.3%
Hires Separations
Bureau of Labor Statistics
Rat
e
Job hires vs. Job Separations, Seasonally Adjusted Jan 2008 through Aug 2011
Return to Peak Employment?
© Towson University, Division of Economic and Community Outreach IHS Global Insight
Checking Consumer and Business
Temperature
Consumer Sentiment Index
40.0
50.0
60.0
70.0
80.0
90.0
100.0
110.0
120.0
Inde
x
Firs
t Qua
rter
196
6=10
0
University of Michigan © Towson University, Division of Economic and Community Outreach
Consumer Sentiment Monthly Index, Jan 2007 through Oct 2011
Pulse of Commerce
70.00
75.00
80.00
85.00
90.00
95.00
100.00
105.00
PCI CERIDIAN INDEX GDP
Ceridian-UCLA Pulse of Commerce Index
Inde
x
PCI Monthly Index, GDP, Seasonally Adjusted Jan 2002 through Sept 2011
© Towson University, Division of Economic and Community Outreach
Regional PCI Growth
© Towson University, Division of Economic and Community Outreach Ceridian-UCLA Pulse of Commerce Index
ISM: Purchasing Managers Index
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
Oct: 50.8
Dif
fusi
on In
dex
Institute for Supply Management © Towson University, Division of Economic and Community Outreach
ISM Monthly Index, Jan 2005 through Oct 2011
Checking the Housing Picture
0
0.5
1
1.5
2
2.5
Pending Serious Delinquency Inventory Pending FC Inventory Pending REO Inventory
Shadow Inventory Concerns M
illio
ns o
f Uni
ts
Shadow Inventory Detail, Monthly, Jan 2006 through Jul 2011
© Towson University, Division of Economic and Community Outreach CoreLogic
Months’ Supply Shadow Inventory
0
1
2
3
4
5
6
7
8
9
Pending Serious Delinquency Inventory Pending FC Inventory Pending REO Inventory
Num
ber o
f Mon
ths
Months’ Supply Detail, Monthly, Jan 2006 through Jul 2011
© Towson University, Division of Economic and Community Outreach CoreLogic
Foreclosure Heat Map
RealtyTrac
September 2011
© Towson University, Division of Economic and Community Outreach
New Houses For Sale in the United States Months Since Completion
0
2
4
6
8
10
12
14
16
© Towson University, Division of Economic and Community Outreach
Not Seasonally Adjusted, Monthly, Jan 2006 through Jul 2011
Num
ber o
f Mon
ths
Census Bureau
New Houses For Sale in the United States Number of Months to Clear Out Inventories
0
2
4
6
8
10
12
14
© Towson University, Division of Economic and Community Outreach
Seasonally Adjusted, Months at Current Sales Rate, Jan 2006 through Jul 2011
Num
ber o
f Mon
ths
Census Bureau
Distressed Sales as A Percentage of Total Sales
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Short Sales REO Sales
Monthly, Jan 2006 through July 2011
Perc
ent o
f Tot
al S
ales
© Towson University, Division of Economic and Community Outreach CoreLogic
Story Behind the Numbers
• Incomes have remained stagnant for prime home buyers
• Negative housing price trends have a negative
wealth effect
© Towson University, Division of Economic and Community Outreach
Maryland Outlook
Slow Down in Maryland’s Economy?
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
MD US
Annual Rate of Change, Index, Monthly Jan 1997 through Sept 2011
© Towson University, Division of Economic and Community Outreach Federal Reserve Bank
Coi
ncid
ent I
ndex
Maryland Performance
• Maryland added 10,000 private sector jobs in September
• Employment growth is at 0.5 percent – a faster clip than the
0.1 percent for the nation
o Federal Government added 2,100 jobs
o State Government added 100 jobs
o Local Government shed 5,400 jobs
• Since January, 95 percent of new jobs have been created by
the private sector
© Towson University, Division of Economic and Community Outreach Department of Labor, Licensing and Regulation
Personal Income Percent Change
© Towson University, Division of Economic and Community Outreach Bureau of Economic Activity
Mid-Atlantic Region Unemployment Rankings
Bureau of Labor Statistics
September Unemployment Rates Seasonally Adjusted
State 2009 2010 2011
Maryland 7.4 7.4 7.4
Pennsylvania 8.5 8.5 8.3
Virginia 7.1 6.7 6.5
Delaware 8.3 8.3 8.1 DC 10.2 9.7 11.1
© Towson University, Division of Economic and Community Outreach
U.S. Unemployment Rate: 9.1 in September 9.0 in October
Measures of Labor Underutilization
7.3
10.2 9.2 8.8
12 10.7
12.7
15.4 16.2
0
2
4
6
8
10
12
14
16
18
Maryland District of Columbia United States
U-3 U-5 U-6
Bureau of Labor Statistics
Labor Underutilization, Averages, 2010Q3 through 2011Q2
Perc
ent
© Towson University, Division of Economic and Community Outreach
Maryland Mass Layoffs
0
5
10
15
20
25
30
35
0
500
1,000
1,500
2,000
2,500
3,000
Total Initial Claimants Layoff Events
Tota
l Ini
tial C
laim
ants
, To
tal a
ll In
dust
ries
Bureau of Labor Statistics
Layo
ff E
vent
s, T
otal
all
Indu
stri
es
© Towson University, Division of Economic and Community Outreach
Total Initial Unemployment Claimants and Layoff Events, Monthly, Jan 2010 through Sep 2011
Housing
MD Homes Sales vs. Inventories
0
10,000
20,000
30,000
40,000
50,000
60,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Home Sales Inventories
Hom
e Sa
les
Maryland Association of Realtors
MD Home Sales vs. Inventories, Seasonally Adjusted Jan 2000 through Aug 2011
© Towson University, Division of Economic and Community Outreach
Inve
ntor
y
MD Homes Prices vs. Inventories
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
0
10,000
20,000
30,000
40,000
50,000
60,000
Inventories Home Prices
Ave
rage
Hom
e Pr
ice
Inve
ntor
y
Maryland Association of Realtors
MD Home Sales vs. Inventories, Seasonally Adjusted Jan 2000 through Aug 2011
© Towson University, Division of Economic and Community Outreach
MD Distressed Properties
82%
12%
6%
Aug-10
83%
9% 8%
Aug-11
Total Sales REO Sales Short Sales
© Towson University, Division of Economic and Community Outreach CoreLogic
Baltimore – Towson Distressed Properties
83%
12%
5%
Aug-10
87%
7% 6%
Aug-11
Total Sales REO Sales Short Sales
© Towson University, Division of Economic and Community Outreach CoreLogic
Housing and Foreclosures
• Maryland - September 2011 o 10,662 Foreclosure Homes for Sale o $180,906 Average Foreclosure Sales Price
• US – September 2011 o 1,485,418 Foreclosure Homes for Sale o $173,344 Average Foreclosure Sales Price
© Towson University, Division of Economic and Community Outreach RealtyTrac
What’s Looming Ahead?
Maryland Federal Government and Private Sector Employment
1,800
1,850
1,900
1,950
2,000
2,050
2,100
2,150
2,200
110
115
120
125
130
135
140
145
150
Federal Total Private
Bureau Of Labor Statistics
Seasonally Adjusted, Jan 2000 through Sept 2011
Fede
ral G
over
nmen
t Em
ploy
men
t, th
ousa
nds
Priv
ate
Sect
or E
mpl
oym
ent,
thou
sand
s
© Towson University, Division of Economic and Community Outreach
Challenges Ahead
• Maryland fiscal leaders cut the State’s economic outlook
• The State’s Board of Revenue Estimates
expects growth of 2.8 percent – downgraded from 4.7 percent.
• Increased Taxes (?) • Federal Budget Cuts
© Towson University, Division of Economic and Community Outreach
Maryland’s Forecast
RESI Employment Outlook
2,350,000
2,400,000
2,450,000
2,500,000
2,550,000
2,600,000
-3.5%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
Growth TNA
Maryland Historical & Projected TNA Employment Growth, 2007Q1 through 2013Q4
RESI, Bureau of Labor Statistics
Perc
ent c
hang
e fr
om sa
me
qu
arte
r one
yea
r ago
© Towson University, Division of Economic and Community Outreach
TNA
Em
ploy
men
t Lev
el
RESI Employment Outlook
-2.3% -1.8%
-1.1% 0.1%
0.2% 0.5%
0.7% 0.9%
1.1% 1.4%
1.6% 1.8%
2.5% 2.6%
2.8%
-3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0%
Information Utilities
Manufacturing Real Estate
Financial Svcs Mgmt of Companies
Educational Svcs. Trade
Transp./Warehousing Government
Accomm/Food Svcs Healthcare Svcs. Professional/Sci.
Arts/Entertainment Admin/Waste
Maryland Projected Employment Growth, Percent, 2011 to 2012
RESI, Bureau of Labor Statistics © Towson University, Division of Economic and Community Outreach
RESI Outlook - Summary
RESI, Bureau of Labor Statistics, Bureau of Economic Analysis
Maryland Indicators - Historical & Projected Annual Figures
2009 2010 2011 2012 2013
Total Non-Agricultural Employment
(annual growth)
-3.0% -0.3% 0.7% 1.1% 1.4%
Total Personal Income
(annual growth)
0.3% 2.8% 4.5% 3.2% 3.7%
© Towson University, Division of Economic and Community Outreach