The Light at the End of the Tunnel
Facing Sunshine or Oncoming Train?
Daraius Irani, PhD
November 8, 2012
© Towson University, Division of Economic and Community Outreach
1982
Q1
1984
Q1
1986
Q1
1988
Q1
1990
Q1
1992
Q1
1994
Q1
1996
Q1
1998
Q1
2000
Q1
2002
Q1
2004
Q1
2006
Q1
2008
Q1
2010
Q1
2012
Q1-10%
-5%
0%
5%
10%
15%
Light?Real Gross Domestic Product,
Seasonally Adjusted 1981Q1 - 2012Q3
© Towson University, Division of Economic and Community Outreach
2.0 %
An
nua
l Ra
te o
f Exp
ansi
on
Bureau of Economic Analysis
JobsUS Monthly Change(Thousands)
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12-1000
-800
-600
-400
-200
0
200
400
600
Unemployment, by Party in Office
1952
1956
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
2008
2012
0%
2%
4%
6%
8%
10%
12%
Na
tion
al U
ne
mp
loym
en
t R
ate
Republican Democrat
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statists
Job Hires vs. Job Separations
July
2006
12/1
/200
6
5/1/
2007
10/1
/200
7
3/1/
2008
8/1/
2008
Jan
2009
6/1/
2009
11/1
/200
9
4/1/
2010
9/1/
2010
2/1/
2011
July
2011
12/1
/201
1
5/1/
2012
2.5%2.7%2.9%3.1%3.3%3.5%3.7%3.9%4.1%4.3%
Hires Separations
Ra
te
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics
Seasonally Adjusted Jan 2008 through Aug 2012
Measures of Labor Underutilization
Maryland District of Columbia United States0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
6.9%
9.3%8.3%8.5%
11.2%
9.7%
12.1%
14.5% 15.0%
U-3 U-5 U-6
Average Unemployment, 2011Q4 through 2012Q3
Un
em
plo
yme
nt P
erc
en
t
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics
Unemployment Heat Map
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics
Pre-Recession
Unemployment Heat Map
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics
Mid-Recession
Unemployment Heat Map
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics
Current Levels
Personal Income Percent Change
© Towson University, Division of Economic and Community Outreach Bureau of Economic Activity
Home Prices 2
000Q
1
200
1Q1
2
002Q
1
200
3Q1
2
004Q
1
200
5Q1
2
006Q
1
200
7Q1
2
008Q
1
200
9Q1
2
010Q
1
2011
Q1
20
12Q
1
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
U.S. and Maryland Home Prices, Seasonally Adjusted, 2000Q1 - 2012Q3
Avg
. Pri
ce o
f Ho
me
s S
old
© Towson University, Division of Economic and Community Outreach Bureau of Economic Analysis
Consumer Spending
US May June July August September
Personal Income
0.3% 0.3% 0.2% 0.1% 0.4%
Disposable Personal Income
0.5% 0.2% 0.1% -0.3% 0.0%
Personal Consumption
0.0% -0.1% 0.3% 0.1% 0.4%
Percent Change from Previous Month
© Towson University, Division of Economic and Community Outreach Bureau of Economic Analysis
Jan-
05
7/1/
2005
Jan-
06
7/1/
2006
Jan-
07
7/1/
2007
Jan-
08
7/1/
2008
Jan-
09
7/1/
2009
Jan-
10
7/1/
2010
Jan-
11
7/1/
2011
Jan-
12
7/1/
2012
$8,000 $8,200 $8,400 $8,600 $8,800 $9,000 $9,200 $9,400 $9,600 $9,800
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
0.6%
Consumption Exp. Percent change
Consumer SpendingPersonal Consumption, Seasonally Adjusted, Jan 2005 - Sept 2012
Per
sona
l Con
sum
ptio
n E
xpen
ditu
res
Bill
ions
of
Cha
ined
200
5 D
olla
rs
An
nua
l Per
cent
Ch
ang
e
© Towson University, Division of Economic and Community Outreach Bureau of Economic Analysis
Consumer Sentiment Index
40.0
50.0
60.0
70.0
80.0
90.0
100.0
110.0
120.0
Inde
x F
irst
Qua
rter
196
6=10
0
Jan 2007 through April 2012
© Towson University, Division of Economic and Community Outreach University of Michigan
Pulse of Commerce
Jan-
02
Sep-0
2
May
-03
Jan-
04
Sep-0
4
May
-05
Jan-
06
Sep-0
6
May
-07
Jan-
08
Sep-0
8
May
-09
Jan-
10
Sep-1
0
May
-11
Jan-
1270
75
80
85
90
95
100
105
110
PCI CERIDIAN INDEX GDP
Ind
ex
PCI Monthly Index, GDP, Seasonally Adjusted Jan 2002 through May 2012
© Towson University, Division of Economic and Community Outreach Ceridian-UCLA Pulse of Commerce Index
Inflation
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
150.0
170.0
190.0
210.0
230.0
250.0
Inflation Rate CPI
Year Over Year Change in CPI (1982)
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics
The Fiscal Cliff
© Towson University, Division of Economic and Community Outreach
The Fiscal Cliff
Best Case Most LikelyPlausable Downside Worst Case
-4%
-3%
-2%
-1%
0%
-0.90%
-1.50%
-2.40%
-3.80%
Effects of Sequestration on GDP Growth
© Towson University, Division of Economic and Community Outreach Credit Suisse
The Fiscal Cliff
Total Job LossTotal Gross
State Product Loss
Maryland 114,795 $11,546,000,000
D.C. 127,407 $12,814,000,000
Virginia 207,571 $20,876,000,000
Pennsylvania 78,454 $7,890,000,000
© Towson University, Division of Economic and Community Outreach GMU Center for Regional Analysis
Euro Crisis
© Towson University, Division of Economic and Community Outreach
Euro Crisis• How is it going to affect the U.S. economy• U.S. Banks are heavily invested in Europe
o About $1.4 Trillion in loansoCould see a tightening in small business
loans in the US• Exports to Eurozone constitute 14% of total,
behind Mexico and Canada. To Europe: 20%o 20% drop in exports to Europe means a 5%
drop in total exports
© Towson University, Division of Economic and Community Outreach ABC New Corp.
Euro Crisis
Jan-
06
Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Jul-1
1
Jan-
12
Jul-1
20.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
European Union Euro area Spain Greece United States
Selected European Unemployment Levels
© Towson University, Division of Economic and Community Outreach EuroStat
Euro Crisis
Sep-0
9
Mar
-10
Sep-1
0
Mar
-11
Sep-1
1
Mar
-12
Sep-1
2-0.1
0
0.1
0.2
0.3
0.4 USDJPYGBPCNY
Ind
exe
d A
ga
inst
Oth
er
Ma
jor
Cu
rre
nci
es
© Towson University, Division of Economic and Community Outreach Euro ITS
The falling power of the Euro
Additional Challenges
Debt Crisis
China
Japan
Oil Exporters
Brazil
Other Foreign Investors
Owned Domestically
US Debt Ownership
© Towson University, Division of Economic and Community Outreach Congressional Research Service
Gas Prices
$2.71
$2.91
$3.11
$3.31
$3.51
$3.71
$3.91
Baltimore United States
© Towson University, Division of Economic and Community Outreach GasBuddy.com, U.S. Administration of Energy Statistics
European Gas Prices
2007 2008 2009 2010 2011 2012$0.00$1.00$2.00$3.00$4.00$5.00$6.00$7.00$8.00$9.00
$10.00
US Europe
Dollars per Gallon
U.S. Energy Information Administration© Towson University, Division of Economic and Community Outreach
Banking
Quantitative Easing: Round 3
• New Round of Fed Res buying up mortgage backed securities
• Effects on inflations• Encourages higher risk investmentsoStability of the market
© Towson University, Division of Economic and Community Outreach
Banking Indicators
$0
$30,000
$60,000
$90,000
$120,000
$150,000
Mill
ion
s o
f D
olla
rs
Total Value of Loans for All C&I Loans, All Commercial Banks
© Towson University, Division of Economic and Community Outreach Federal Reserve
Banking Indicators
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Consumer Loans at All Commercial Banks
Bill
ion
s o
f Dol
lars
© Towson University, Division of Economic and Community Outreach Federal Reserve
Banking Indicators
1940
1631
6
1801
9
1972
5
2142
9
2313
2
2483
8
2654
3
2824
6
2995
2
3165
6
3335
9
3506
5
3677
0
3847
320
10$0
$800
$1,600
$2,400
$3,200
$4,000
Real Estate Loans at All Commercial Banks
© Towson University, Division of Economic and Community Outreach Federal Reserve
Bill
ion
s o
f Dol
lars
Banking Indicators
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$500
$700
$900
$1,100
$1,300
$1,500
Real Estate Loans Consumer Loans
Re
al E
sta
te L
oa
ns
Co
nsu
me
r L
oa
ns
© Towson University, Division of Economic and Community Outreach Federal Reserve
Lending at All Commercial Banks (Millions of Dollars)
Maryland Outlook
Maryland Performance•Maryland added 9,800 jobs in September
• 98 percent of these jobs came from the private sectoro Profession and Business Services accounted for 4,100 new jobso Trade/Transportation/Warehousing and Utilities created approximately
2,000 jobso Government responsible for only 200 new jobs
• Unemployment rate down to 6.9% from last month’s 7.1%
© Towson University, Division of Economic and Community Outreach Department of Labor, Licensing and Regulation
Mid-Atlantic Region Unemployment Rankings
September Unemployment Rates Seasonally Adjusted
State 2010 2011 2012
Maryland 7.4 7.4 6.9
Pennsylvania 8.5 8.3 8.2
Virginia 6.7 6.5 5.9
Delaware 8.3 8.1 6.8
DC 9.7 11.1 8.7
U.S. Unemployment Rate: 8.1 percent in August 7.8 percent in September
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics
Measures of Labor Underutilization
Maryland District of Columbia United States02468
1012141618
7.1
9.7 9.28.8
11.610
12.714.5 15.3
U-3 U-5 U-6
Labor Underutilization, Averages, 2011Q3 - 2012Q2
Pe
rce
nt
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics
Maryland Employment
Jan-
02
Sep-0
2
May
-03
Jan-
04
Sep-0
4
May
-05
Jan-
06
Sep-0
6
May
-07
Jan-
08
Sep-0
8
May
-09
Jan-
10
Sep-1
0
May
-11
Jan-
121,850
1,900
1,950
2,000
2,050
2,100
2,150
420
440
460
480
500
520
Private Government
Employment Level (,000’s)
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics
Slow Down in Maryland’s Recovery
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%MD US
Year over Year Change in Coincidence Index
© Towson University, Division of Economic and Community Outreach
Co
inci
den
t Ind
ex
Federal Reserve Bank
Maryland Mass Layoffs
Jan-
10
May
-10
Sep-1
0
Jan-
11
May
-11
Sep-1
1
Jan-
12
May
-12
Sep-1
20
5001,0001,5002,0002,5003,0003,5004,0004,500
0510152025303540
Total Initial Claimants Layoff Events
Tota
l In
itial
Cla
ims
Tota
l Mas
s L
ayo
ff E
vent
s
© Towson University, Division of Economic and Community Outreach
Total Initial Unemployment Claimants and Layoff Events, Monthly, Jan 2010 - Sep 2012
Bureau of Labor Statistics
Housing
Housing and Foreclosures• Maryland - November 2012
o 8,306 Foreclosure Homes for Saleo $170,708 Average Foreclosure Sales
Price
• US – November 2012o 1,571,644 Foreclosure Homes for Saleo $177,975 Average Foreclosure Sales
Price
© Towson University, Division of Economic and Community Outreach RealtyTrac
Story Behind the Numbers
• Positive housing prices trends have a positive wealth effect
• Though inventories have fallen to around 25,000 homes,
research suggest that at least 7% of homes are at least 90 day delinquent, making them suspect to foreclosure
© Towson University, Division of Economic and Community Outreach CoreLogic
0
0.5
1
1.5
2
2.5
3
3.5
REO Inventory FC InventoryDelinquency Inventory
Shadow InventoryM
illio
ns o
f Un
its
Pending Inventory Details Monthly, Jan 2006 through Jul 2012
© Towson University, Division of Economic and Community Outreach CoreLogic, a data and analytics company
MD Homes Sales vs. Inventories
20002001
20022003
20042005
20062007
20082009
20102011
20120
2,000
4,000
6,000
8,000
10,000
0
10,000
20,000
30,000
40,000
50,000
60,000
Number of Homes Sold Inventory
Hom
e S
ales
Seasonally Adjusted Jan 2000 - Sept 2012
© Towson University, Division of Economic and Community Outreach
Inve
ntor
y
Maryland Association of Realtors
MD Homes Prices vs. Inventories
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
0
10,000
20,000
30,000
40,000
50,000
60,000
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Inventory Price
Seasonally Adjusted Jan 2000 - Sept 2012
© Towson University, Division of Economic and Community Outreach Maryland Association of Realtors
Ave
rage
Hom
e P
rice
Inve
ntor
y
RESI Forecast
RESI Employment Outlook
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
2,250,000
2,300,000
2,350,000
2,400,000
2,450,000
2,500,000
2,550,000
2,600,000
2,650,000
2,700,000
Growth TNA
Maryland Historical & Projected TNA Employment Growth, 2007Q1 through 2015Q4
RESI, Bureau of Labor Statistics
Pe
rce
nt c
han
ge
from
sa
me
q
uart
er
on
e y
ear
ago
© Towson University, Division of Economic and Community Outreach
TN
A E
mp
loym
ent
Lev
el
RESI Employment Outlook
InformationManufacturingFinancial Svcs
Real EstateEducational Svcs.
GovernmentConstruction
Admin/WasteHealthcare Svcs.
Arts/EntertainmentTrade
Professional/Sci.Accomm/Food Svcs
Transp./WarehousingMgmt of Companies
-3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0%
-2.1%-0.4%
0.5%0.6%
0.8%0.9%
1.5%1.6%
1.9%2.3%2.4%2.4%
2.6%2.6%2.7%
Maryland Projected Employment Growth, Percent, 2012 to 2013
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
2010 2011 2012 2013 2014
Total Non-Agricultural Employment
(annual growth)
-.02% 1.2% 1.4% 2.3% 2.3%
Total Personal Income
(annual growth) 3.5% 5.0% 3.3% 2.9% 4.3%
© Towson University, Division of Economic and Community Outreach
Join us next year to find out how bringing home the World Series will affect
Baltimore’s economic outlook.
EOC 2012