Economic OutlookNovember 2010
Recession Impact
Fewer Moving
Delay in Marriage
One Car
Office at Home
More Education
Why is the U.S.economic growth
so lackluster?
Sources of Economic Growth
Employment Changes During Recession-Recoveries
Percent of Long-term Unemployed
Household Debt Is Still High
History of Home Prices
Housing Affordability Index
Double-dip in Housing?
Seriously Delinquent Mortgages
DistressDistressed Home Sales
Homeowner Vacancy Rate
State & LocalGovernments
State and Local Government Payroll
State and Local Government Drag
Fiscal Stimulus
No Ammunition
Budget Deficits % of GDP
Tax Increase?
Current 2011
Top Income Tax Rate 35% 41%
Capital Gains Rate 15 20
Top Dividend Rate 15 39.6
Estate Tax 0 55
Quantitative Easing
Employment Changes During Recession-Recoveries
OOOOOOoooutpOutput Gap
Why QE?•Short Rate Zero
•Lower Bond Yields
•Weaker Dollar
Money to Emerg. Mkts Stocks and Bonds
Blue Chip Economic Forecasts
Double-dipYes/No ?
No Double-dip?•Tax Cuts
•QE2
•Low Base
Inflationor
Deflation
Major Inflation and Deflation
Lower Inflation Expectations
Why No DeflationInflation Expectations
Wage RigiditiesImport Prices
Monetary Policy
No DeflationInflation Eventually
Cost Push Excess Cap. Diminishes
TaxesFees
Assessments of Government Economic Policy
University of Michigan
90 Days after Mid-term
(1922-2006)
8.5 percent
Mid-term Elections and S&P 500
Stocks and Election Cycle
(1871-2005)
First Second Third Fourth
3.0% -2.7% 10.1% 7.5%
Key IssuesTax & Budget
EnergyTrade
China CurrencyFinancial ReformHousing Finance
Health careImmigration
Compromise or Not?
Rebalancing Global Trade
Internal Rebalancing
•Domestic Demand
•Budgets
•Finance/Credit
External Rebalancing
•Deficit CountriesIncrease Exports
•Surplus CountriesIncrease Consumption
Government Debt % of GDP
Debt to GDPOver 90%: 1.7%
Vs.Below 30%: 3.5%
Over 100%
Stunt Growth
Soft Landing in China?
8
8.5
9
9.5
10
10.5
11
2008 2009 2010 2011
China’s Economic Growth (% Change Year over Year)
Forecast
ChineseChinese Currency Undervalued
260,000
270,000
280,000
290,000
300,000
310,000
320,000
330,000
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
Ventura County
Total, All Industries (jobs)
VC Employment
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
Ventura County
Civilian Unemployment Rate (percent of labor force)
VC Unemployment Rate
-1
0
1
2
3
4
5
6
7
8
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
Ventura County
Educational & Health Services job growth (year-on-year)
VC Education and Health Jobs
-10
-8
-6
-4
-2
0
2
4
6
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
Ventura County
Other Services job growth (year-on-year)
VC Other Service Jobs
-10
-8
-6
-4
-2
0
2
4
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
Ventura County
Retail Trade job growth (year-on-year)
VC Retail Trade jobs
-10
-8
-6
-4
-2
0
2
4
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
Ventura County
Information job growth (year-on-year)
Information Jobs
-10
-9
-8
-7
-6
-5
-4
-3
-2
-1
0
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
Ventura County
Financial Activities job growth (year-on-year)
VC Financial Jobs
-10
-8
-6
-4
-2
0
2
4
6
8
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
Ventura County
Leisure & Hospitality job growth (year-on-year)
VC Leisure-Hospitality Jobs
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
1/1/72 1/1/78 1/1/84 1/1/90 1/1/1996 1/1/2002 1/1/2008
Population Growth Year on Year
Ventura County
Percent Change
DrSohn.com
(not Dr.Sohn.com)
TIPS and 10-yr Treasury Yield Curves