National Economic Outlook & Monetary Polciy Argentum Senior Living Executive Conference State of the Economy for Senior Living and Beyond
Joseph Tracy Research April 16, 2019 The views expressed are my own and do not necessarily reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System
Real GDP growth since beginning of expansion, percent 60
1950 1954 1958 1961 1971 1975 1980 1983 1991 2002 2009
50
40 30
1961
1991 1983
2009
20
2002
10 0 0
4
8
12
16 20 24 28 32 Quarters since beginning of expansion
36
Sources: Bureau of Economic Analysis, National Bureau of Economic Research via Haver Analytics
40
44
Unemployment Rates Rate 12
10 Actual Unemployment 8
6
Natural Rate of Unemployment
4
2 2000
2002
2004
2006
2008
Source: Bureau of Labor Statistics via Haver Analytics
72010
2012
2014
2016
2018
Note: Shading shows NBER recessions.
PCE Deflator 12-Month % Change
5 Total PCE
4
FOMC Objective 3
2 1 0 -1
-2 2000
2002
2004
2006
2008
Source: Bureau of Economic Analysis via Haver Analytics
2010
2012
2014
2016
2018
Note: Shading shows NBER recessions.
Alternative Measures of Trend Inflation Give Similar Signals 12-Month % Change 5 Total PCE
4
FOMC Objective 3 2 Core PCE
1
Dallas Trim Mean PCE
0 -1 -2 2000
2002
2004
2006
2008
2010
Sources: Bureau of Economic Analysis, FRB Dallas, via Haver Analytics
2012
2014
2016
2018
Tax Cuts and Jobs Act (TCJA) of 2017 Estimated Budget Impact Source
Fiscal Year 2018 $B
Individual Tax Reform
–75
Business Tax Reform
–129
International Tax Reform
69
Net Total
–136
% of GDP
–1.0
Effect on Real GDP Growth Average Est
2018
2019
2020
1.32
0.33
–0.28
6
Disposable Income, Consumption, and Wealth 4 Quarter % Change
% of Disposable Income
8
Real Disposable Income (Left Axis)
Household Net Worth (Right Axis)
6
700
650
4 600 2 550 0
Real Personal Consumption (Left Axis)
-2
-4 2000
2002
2004
2006
2008
500
2010
2012
Sources: Bureau of Economic Analysis, Federal Reserve Board, via Haver Analytics
2014
2016
450 2018
Note: Shading shows NBER recessions.
House Prices and Mortgage Debt Index (Jan 2000 = 100)
$ Trillions
210
10 9
190
170
CoreLogic HPI (Left Axis)
8 Mortgage Debt Outstanding (Right Axis)
7
150 6 130 5 110
90 2000
4 3 2002
2004
2006
2008
2010
Sources: FRBNY Consumer Credit Panel/Equifax and CoreLogic
2012
2014
2016
2018
Personal Saving Rate (Percent) 14 12 10 8 6 4 2
0 400
450
500
550
600
650
Households' Net Worth as a Percent of Disposable Income Sources: Bureau of Economic Analysis, Federal Reserve Board via Haver Analytics
700
Growth of Employment and Aggregate Hours 12 Month % Change 4 2 0 Payroll Employment
-2
Aggregate Hours
-4 -6 -8 -10 2000
2002
2004
2006
2008
Source: Bureau of Labor Statistics via Haver Analytics
2010
2012
2014
2016
2018
Note: Shading shows NBER recessions.
Wage Growth
Percent YoY Log Wage Growth
10
8
6
4 BLS AHE Growth 3.0%
2
0 1985
1990
1995
2000
NOTE: Grey bars represent recession. 4-quarter moving average. SOURCES: Haver Analytics (FN55@EMPL).
2005
2010
2015
Wage Growth
Percent YoY Log Wage Growth
10
8
6
CPS Average Wage Growth 4.9%
4 BLS AHE Growth 3.0%
2
0 1985
1990
1995
2000
NOTE: Grey bars represent recession. 4-quarter moving average. SOURCES: Haver Analytics (FN55@EMPL).
2005
2010
2015
Wage Growth
Percent YoY Log Wage Growth
10
8
6
CPS Average Wage Growth 4.9% CPS Average Wage Growth 55+ 4.0% BLS AHE Growth 3.0%
4
2
0 1985
1990
1995
2000
NOTE: Grey bars represent recession. 4-quarter moving average. SOURCES: Haver Analytics (FN55@EMPL).
2005
2010
2015
Labor force participation for older men has stabilized after 40 years of decline Labor Force Participation Rate, Age 55+ by Gender Participation
100 90 80 70 60 50
Men 46%
40
Wome n 35%
30 20 10
0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 SOURCES: Haver Analytics (FN55M@EMPL, FN55F@EMPL).
Aggregate Homeownership Rate Rate 70
68
66
64
62
60 1980
1985
1990
Source: Census Bureau via Haver Analytics
1995
2000
2005
2010
2015
2020
Note: Shading shows NBER recessions.
Housing Starts Thousands, 3 MMA 450 400
Thousands, 3 MMA 2000
Total Multifamily (Left Axis)
1600
350 300
1200
250 200
800
150 Single Family (Right Axis)
100
400
50 0 2000
0 2002
2004
2006
Source: Census Bureau via Haver Analytics
2008
2010 7
2012
2014
2016
2018
Note: Shading shows NBER recessions.
Manufacturing and ISM Manufacturing Index 12 Month % Change 20
Index 70
15 10
60
5 0
50
-5
-15 -20 2000
ISM Manufacturing Index (Right Axis)
Industrial Production: Manufacturing (Left Axis)
-10
40
30 2002
2004
2006
2008
2010
Sources: Institute for Supply Management, Federal Reserve Board, via Haver Analytics
2012
2014
2016
2018
Note: Shading shows NBER recessions.
Foreign Growth Outlook Index, 3MMA, 50+ = expansion
Foreign-advanced PMI
60
Emerging-market PMI 58
56
54
52
50
48
46 2013
2014
2015
Source: FRB Dallas Database of Global Economic Indicators
2016
2017
2018
2019
Note: Aggregates are US trade-weighted.
Real Government Consumption and Gross Investment 4 Quarter % Change 10 8 6
Federal
4 2 0 State and Local
-2 -4 -6 -8 -10 2000
2002
2004
2006
2008
Source: Bureau of Economic Analysis via Haver Analytics
2010
2012
2014
2016
2018
Note: Shading shows NBER recessions.
Debt is Rising When Should Be Paying Down
Effective Federal Funds Rate Rate
Bil. $
7 6
EFFR (Left Axis)
5 4 3 2 1 0 2000
2002
2004
2006
Source: Federal Reserve Board via Haver Analytics
2008
72010
2012
2014
2016
2018
Note: Shading shows NBER recessions.
Effective Federal Funds Rate & Balance Sheet Rate
Bil. $
7
5000 4500
6
EFFR (Left Axis)
4000
5
3500
Total Credit Outstanding (Right Axis)
4
3000 2500
3
2000 1500
2
1000 1 0 2000
500 0 2002
2004
2006
2008
Source: Federal Reserve Board via Haver Analytics
7 2010
2012
2014
2016
2018
Note: Shading shows NBER recessions.
Additional Slides:
Effective Federal Funds Rate Rate
Bil. $
7
5000 4500
6
EFFR (Left Axis)
4000 Total Credit Outstanding (Right Axis)
5 4
3500 US Treasuries (Right Axis)
3
3000 2500 2000 1500
2
1000 1 0 2000
Mortgage-Backed Securities (Right Axis)
500 0
2002
2004
2006
2008
Source: Federal Reserve Board via Haver Analytics
7 2010
2012
2014
2016
2018
Note: Shading shows NBER recessions.
Financial Conditions Have Tightened
Equipment Investment and Capacity Utilization % of Capacity
4 Quarter % Change 30
20
100 Manufacturing Capacity Utilization Rate (Right Axis)
Manufacturing Capacity Utilization longer-term average (78.5)
90
10 80 0 Real Business Investment in New Equipment (Left Axis)
-10
70
60
-20
-30 1980
50 1985
1990
1995
2000
2005
Sources: Bureau of Economic Analysis, Federal Reserve Board, via Haver Analytics
2010
2015
Note: Shading shows NBER recessions.