20 Indicators Everyone Should Know

C2ER’s 52nd Annual ConferenceOklahoma City • June 7, 2012

Jenny HsuManager of Economic Research

Measuring the Economy - GDP

Consumption Investments Government Spending Net Exports GDP

Price Pressures

Indicators Tracking GDP

Price Pressures (CPI)

• Customs District Trade

• Budget Balance Report• Construction Spending

• PMI• Building Permits• Home Sales

• Employment• Retail Sales• Auto Sales

ConsumptionInvestments

Net Exports

Government

C I

G N

Indicators Tracking GDP

Price Pressures (CPI)

• Customs District Trade

• Budget Balance Report• Construction Spending

• PMI• Building Permits• Home Sales

• Employment• Retail Sales• Auto Sales

ConsumptionInvestments

Net Exports

Government

C I

G N

Houston Area ProfileEmployment

U.S. Bureau of Labor Statistics

Indicator Frequency

Nonfarm Payroll Employment Monthly

Unemployment Rate Monthly

Quarterly Census of Employment & Wages Quarterly

Occupational Employment Statistics Annually

C

I

N

G

Houston Area Profile

– Establishment survey

• 300,000 establishments

• 400 metro areas

• 40% of total nonfarm population

– Seasonal adjustments

Nonfarm Payroll Employment

C

I

N

G

Indicator #1

Houston Area ProfileNonfarm Payroll Employment

Indicator #1

Houston Area ProfileUnemployment Rate

C INGSource: U.S. Bureau of Labor Statistics

U3 = Total unemployed in the labor force

Indicator #2

Houston Area ProfileUnemployment Rate

C INGSource: U.S. Bureau of Labor Statistics

U4 = U3 + discouraged workers

U3 = Total unemployed in the labor force

U5 = U4 + marginally attached

Indicator #2

Houston Area ProfileUnemployment Rate

C INGSource: U.S. Bureau of Labor Statistics

U6 = U5 + part time for economic reasons

U4 = U3 + discouraged workers

U3 = Total unemployed in the labor force

U5 = U4 + marginally attached

Indicator #2

Quarterly Census of Employment and Wages (QCEW)

C ING

Indicator #3

• Census of 9 million establishments

• Unemployment insurance taxes

• Released 6 months after the quarter

• Benchmark revisions

Using the QCEW

C ING

19.2%

18.4%

16.9%11.8%

10.2%

7.2%

7.0%3.3%

2.8%1.7%

1.5%

21.5%

15.0%

21.8%

8.9%

3.6%

7.0%

5.3%

9.7%

2.8%3.1%1.3%

2011 Share of Jobs and Wages by IndustryOuter Loop: Share of Jobs

Inner Loop: Share of WagesTrade, Transportation and Utilities

Professional and Business Services

Education and Health Services

Manufacturing

Natural Resources and Mining

Construction

Financial Activities

Leisure and Hospitality

Public Administration

Other Services

Information

Source: Texas Workforce Commission, Quarterly Census for Employment and Wages

Indicator #3

Occupational Employment Statistics

OccupationPer 100,000 Workers

United States Houston

Petroleum Engineers 24 443

Marine Engineers 4 26

Chemical Engineers 22 119

Aerospace Engineers 62 113

Health and Safety Engineers 18 42

Civil Engineers 198 350

Materials Engineers 17 22

Engineering Managers 137 246

Mechanical Engineers 186 264

Engineers, All Others 98 180C I

NGIndicator #4

Houston Area ProfileEmployment

Houston Area ProfileEmployment

Retail & Auto Sales

• Consumer spending makes up 70% of all economic activity

• Retail sales account for 30% of consumer spending

• Sign of consumer confidence and overall economic growth

• Not adjusted for inflation

C ING

Indicators #5 & #6

Purchasing Managers Index

• First indicator available every month

• Leading indicator for regional production

• Range of 0-10050 = neutral

> 50 = likely increase in production over next 3-4 months

< 50 = likely contraction in production over next 3-4 months

C ING

Indicator #7

Purchasing Managers Index

30

35

40

45

50

55

60

65

70

1/05 1/06 1/07 1/08 1/09 1/10 1/11 1/12

Source: National Association of Purchasing Management - Houston, Inc.

Neu

tral

= 5

0

March `0939.0

April `12 59.1

Indicator #7

North American Rig Count (monthly average)

500

700

900

1,100

1,300

1,500

1,700

1,900

2,100

2,300

1/05 1/06 1/07 1/08 1/09 1/10 1/11 1/12

June `09895

Apr ’12 1,962

Source: Baker Hughes

Sep `082,014

Housing Starts & Building Permits

• Reliable leading indicator

• Multiplier effects on other industries– 1,000 homes = 2,500 jobs = $100M wages

• Home construction = 5% of GDP

C ING

Indicators #8 & #9

Home Sales

• 8 out of 10 are existing home sales

• Signals confidence in jobs and income growth

• Foreshadows future consumer purchases

• 1-3 months lag in data– Time of actual closing vs. Pending

C ING

Indicator #10

Foreign Trade

• Trade Value vs. Weight/Units

• Top export, imports, & trade partners

C ING

Indicator #11

Using Foreign Trade data

Houston-China Total Trade

C ING

Indicator #11

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

2

4

6

8

10

12

14

ImportsExportsTotal

Inflation

• Price pressures on consumers and businesses

• Use CPI to adjust other indicators to “real” dollars

• CPI-W, CPI-U and Core CPI

C ING

Indicator #12

Indicators Tracking GDP

Price Pressures (CPI)

Consumption

Investments

Net Exports

Government

GDP comparison

Houston MSAGRP = $325.5 billion

Austria = $379.1 billion

Venezuela = $391.8 billion

Houston = $395.4 billion

Saudi Arabia = $434.7 billion

Norway = $413.0 billionHouston Metro AreaGDP = $395.4 Billion

Source: World Bank

An economist is an expert who will know tomorrow why

the things he predicted yesterday didn’t happen today.

-Dr. Laurence J. Peter

20 Indicators Everyone Should Know

C2ER’s 52nd Annual ConferenceOklahoma City • June 7, 2012

Jenny HsuManager of Economic Research