a peek behind the jobs numbers (robert johnson)
TRANSCRIPT
1 1
Economy Drives Employment Economic Overview Trends in Employment/Recruitment
September 2012 Robert Johnson, CFA Director of Economic Analysis Vishnu Lekraj Senior Equity Analyst
Why Should I Care?
× Economy Drives Employment/Recruitment Levels × State of Labor Market Determines Employer Pickiness × More Outsourcing Means Less U.S. Employment × Stagnant Economy Makes Relocation Difficult × Nature of Recovery Determines Hot Sectors
2
3 3
U.S. Economic Forecast
× 2012 Outlook: A Slow Start Before an Acceleration
× Real U.S. GDP Growth of 2.0%-2.5%
× Inflation Slows to 2.0%-2.5% Due to Falling Commodities
× Employment Growth Accelerates to 195,000 Per Month × Unemployment Rate Drops to 8.0% or Lower
4 4 4
Economic Drivers
× Consumer Spending
× Housing and Construction
× Lower Inflation × Autos
5 5 5
Risks to Economic Growth
× Drought Could Cause Food Inflation
× Consumer Spending Outpacing Incomes
× Geopolitical Issues
× European Sovereign Debt × Slowing Manufacturing Economy Outside the United States
Where Are We Now? Muddling Through
6
7 7
This Recovery Has Grown at Half the Normal Rate
Year After Bottom, 33-Month GDP Growth Rate
Prior GDP Contraction
1982 15.8% -2.7%
1960 15.6% -1.0%
1970 15.3% -1.1%
1975 13.7% -3.2%
1954 12.1% -2.6%
1958 11.2% -3.7%
1991 8.7% -1.4%
2001 6.7% -0.3%
1980 5.2% -2.2%
Average 11.6% -2.0%
2009 6.7% -5.1%
Sources: BEA, Morningstar calculations.
8 8
Consumer Takes the Stage, Represents 71% of the Economy
Source: The Gleaner.
9 9 9
Watching the Consumer Is Key
Reasons for Consumer Optimism
10
11 11
Private Sector Employment Continues to Grow
Source: Bureau of Labor Statistics, updated Aug. 3, 2012.
12 12
Initial Claims Point to a Stronger Job Market
Source: Bureau of Labor Statistics, updated Aug. 23, 2012.
13 13
Inflation Falling Back, Key to Continued Recovery
Source: Bureau of Labor Statistics, updated Aug. 15, 2012.
Bars Are Recessions, Line Is Recession Danger Point
Home Prices Stabilizing at Last
14
Source: St Louis Federal Reserve, updated Aug. 28, 2012.
The Consumer Is Far From Worry Free
15
16
Drought Could Drive Food Prices Skyward
Source: http://i2.cdn.turner.com/cnn/dam/assets/120716054700-midwest-drought-06-horizontal-gallery.jpg
Consumer Income Growth Is Stagnant
17
Source: Bureau of Economic Analysis, Morningstar Est. for June, updated July 31, 2012.
The Stages of Consumer Confidence
18
19 19
Retail Sales Continue to Chug Along—Short-Term Confidence
Source: International Council of Shopping Centers, updated Aug. 28, 2012.
20
Auto Sales Could Jump in 2012—Intermediate-Term Confidence
Source: Automotive News, updated Jan. 4, 2012 and April 10, 2012.
U.S. Auto Sales Year Millions of Units 2009 10.4 2010 11.6 2011 12.8 2012E 13.6 (Rev. Est. 14.5)
21 21
Improved Consumer Confidence Means More Auto Sales …
Interpretation: January 2012 sales were 81% of 2005 levels. Sources: BEA, Bureau of Labor Statistics; Morningstar, Updated Aug. 1, 2012.
22 22
… but Not Enough to Help the Housing Market —Long-Term Confidence
Sources: Census Bureau; Morningstar, updated Aug. 16, 2012.
Red bar represents average natural demand, Morningstar estimate
23 23
Future Dynamics for the Recruiting Industry a
Factors and Trends Affecting HR Specialists
• Structural Change in Economy
• Service Sectors Will Drive Growth
• Contingent Labor Will Play a Larger Role
• More HR Back-Office Automation
24 24 24
Structural Change to Economy = Structural Change to HR Services Sectors Expected to Produce Robust Employment Growth
0
100
200
300
400
500
600
700
800
Top 17 Occupations for Employment Growth Forecast by the BLS from 2010 through 2020 (Thousands)
Sources: BLS, Morningstar.
25 25 25
Structural Change to Economy = Structural Change to HR Services Contingent Labor Will Play a Larger Role
0%
5%
10%
15%
20%
25%
30%
35%
40%
90s 00s Recent
Contingent Labor as a % of Job Adds 36 Months Post Recession
Sources: BLS, Morningstar.
26 26 26
Structural Change to Economy = Structural Change to HR Services Automation and Outsourced Services Will Play a Larger Role