enterpriseseattle 2011 forecast - dick conway
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39th Annual Economic Forecast
Conference
2011 FORECAST: A LOOK AHEAD Moderator:
Emory Thomas Jr., Puget Sound Business Journal
Panelists:
- Ken Goldstein, The Conference Board
- Mike Dueker, Russell Investments
- Dick Conway, Puget Sound Economic Forecaster
www.enterpriseSeattle.org
THE PUGET SOUND
ECONOMIC FORECASTER
PUGET SOUND ECONOMIC OUTLOOK
Dick Conway
The Puget Sound Economic Forecaster
Conway Pedersen Economics, Inc.
www.economicforecaster.com
THE PUGET SOUND
ECONOMIC FORECASTER
Positive Signs for the U.S. Economy
• Leading indexes are rising sharply, suggesting accelerating growth.
• Stock market has regained two-thirds of the value lost during the last plunge.
• Spread between 3-month LIBOR and T-bill rate signals little, if any, stress in the credit markets.
• Despite recent declines, home prices have been generally stable since March 2009.
THE PUGET SOUND
ECONOMIC FORECASTER
Puget Sound RecoveryThree Things to Think About
• Puget Sound region was hard-hit by the recession and will likely trail the nation coming out of it.
• In terms of jobs, the root of the recession was construction and financial activities.
• The recession was far-reaching, damaging almost every state.
THE PUGET SOUND
ECONOMIC FORECASTER
Puget UnitedSound States
Peak to trough (quarters)8 7
Employment (% change) -7.4 -6.0
Construction -34.1 -27.3
Financial activities -17.1 -9.2
Peak unemployment rate (%) 9.1 10.0
Unemployment rate (% change)* 5.1 5.5
*Percentage point change.
The Great RecessionEmployment Change
THE PUGET SOUND
ECONOMIC FORECASTER
PercentChange Change
Construction employment -45,000 -34.1
Financial activities employment -18,700 -17.1
Indirect employment* -61,200 ---
Total employment impact-124,900 -6.7
Total employment change -138,200 -7.4
*Due to multiplier effect.
The Great RecessionConstruction and Financial Activities Impact
THE PUGET SOUND
ECONOMIC FORECASTER
Puget Sound and U.S. EmploymentAnnual Percent Change
2007.1 2007.3 2008.1 2008.3 2009.1 2009.3 2010.1 2010.3-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
Puget Sound United States
THE PUGET SOUND
ECONOMIC FORECASTER
Exports of Goods and Services
• On a per capita basis, Puget Sound region tops the nation in foreign exports.
• Boeing and Microsoft are our two biggest overseas sellers.
• Since the mid-2009 turnaround in U.S. real GDP, exports have been the fastest growing sector.
• The regional impact of export growth will be muted, since Boeing is close to peak production.
THE PUGET SOUND
ECONOMIC FORECASTER
Government Expenditures
• The federal government was the only positive growth force during the Great Recession.
• With the focus now on balancing the budget, it will reduce spending and trim employment.
• Due to a record drop in tax revenue, state and local governments will also cut expenditures.
• Financial problems in the public sector will cost the region 10,000 government jobs.
THE PUGET SOUND
ECONOMIC FORECASTER
U.S. Fixed Investment
2004 2006 2008 2010 2012-25
-20
-15
-10
-5
0
5
10
15
20
Equipment and software Structures
Percent Change
THE PUGET SOUND
ECONOMIC FORECASTER
U.S. Real Gross Domestic Product andPersonal Consumption Expenditures
2000 2002 2004 2006 2008 2010 2012-4.0
-2.0
0.0
2.0
4.0
6.0
1.0
2.0
3.0
4.0
5.0
6.0
GDP (l) Consumption (l) Savings rate (r)
Percent Change Percent
THE PUGET SOUND
ECONOMIC FORECASTER
2009 2010 2011 2012
Employment -4.9 -1.9 1.2 2.4
Personal income -1.6 1.9 3.8 5.1
Consumer price index 0.6 0.5 1.5 1.7
Housing permits -50.1 22.9 4.0 36.9
Population 1.5 0.9 0.6 0.8
Puget Sound Economic ForecastPercent Change
THE PUGET SOUND
ECONOMIC FORECASTER
2009 2010 2011 2012
Retail sales -4.5 3.1 4.1 4.7
Taxable retail sales -12.4 -1.0 3.0 7.2
Home sales -2.5 0.9 10.2 9.9
Average home price -11.7 -0.2 1.3 5.5
Apartment vacancy (%) 6.9 5.5 4.9 4.8
Puget Sound Economic Forecast (2)Percent Change
THE PUGET SOUND
ECONOMIC FORECASTER
Puget Sound Leading Index and Employment
Series1
0.920
0.960
1.000
1.040
1.080
1.120
1.160
1.200
1600
1650
1700
1750
1800
1850
1900
1950
Leading index (l) Employment (r)
1987=1.000 Thousands
Note: Shaded areas designate recessions.
1999 2001 2003 2005 2007 2009
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