tennessee's gdp forecast - chase
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Economic Forecast
OUTPUT AND EMPLOYMENT WHAT THE TABLE SHOWS:
Tennessee’s GDP forecast is derived from
the national forecast by allocating output to
each of the 50 states based on employment
shares. So, forecast misses reflect surprises
in the aggregate forecast as well as
unexpected shifts in a state’s GDP share.
Tennessee’s economy has fared quite well
in the last couple of years.
KEY MESSAGES:
The state’s economy is forecast to do even
better in 2013.
Note: GDP figures are based on quarterly values that are
interpolated from annual GDP estimates using quarterly
employment changes. Unbolded figures are reported actual
values and bold figures represent forecasts.
Sources: US Department of Commerce;
US Department of Labor.
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 2
2007 2008 2009 2010 2011 2012 2013 2014
United States
Real GDP
$ billions (fourth quarter) $13,326 $12,884 $12,873 $13,181 $13,441 $13,648 $14,090 $14,654
% change over the four quarters 2.2% -3.3% -0.1% 2.4% 2.0% 1.5% 3.2% 4.0%
Nonfarm employment
Job count (fourth quarter) 137,943,000 135,153,333 129,526,667 130,283,667 132,286,667 134,455,000 136,189,659 138,513,010
% change over the four quarters 0.9% -2.0% -4.2% 0.6% 1.5% 1.6% 1.3% 1.7%
Average monthly change 99,750 -232,472 -468,889 63,083 166,917 180,694 180,694 180,694
Tennessee
Real GDP
$ billions (fourth quarter) $230 $227 $224 $231 $236 $240 $247 $257
% change over the four quarters 0.1% -1.6% -1.4% 3.5% 1.9% 2.0% 2.8% 4.0%
Nonfarm employment
Job count (fourth quarter) 2,804,200 2,729,633 2,595,700 2,626,933 2,671,867 2,702,933 2,739,050 2,787,423
% change over the four quarters 0.7% -2.7% -4.9% 1.2% 1.7% 1.2% 1.3% 1.8%
Average monthly change 1,581 -6,214 -11,161 2,603 3,744 2,589 3,010 4,031
The Economy’s Structure
PERCENT OF TOTAL GDP DERIVED FROM SELECTED INDUSTRIES WHAT THE CHART SHOWS:
The figure compares the relative importance
of selected industries to the state’s economy
with the national footprint of each industry
(state and national figures reflect the value
added of each industry as a percent of
aggregate state or US nominal GDP,
respectively).
Tennessee’s economy depends more
heavily on durable manufacturing (vehicles)
and health care, compared with the national
economy.
KEY MESSAGES:
The outsized footprint of the real estate and
financial services industries is a challenge.
Source: US Department of Commerce. Updated through
2011.
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 3
0
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4
6
8
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Agr
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Fin
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US industry mix Tennessee industry mix
Bankruptcies
RATIO OF BANKRUPTCY FILINGS TO THE 2007 Q4 NUMBER WHAT THE CHART SHOWS:
The ratio of bankruptcy filing by businesses
and persons to filings in 2007 Q4.
Bankruptcy filings are receding.
KEY MESSAGES:
Indicators of financial stress are a useful
coincident indication of economic distress.
The recession took a toll on the state’s
businesses but financial pressures are
easing.
Source: Administrative Office of the U.S. Courts; Updated
through December 2012.
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 4
0
1
2
3
4
5
6
0
1
2
3
4
5
6
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Business bankruptcy filingsNonbusiness bankruptcy filings
All US bankruptcy filings (shaded area)
FRB Atlanta Business Survey
REAL GDP (% CHANGE 12 MONTHS EARLIER) DIFFUSION INDEXES (0 = NO CHANGE) WHAT THE CHART SHOWS:
The figure compares an index of business activity
produced by the Federal Reserve Bank of Atlanta
with Tennessee’s real GDP growth. The activity
index, the D6 Factor, is an estimate of the trend
common to 25 distinct monthly series of economic
data for the six states in the Atlanta Federal
Reserve Bank District (the 6th district) that
includes Alabama, Florida, Georgia, Louisiana,
Mississippi, and Tennessee. The D6 Factor filters
out idiosyncratic shocks that disproportionately
affect individual states. A “0” value for the index
appears to match trend-like growth for the
national economy.
The Atlanta FRB index stands at a level
consistent with growth that is slightly subpar.
KEY MESSAGES:
The Southeast region of the country is recovering
but at a slow pace.
Sources: Federal Reserve Bank of Atlanta; US Department
of Commerce. Updated through December 2012 (surveys)
and 2012 Q4 (GDP).
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 5
-8
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
4
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
FRB Atlanta D6 Factor, columns (left)
Tennessee real GDP, line (right)
Private Business Surveys
REAL GDP (% CHANGE 12 MONTHS EARLIER) DIFFUSION INDEXES (50 = NO CHANGE) WHAT THE CHART SHOWS:
Selected business conditions indexes based
on a survey of purchasing managers and
real GDP growth in the region.
Business activity in the Midwest has
moderated a little.
KEY MESSAGES:
Diffusion indexes, like those based on
responses from purchasing managers, are a
timely indicator of activity in the state and
these may be moderating.
Business surveys have rebounded from a
slowdown late last year.
Sources: Institute of Supply Management; US Department
of Commerce. Updated through December 2012 (diffusion
indexes) and 2012 Q4 (GDP).
February 17, 2013
Regional Perspectives: Indiana Economic Outlook
Commercial Banking 6
10
20
30
40
50
60
70
80
90
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Real GDP in the Great Lakes region (left scale)
Business Barometer Index, Mid-America Purchasing Managers (right scale)
Initial Jobless Claims
RATIO OF INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE TO THE 2007 Q4 LEVEL WHAT THE CHART SHOWS:
The figure tracks layoffs in Tennessee and
the national level of claims.
Weekly layoffs, both the state and national
tallies, are illustrated in the figure as a ratio
to the level of layoffs in the fourth quarter of
2007, prior to the recession.
Layoffs have fallen back to pre-recession
levels.
KEY MESSAGES:
Layoffs, because they are reported so
promptly, are a useful indicator of changing
economic trends.
The falling layoff pace points to a gradual
economic recovery.
Source: US Department of Labor. Updated through
February 2, 2013 (state) and February 9, 2013 (US).
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 7
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.75
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.75
2007 2008 2009 2010 2011 2012 2013
TennesseeUS (solid area)
Economic Growth
REAL GDP GROWTH (PERCENT CHANGE FROM FOUR QUARTERS EARLIER) WHAT THE CHART SHOWS:
Real GDP growth in Tennessee (the line in
the figure) is superimposed on top of US
real GDP growth (bars in the figure).
Tennessee’s economy has recovered in line
with the national economy’s recovery.
KEY MESSAGES:
Tennessee’s economy is expected to
continue to grow in the next several years.
Source: US Department of Commerce. Updated through
2012 Q4.
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 8
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
8
9
-6
-5
-4
-3
-2
-1
0
1
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9
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
TennesseeUS
Economic Output
REAL GDP LEVEL (RATIO TO 2000 Q4) WHAT THE CHART SHOWS:
The figure illustrates the evolution of real
GDP of the state and the overall US
economy since the fourth quarter of 2000,
the peak of the previous business cycle—
that is, at any point in time the lines trace the
ratio of real GDP to its level in 2000 Q4.
Tennessee paced the national level of
economic activity in the earlier expansion
but the loss of momentum in the last couple
of years has brought the level of activity
back in line with the national economy’s
growth pace.
KEY MESSAGES:
Tennessee’s economy is largely paralleling
the national economy.
Source: US Department of Commerce. Updated through
2012 Q4.
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 9
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
1.40
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
1.40
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Tennessee
US
Employment Growth
NONFARM PAYROLL EMPLOYMENT (PERCENT CHANGE FROM 12 MONTHS EARLIER) WHAT THE CHART SHOWS:
Tennessee’s employment trend, compared
with the nation’s.
Employment growth in Tennessee had been
relatively steady in the latter half of the
2000s, but the recession took a heavy toll on
the state.
Recent acceleration in job growth is
encouraging.
KEY MESSAGES:
Job gains are expected to improve in 2013.
Source: US Department of Labor. Updated through January
2013.
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 10
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
-7
-6
-5
-4
-3
-2
-1
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90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
TennesseeUS
Employment
NONFARM PAYROLL EMPLOYMENT (RATIO TO THE 2000 Q4 LEVEL) WHAT THE CHART SHOWS:
The figure illustrates the evolution of
employment in the state compared with the
nation since 2000 Q4, the peak of the
previous business cycle. The lines trace out
the ratio of employment at the time to
employment in 2000 Q4.
Tennessee’s businesses have recovered or
replaced 61 percent of the jobs lost during
the recession.
KEY MESSAGES:
The recession took a heavy toll on
Tennessee’s economy, reflecting the
outsized footprint of the motor vehicle
industry, but that is now in the past.
Source: US Department of Labor. Updated through January
2013.
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 11
0.94
0.95
0.96
0.97
0.98
0.99
1.00
1.01
1.02
1.03
1.04
1.05
0.94
0.95
0.96
0.97
0.98
0.99
1.00
1.01
1.02
1.03
1.04
1.05
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
US
Tennessee
Intrastate Employment
NONFARM PAYROLL EMPLOYMENT IN SELECTED COMMUNITIES (RATIO TO 2000 Q4 LEVEL) WHAT THE CHART SHOWS:
Employment trends in local communities
across the state.
Lines are the cumulative percent change in
employment since 2000 Q4, the peak of the
previous business expansion.
All regions are beginning to stabilize.
KEY MESSAGES:
The recovering national economy is lifting
business activity across the state.
Source: US Department of Labor. Updated through
December 2012 (state) and January 2013 (US).
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 12
0.84
0.86
0.88
0.90
0.92
0.94
0.96
0.98
1.00
1.02
1.04
1.06
1.08
1.10
1.12
0.84
0.86
0.88
0.90
0.92
0.94
0.96
0.98
1.00
1.02
1.04
1.06
1.08
1.10
1.12
2001 2003 2005 2007 2009 2011 2013 2015
US forecast
US
Clarksville
Knoxville
Nashville
Johnson City
Chattanooga
Cleveland
Kingsport-Bristol
Memphis
Jackson
Morristown
Tennessee forecast
Tennessee
Unemployment
UNEMPLOYMENT (PERCENT OF THE LABOR FORCE) WHAT THE CHART SHOWS:
Trends in Tennessee’s unemployment rate,
compared with the national average.
Typically, Tennessee’s economic
performance parallels the US economy’s but
unemployment rose by more in this
recession than the national average.
Tennessee’s unemployment rate topped out
around 11 percent, but is plunging and has
fallen below the national unemployment rate.
KEY MESSAGES:
The unemployment rate is the single best
indicator of the relative economic
performance of a region and by this
standard the local economy is faring worse
than the national economy.
Tennessee appears on the road to recovery,
judging by the declining unemployment rate.
Source: US Department of Labor. Updated through
December 2012 (state) and January 2013 (US).
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 13
0
1
2
3
4
5
6
7
8
9
10
11
12
13
0
1
2
3
4
5
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9
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11
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13
1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018
Tennessee
US (shaded)
Relative House Prices
RATIO OF THE STATE’S HOUSE PRICES TO THE NATIONAL AVERAGE (1995 Q2 = 1.0) WHAT THE CHART SHOWS:
The figure tracks the relative price of houses
in the state versus the nation—that is, it
reflects the ratio of the state price index to
the national house price index, with that ratio
set to unity in the summer of 1995. A drop
in the line means that house prices in the
state lag the national trend. States that did
not suffer from speculative conditions saw a
decline in the relative price of houses in this
last decade.
Tennessee saw little of the speculative fury
found in many other real estate markets in
the last decade.
KEY MESSAGES:
Tennessee’s housing values are in normal
alignment with the rest of the nation,
following corrections of inflated values
elsewhere.
Source: FHFA. Updated through 2012 Q3.
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 14
0.7
0.8
0.9
1.0
1.1
0.7
0.8
0.9
1.0
1.1
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Real Estate Markets
HOUSE PRICES IN SELECTED COMMUNITIES (RATIO TO THE 1995 Q2 LEVEL) WHAT THE CHART SHOWS:
The figure tracks the cumulative percentage
deviation in house prices since 1995 in
selected local markets and compares those
with the national average.
Tennessee’s housing markets don’t look
speculative, based on the steady trends in
each community but some markets match
the rise in the national average.
KEY MESSAGE:
The softer economy may dampen housing
prices in the state.
Sources: FHFA; Standard & Poor’s. Updated through
2012 Q3.
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 15
0.75
1.00
1.25
1.50
1.75
2.00
2.25
0.75
1.00
1.25
1.50
1.75
2.00
2.25
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
US
Knoxville
Kingsport-Bristol-Bristol
Jackson
Beaumont
Cleveland
Chattanooga
Memphis
New Home Building
HOUSING STARTS (RATIO TO THE JULY 1990 LEVEL) WHAT THE CHART SHOWS:
The pace of new home building (housing
starts) in Tennessee, compared with the
national trends.
New home construction in Tennessee is
beginning to rebound.
KEY MESSAGES:
Tennessee’s home building industry is
expected to continue to recover.
Source: Census Department. Updated through December
2012.
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 16
0.0
0.5
1.0
1.5
2.0
0.0
0.5
1.0
1.5
2.0
2000 2003 2006 2009 2012 2015
TennesseeUS
Office Markets
PERCENT OF OFFICE SPACE THAT IS VACANT WHAT THE CHART SHOWS:
Office market conditions in Nashville,
compared with the national commercial real
estate market.
Vacancy rates in Nashville are beginning to
come down, reflecting the building strength
of the state’s economy.
KEY MESSAGES:
Tennessee’s commercial real estate markets
should continue to strengthen in 2013.
Source: CB Richard Ellis (formerly CB Commercial Property
Information Systems), Office Vacancy Index of the United
States. Updated through 2012 Q3.
February 17, 2013
Regional Perspectives: Tennessee Economic Outlook
Commercial Banking 17
0
5
10
15
20
25
0
5
10
15
20
25
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Nashville
All metropolitan areas (shaded area)
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