cfa of west michigan economic update apr '16 final event presentations/p… · billions...

  Paul Traub Federal Reserve Bank of Chicago April 16, 2014

Economic Update CFA of West Michigan

Billions Chained $2009, % Change Q/Q at SAAR

!10.0%

!5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

12,000%

12,500%

13,000%

13,500%

14,000%

14,500%

15,000%

15,500%

16,000%

16,500%

'00% '01% '02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%

$%Billions%

Q4%‘07%$14,996%

Q4%‘13%$15,942%

Q2%‘09%$14,357%

April 16, 2014 1 Federal Reserve Bank of Chicago

Q4%‘13%2.6%%

U.S. Real GDP

Q4%‘08%!8.3%%

Percent%

Source:%U.S.%Bureau%of%Economic%Analysis%


Real U.S. GDP Q3%&%Q4%2013%!%Percent%Change%Q/Q%!%SAAR%

GDP%grew%2.6%%!%Q4/Q3%‘13%ContribuSon%to%%%Change%!%SAAR%

!1.0%

!0.3%

0.7%

1.0%

2.2%

2.6%

!2.0% !1.0% 0.0% 1.0% 2.0% 3.0%

Government%

Res.%Investment%

Nonres.%Invest.%

Net%Exports%

PCE%

Real%GDP%


!5.2%

1.3%

9.5%

5.7%

!7.9%

3.3%

2.6%

0.4%

2.4%

3.9%

4.8%

10.3%

2.0%

4.1%

!10.0% !5.0% 0.0% 5.0% 10.0% 15.0%

Government%

Imports%

Exports%

Nonres.%Invest.%

Res.%Invest.%

PCE%

GDP%

Q3%'13% Q4%'13%

But%the%Growth%Rate%Decelerated%Q4%‘13%vs.%Q3%‘13%


21.6% 23.5%

29.5%33.8%

45.2%

16.1%

6.3% 7.5%

1.5%

20.2%

5.1%

!2.4%!10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

GDP% ConsumpSon% Investment% Exports% Imports% Government%

Average%'60%!%'01% 2007%Recession%

Recession Comparisons – GDP by Sector Percent Change 24 Quarters After the Start of the Recession

Percent%

Source:%Author’s%calculaSons%using%data%from%the%BEA%


23.5%

42.4%

16.6%

23.9%

7.5%

18.4%

5.9% 6.8%

!10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

ConsumpSon% Durables% Nondurables% Services%


Recession Comparisons – PCE by Category Percent Change 24 Quarters After the Start of the Recession

Percent%



29.5% 28.3%23.1%

1.5% 1.2%

!16.7%!20.0%

!10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

Investment% NonresidenSal% ResidenSal%


Recession Comparisons – Private Investment Percent Change 24 Quarters After the Start of the Recession

Percent%



16.1%11.3%

29.5%

18.8% 18.4%

!2.4%

3.6%

!1.0% !3.0%

!14.8%!20.0%

!10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

Total%Government%

Federal%ConsumpSon%

Federal%Investment%

State%&%Local%ConsumpSon%

State%&%Local%Investment%


Recession Comparisons – Government Percent Change 24 Quarters After the Start of the Recession

Percent%



U.S. Energy Trade Gas, Oil and Petroleum & Coal Products - Index, 2002 = 100 and Ratio

12.7%

7.1%

3.4% 3.1%2.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0%

200%

400%

600%

800%

1,000%

1,200%

1,400%

1,600%

'02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% Feb%'13%

Feb%'14%

Imports%/%Exports%RaSo%(Right)% Exports%(Le`)% Imports%(Le`)%

YTD%

1,399%

333%


Retail Sales

Source:%U.S.%Census%Bureau,%InflaSon%adjusted%using%CPI%!%All%Urban%Consumers%

Retail Sales and Food Services - Billions of Dollars, Percent Change M/M

!1.00%

!0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

410.0%

415.0%

420.0%

425.0%

430.0%

435.0%

440.0%

Jan%'13%

Feb% Mar% Apr% May% Jun% Jul% Aug% Sep% Oct% Nov% Dec% Jan%'14%

Feb% Mar% Apr%

M/M%%%Chg.% Real%Retail%Sales%

$Billions%

Mar ’14 433.9

1.1

Percent%


U.S. Light Vehicle Sales Millions of Units - SAAR

15.2%

15.8%16.0%

16.3%

15.3% 15.2% 15.3%

16.3%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

Jan%'13%


Feb% Mar%

Millions%

Source:%Ward’s%Auto%Data%and%BEA%Seasonal%Factors%


Industrial Production Index

Source:%U.S.%Census%Bureau,%InflaSon%adjusted%using%CPI%!%All%Urban%Consumers%

Index 2007 = 100, Percent Change M/M

!0.6%

!0.3%

0.0%

0.3%

0.6%

0.9%

1.2%

96.0%

97.0%

98.0%

99.0%

100.0%

101.0%

102.0%

Jan%'13%


Feb% Mar%

M/M%%%Chg.% Industrial%ProducSon%Index%

Index%Feb ‘14 101.6

0.6

Percent%

11 Federal Reserve Bank of Chicago

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

70.0

'07 '08 '09 '10 '11 '12 '13 '14

Index%

PMI Composite Index

Mar%’14%53.7%

April 16, 2014

ISM Manufacturing

Source:%InsStute%for%Supply%Management%

May%’13%49.0%

Nov%’13%57.3%


30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

70.0

'07 '08 '09 '10 '11 '12 '13 '14

U.S.% Southeast%Michigan% Western%Michigan%

Index

Manufacturing & Nonmanufacturing – 12 MMA

Mar ’14 57.6 55.5 53.9

April 16, 2014

ISM – PMI Composite Index

Source: Institute for Supply Management Note: The actual WMI is not seasonally adjusted.

Actuals Feb ‘14 Mar ’14 WMI 58.2 60.6 SEMI 47.7 50.1 U.S. 53.2 53.7

Existing Home Sales

13 Federal Reserve Bank of Chicago April 16, 2014

Thousands%of%Units,%SAAR%Thousands%

Source:%NaSonal%%AssociaSon%of%REALTORS®%

4,190%

4,660%

5,090%5,380%

5,130%4,870%

4,600%

2,000%

2,500%

3,000%

3,500%

4,000%

4,500%

5,000%

5,500%

6,000%

'10% '11% '12% '13% Jul%'13% A% S% O% N% D% Jan%'14% F%

Annual% Monthly%

New Private Housing


Starts,%Permits%and%Under%ConstrucSon%

Source:%U.S.%Census%Bureau%

400%

500%

600%

700%

800%

900%

1,000%

1,100%

1,200%

'13% F% M% A% M% J% J% A% S% O% N% D% '14% F%

Starts% Permits% ConstrucSon%

Thousands%of%Units%Annualized,%SA%


Job Growth Nonfarm%Payroll,%Monthly%Job%Change,%3%–%12%MMA%

!50.0%

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

300.0%

Jan%'13%


Feb% Mar%

Job%Change% Revisions% 3%!%12%MMA%

Thousands%

Source:%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%

192

197 (+22)

144 (+15)

274 280


NFIB Small Business Optimism Index Based on 10 Survey Indicators, 1986 = 100 - SA

Source:%NaSonal’%FederaSon%of%Independent%Business%

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

105.0%

110.0%

'00% '01% '02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%

Index%

Mar%’09%81.0%

Nov%’04%107.7%

Mar%‘14%93.4%


NFIB Small Business Survey Select Questions - April 2014 Report

4.0%

7.0%

29.0%

36.0%

9.0%

17.0%

8.0%

5.0%

30.0%

41.0%

14.0%

19.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

Credit%Was%Harder%to%Get%

Borrowing%Needs%Not%SaSsfied%

Borrowing%Needs%SaSsfied%

Few%or%No%Qualified%Applicants%

Planning%to%Raise%CompensaSon%

Planning%to%Raise%Selling%Price%

Mar%'14% Mar%'13%

Source:%NaSonal%FederaSon%of%Independent%Businesses%%April%Report%

Percent%of%%Firms%Surveyed%

Note:%Percent%calculated%as%higher%minus%lower.%


NFIB Small Business Survey Single Most Important Small Business Problem

6%

5%

8%

17%

21%

23%

8%

9%

10%

14%

21%

21%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

CompeSSon%from%Large%Business%

Quality%of%Labor%

Cost%/%Availability%of%Insurance%

Poor%Sales%

Government%RegulaSon%&%Red%Tape%

Taxes%

Mar%'14% Mar%'13%

Source:%NaSonal%FederaSon%of%Independent%Businesses%%April%Report%

Percent%of%%Firms%Surveyed%Historical%High%/%Low%

High%%32%%27%%34%%29%%24%%14%

Low%%8%%4%%2%%4%%3%%4%


2.5%

2.8%2.9%

3.0%

2.8%

2.2%

1.9%

1.7%

3.0% 3.0%3.1%

2.7%

3.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Q1%'14% Q2%'14% Q3%'14% Q4%'14% 2014%Q4/Q4% 2015%Q4/Q4%

January%Consensus% February%Consensus% March%Consensus% April%Consensus%

Percent Change From Prior Period at Annual Rate

U.S. Real GDP Projections

Percent% Consensus of the Blue Chip by Month

Source:%Blue%Chip%Economic%Indicators%–%March%10,%2014%


1.6%1.2% 1.2%

2.2%2.6%

6.4%

5.1% 5.3%5.7% 6.0%

4.0%

3.2% 3.3%4.0%

4.4%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2011% 2012% 2013% 2014% 2015%Advanced%Economies% Emerging%and%Developing%Economies% World%

Global Outlook IMF%Forecast%for%Growth%(April%‘14),%Percent%Change%Yr./Yr.%Percent%

Difference from January 2014 Outlook 2014 0.0 0.6 0.3 2015 0.3 0.6 0.5

April 16, 2014 Federal Reserve Bank of Chicago 21

Inflation & Employment

Inflation – PCE Price Index


!3.0%

!2.0%

!1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

'07% '08% '09% '10% '11% '12% '13% '14%

Percent%Change%Yr.%/%Yr.%–%2009%=%100%

Core%Feb%‘14%1.1%%

All%Items%Feb%‘14%0.9%%

Percent%



Inflation – PCE Price Index Quarterly%Percent%Change,%2009%=%100%

1.8%2.0%

!0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

'10% '11% '12% '13% 14% '15%Q1%

PCE%All%Items%InflaSon%Percent%

Q4%’13%1.1%%

1.8% 1.9%

!0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

'10% '11% '12% '13% '14% 15%Q1%

PCE%Core%InflaSon%Percent%

Q4%’13%1.3%%

‘15%‘16%Annual%Q4%/%Q4%

Source:%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%and%%FRB%Philadelphia%!%Q1%2014%Survey%of%Professional%Forecasters%

‘15%‘16%Annual%Q4%/%Q4%


U.S. Employment Unemployment%Rate%and%ParScipaSon%Rate%

60.0%

61.0%

62.0%

63.0%

64.0%

65.0%

66.0%

67.0%

68.0%

69.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

'07% '08% '09% '10% '11% '12% '13% '14%

Unemployment%Rate%(Le`)% PatricipaSon%Rate%(Right)%

Percent%

Mar%’14%6.7%%%

63.2%

Oct%’09%10.0%%%%%

65.0%

Percent%



!600.0%

!500.0%

!400.0%

!300.0%

!200.0%

!100.0%

0.0%

100.0%

200.0%

'07% '08% '09% '10% '11% '12% '13% '14%

Employment, Labor Force & Population

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1950's% 1960's% 1970's% 1980's% 1990's% 2000's% 2010's%

PopulaSon%1/% Labor%Force%

1/%Civilian%non!insStuSonalized%populaSon%over%16%years%of%age.%

Source:%Author’s%calculaSons%using%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%data.%

Average%Percent%Change%by%Decade%Chg.%in%HH%Emp.%–%Chg.%in%L.F.%–%12%MMA%Thousands% Percent%

Thousands%of%Persons%!%SA%


U.S. Population 65 to 80 Years Old Percent%of%PopulaSon%16%to%80%Years%of%Age%

58.0%

60.0%

62.0%

64.0%

66.0%

68.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

'60% '65% '70% '75% '80% '85% '90% '95% '00% '05% '10% '15% '20% '25%

Pre!Boomers%(le`)% Baby%Boomers%(Le`)% ParScipaSon%Rate%(Right)%

Source:%U.S.%Census%Department%and%BLS%

Percent% Rate%


U.S. Unemployment Rate Month%Before%/%A`er%Recession%Trough%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

!10% !5% Trough% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%

Current%Recovery% Average%Recovery%

Percent%

Month 57 6.7

5.3


Note:%Average%includes%%1960,%1973,%1981,%1990%and%2001%recessions.%


6.1%5.7%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

'10% '11% '12% '13% 14% '15%Q1%

Unemployment%Rate%Percent%

Q4%’13%1.1%%

187.7%206.9%

!50.0%

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

300.0%

'10% '11% '12% '13% '14% 15%Q1%

Payrolls%(000)s/month%Percent%

Q4%’13%1.3%%

‘14%‘15%Annual%Average%

Source:%U.S.%Department%of%Labor:%Bureau%of%Labor%StaSsScs%and%%FRB%Philadelphia%!%Q1%2014%Survey%of%Professional%Forecasters%

‘15%‘16%Annual%

Unemployment Rate & Payroll Employment Quarterly%and%Annual%Averages%


Employee Wages Employee%Cost%Indexes%,%Percent%Change%Yr./Yr.%!%SA%

0.0%

2.0%

4.0%

6.0%

8.0%

'02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13%

Total%CompensaSon% Wages%&%Salaries% Benefits%


Percent%


Employee Wages Employee%Cost%Index%%!%Total%CompensaSon,%Percent%Change%Yr./Yr.%!%SA%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

'02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13%


Percent%

Averages%for%2002%–%2007%InflaSon%2.3%%

ProducSvity%2.6%%CompensaSon%3.5%%

Averages%for%Q3%’09%–%2013%InflaSon%1.8%%

ProducSvity%1.6%%CompensaSon%1.9%%

U.S.%Consumer%


Real Disposable Personal Income

!6.0%

!4.0%

!2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

'00% '01% '02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%

Income%


Percent%

Percent%Change%Year/Year%!%$2009%

April 16, 2014

Feb%’14%2.1%%

May%‘09%!2.6%%

Pre!recession%Average%3.1%%

Post%recession%average%1.4%%


Nov%’12%3.3%%

Dec%’12%5.9%%


Personal Savings Rate

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

'00% '01% '02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%

Savings%Rate%

Pre!recession%Average%4.0%%

Post%recession%average%5.3%% Feb%’14%4.3%%

Dec%’12%8.7%%

Savings%as%a%Percent%of%Disposable%Income%


10.0%

13.0%

16.0%

19.0%

22.0%

25.0%

28.0%

'60% '65% '70% '75% '80% '85% '90% '95% '00% '05% '10%

Total Consumer Credit


Percent%

April 16, 2014

Revolving%and%Non!revolving%Credit%as%%%of%DPI%

Feb%‘14%24.6%%

1960%–%1995%Average%17.3%%

1996%to%Present%Average%23.0%

Source:%Board%of%Governors%of%the%Federal%Reserve%System%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

'80% '82% '84% '86% '88% '90% '92% '94% '96% '98% '00% '02% '04% '06% '08% '10% '12%

Debt%Service%RaSo% Financial%ObligaSon%RaSo% Last%DSR% Last%FOR%

Debt Service & Financial Obligation Ratios


15.4%%

Percent%

10.0%%

April 16, 2014

Percent%of%Disposable%Personal%Income%

Q4%‘13%

Source:%Federal%Reserve%Bank%of%St.%Louis%


Initial Unemployment Claims Thousands%of%Claims%–%Monthly%Average%

200.0%

300.0%

400.0%

500.0%

600.0%

700.0%

'00% '01% '02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%

Source:%U.S.%Department%of%Labor:%Employment%and%Training%AdministraSon%

Oct%‘01%481%

Mar%‘09%659%

Mar%‘14%322%


Household Net Worth

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

'80% '82% '84% '86% '88% '90% '92% '94% '96% '98% '00% '02% '04% '06% '08% '10% '12%

Home%Equity% Financial%and%Other%

$11.8

Trillions%of%Dollars,%Q1%‘80%to%Q3%‘13%

Total Decline Q2 ‘07 – Q1 ‘09 -$13.2

Q2 ‘07 $68.8

Source:%Federal%Reserve%Z.1%StaSsScal%Release%,Table%B100,%Households%and%Nonprofit%OrganizaSons%

Q4 ‘13 $80.6

Q1 ‘09 $55.6


Household Owner’s Equity

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

'00% '01% '02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%

As%Percent%of%Household%Real%Estate%

Percent%

Q1%‘01%61.2%

Q1%‘09%36.5%

Q4%‘13%51.7%

Consumer Sentiment


University%of%Michigan%Index%

20%

40%

60%

80%

100%

120%

140%

'00% '02% '04% '06% '08% '10% '12% '14%

Apr%’14%Preliminary%

82.6%

Jan%‘00%112.0%

Source:%Thomson%Reuters%/%University%of%Michigan%

Pre!Recession%Average:%90.8%

Post!Recession%Average:%73.5%

Michigan%Economy%


!0.10%

!0.05%

0.00%

0.05%

0.10%

0.15%

0.20%

Jan%'13%

F% M% A% M% J% J% A% S% O% N% D% Jan%'14%

F% M%

Manufacturing% ConstrucSon%&%Mining% Services% Consumer%Spending% Index%


Index%

Michigan’s Contribution

Feb%‘14%!0.06%

April 16, 2014

Midwest Economic Index

Source: FRB of Chicago

!0.15%

!0.10%

!0.05%

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

Jan%'13%

F% M% A% M% J% J% A% S% O% N% D% Jan%'14%

F% M%

Manufacturing% ConstrucSon%&%Mining% Services% Consumer%Spending% Index%


Index%

Michigan’s Contribution

Feb%‘14%!0.07%

April 16, 2014

Relative Midwest Economic Index

Source: FRB of Chicago

Michigan Real Personal Income

!6.0%

!4.0%

!2.0%

0.0%

2.0%

4.0%

6.0%

'02% '03% '04% '05% '06% '07% '08% '09% '10% '11% '12% '13% '14%


Percent%

Percent%Change%Year/Year%!%$2009%

April 16, 2014

Q1%’11%5.1%%

Source:%BEA%

Q4%‘09%!4.6%%

2002%to%2009%Average%!0.6%%

Post%recession%average%1.1%%

Q4%’13%0.6%%

Q4%‘03%2.1%%


88.0%

90.0%

92.0%

94.0%

96.0%

98.0%

100.0%

102.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

'07% '08% '09% '10% '11% '12% '13% '14%

Unemployment%Rate%!%SA%(Le`)% Labor%Force%Index%(Right)%

Michigan Employment

Feb ‘14 4.7%

93.7

Unemployment Rate & Labor Force Index, Jan ‘07 = 100 – S.A.

Source:%BLS%

Percent Index


Michigan Job Growth Nonfarm%Payroll,%Monthly%Job%Change,%3%–%12%MMA%

(50.0)%

(40.0)%

(30.0)%

(20.0)%

(10.0)%

0.0%%

10.0%%

20.0%%

30.0%%

'09% '10% '11% '12% '13% '14%

Job%Change%M/M% 3%MMA%!%12%MMA%

Thousands%Nov ’13 YTD – 65.4

Feb ’14 4.1


Jan ’09 -107.5


36.5%%

31.3%%

0.6%%

(2.1)%

(4.4)%

(5.8)%

(6.4)%

(28.2)%

(32.6)%

(38.2)%

(40.4)%

(60.0)% (40.0)% (20.0)% 0.0%% 20.0%% 40.0%%

EducaSon%&%Health%Services%

Professional%Business%Services%

Mining%&%Logging%

Leisure%&%Hospitality%

Other%Services%

Financial%

InfromaSon%

ConstrucSon%

Manufacturing%

Government%

Trade,%TransportaSon%&%USliSes%

Michigan Nonfarm Payroll Employment by Sector Employment%Change%Jan%‘08%–%Feb%‘14,%Thousands%of%Jobs%

Source:%Author’s%calculaSons%using%data%from%U.S.%Department%of%Labor%%

Total%H/(L)%!89.7%Total%Nonfarm%Employment%4,056%


Michigan Home Prices Index%!%2000%=%100,%Percent%Change%M/M%

60%

70%

80%

90%

100%

110%

120%

130%

'00% '02% '04% '06% '08% '10% '12% '14%

Michigan% Detroit%Area% Grand%Rapids%!%Wyoming% Kalamazoo%

Source:%Author’s%calculaSons%using%U.S.%Census%Bureau%%and%FHFA%Data.%

Index%

Q4%’13%%

115.06%%

107.6%%

98.1%%%

83.4%

!50%

0%

50%

100%

150%

200%

250%

300%

350%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

'10% '11% '12% '13% '14%

%%Change%(Right)% Starts%(le`)%


Thousands%

Feb%’14%7.0%%

!42.9%%

April 16, 2014

Michigan Housing Starts

Source: U.S. Census / Haver Analytics

Units and Percent Change Yr./Yr. - SAAR

Percent%


16,948%16,504%

16,089%

13,195%

10,401%

11,554%

12,735%

14,440%

15,532%16,000%

16,400%

8,000%

10,000%

12,000%

14,000%

16,000%

18,000%

'05% '06% '07% '08% '09% '10% '11% '12% '13% '14% '15%

Thousands of Units – Calendar Year

U.S. Light Vehicle Sales

Thousands%

Source:%Ward’s%AutomoSve%and%BEA%and%IHS%AutomoSve.%


F.O.M.C. Projections


FOMC Overview – March 19, 2014

1.  Information received since the FOMC met in January indicates that growth in economic activity slowed during the winter months.

2.  Labor market indicators were mixed but on balance showed further improvement.

3.  The unemployment rate, however, remains elevated. 4.  Household spending and business fixed investment continued to

advanced, while recovery of the housing sector remained slow. 5.  Fiscal policy is restraining economic growth, although the restraint is

diminishing. 6.  Inflation has been running below the Committee’s longer-run objective,

but long-term inflation expectations have remained stable 7.  Beginning in April, the purchase pace of mortgage-backed securities will

be reduced to $25 billion and the pace of longer-term Treasury securities will be reduced to $30 billion.

8.  Federal Funds rate was kept at the 0 to ¼ percent target range.


F.O.M.C. GDP Projections

3.0%3.2%

3.0%

2.3%2.8%3.0%

2.5%

2.2%1.9%

2.9%3.1%

2.8%

2.3%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

2013% 2014% 2015% 2016% Long%Run%

Change%in%Real%GDP%Percent%

Source:%Federal%Reserve%Board%Members%and%Federal%Reserve%Bank%Presidents,%March%2014%

Percent Change Q4/Q4 in $2009 - SAAR

Note:%Central%tendency%projecSons%exclude%three%highest%and%three%lowest%projecSons.%


Closing the Output Gap

13,500%

14,500%

15,500%

16,500%

17,500%

18,500%

'05% '06% '07% '08% '09% '10% '11% '12% '13% '14% '15% '16%

PotenSal% Actual% Low% Middle% High%

$%Billions%

Q4%’16%80.8%%81.2%%81.7%%

Actual%/%Projected%Growth%Rate%Scenarios%

Revised'Co

ngressiona

l'Budget'O

ffice'Projec7o

n'

Source:%Author’s%calculaSons%using%data%from%the%BEA%,%FOMC,%and%CBO%

December%18,%2013%FOMC%Economic%ProjecSons1%

1.%ProjecSons%based%on%Federal%Reserve%Board%Members%and%Presidents%range%%of%forecasts%.%

CAGR%‘13%–%16%%%%%%2.8%%%%%%%%%%%%%%%%%%%%%%%%%%3.0%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%3.1%%


F.O.M.C. Inflation Projections

1.6%

2.0% 2.0%

1.5% 1.5%1.7%

1.0%

1.6%1.8% 1.9%

2.0%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2013% 2014% 2015% 2016% Long%Run%

PCE%InflaSon%

1.8%

2.4%

2.0%

1.3%1.5% 1.6%

1.2%

1.6%

2.0%1.8%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

2013% 2014% 2015% 2016%

Core%PCE%InflaSon%Percent% Percent%


Percent Change Yr./Yr. – 2009 = 100



F.O.M.C. Unemployment Projections

6.3%

5.9%5.6% 5.6%6.1%

5.6%

5.2% 5.2%

7.0%

6.2%

5.8%5.4% 5.4%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

2013% 2014% 2015% 2016% Long%Run%

Unemployment%Rate%Percent%


Percent Change Yr./Yr.



1%

13%

2%

0%

2%

4%

6%

8%

10%

12%

14%

2014% 2015% 2016%

Appropriate Timing of Policy Firming FOMC%ParScipants%–%March%19,%2014%

Source:%Federal%Reserve%%Board%of%Governors%


Federal Funds Rate

Percent%

Source:%Federal%Reserve%%Bank%&%CME%Group%

Effective Rate and 30 Day Futures

0%

1%

2%

3%

4%

5%

6%

'07% '08% '09% '10% '11% '12% '13% '14% '15% '16%

Fed%Funds%Rate% Futures%

Thank'You!'


Persons Unemployed 15 Weeks or Longer As%%%of%Labor%Force%!%Month%Before%/%A`er%Recession%Trough%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

!10% !5% Trough% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%


Percent%

Month 57 3.5

1.4




Persons Unemployed by Reason Job%Losers%!%Month%Before%/%A`er%Recession%Trough%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

!10% !5% Trough% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%


Percent%

Month 57 3.5

2.6



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