john silvia – chief economist september 21, 2004 presentation to: global issues forum employment...
TRANSCRIPT
John Silvia – Chief EconomistSeptember 21, 2004
Presentation to:
Global Issues
ForumEmployment Growth, Offshore
Outsourcing and Secular Change in the Charlotte Labor Market.
Our Challenge is Our Opportunity.
200420032002200120001999
8%
6%
4%
2%
0%
-2%
8%
6%
4%
2%
0%
-2%Quarter/Quarter Percent Change, Seasonally Adusted Annual Rate
SUSTAINED GROWTH: ABOVE TREND BIASReal GDP
2nd Quarter 2004@ 2.8%
200420032002
500
450
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450
400
350
300
FEWER CLAIMS SIGNAL RECOVERYInitial Jobless Claims, In Thousands
Blue Line = 4-Week Moving Average @ 338.00
September 11
Green Line = Weekly Figure @ 333.00
0403020100999897
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60
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MANUFACTURING RECOVERYISM COMPOSITE INDEX
August @ 59.0Diffusion Index
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45
40
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70
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SERVICE SECTOR GAINS CONTINUEISM NON-MANUFACTURING INDEXBUSINESS ACTIVITY INDEX
August@ 58.2
Seasonally Adjusted
04020098969492
6%
5%
4%
3%
2%
1%
0%
6%
5%
4%
3%
2%
1%
0%
POSITIVE INCOME & SPENDING GROWTHYear to Year Percent Change, 12 Month Moving Average
Real Spending (Green Line) @ 3.8%Real, Disposable Income (Blue Line) @ 3.6%
July
2004200320022001
30%
20%
10%
0%
-10%
-20%
30%
20%
10%
0%
-10%
-20%
STRENGTH IN EQUIPMENT & SOFTWARE SPENDINGSeasonally Adusted Annual Rate
2nd Quarter 2004@ 13.7%
030199979593918987
1.8
1.6
1.4
1.2
1.0
0.8
0.6
12%
11%
10%
9%
8%
7%
6%
5%
SINGLE FAMILY HOUSING STARTSSeasonally Adjusted Annual Rate - in Millions
Mortgage Rate @ 6.06%
(Right Scale)
(Left Scale)
Green Line
Single-Family Starts @ 1.65Blue Line
July
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15000
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Shaded Areas Denote Recession Periods
CHARLOTTE MSA HOUSING PERMITSSeasonally Adjusted Annual Rate
Single-Family @ 18,411-Units, up 6.5% -- Blue Line
Multi-Family @ 2,805-Unit Pace, down 25.7% -- Green Line
June 2004
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6%
4%
2%
0%
-2%
-4%
6%
4%
2%
0%
-2%
-4%
INFLATION: SERVICES VS "CORE" COMMODITIESYear to Year Percent Change
August@ 3.0%Line is Services
Bars are Commodities, ex. Food & Energy @ - 1.1%
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12%
10%
8%
6%
4%
2%
0%
-2%
12%
10%
8%
6%
4%
2%
0%
-2%
ACCOMODATIVE FED POLICY CONTINUESREAL FEDERAL FUNDS RATE VS. M2 MONEY GROWTH
Green Line = Real Fed Funds Rate*,
Blue Line = M2 Growth, Yr/Yr % Change, August @ 3.1%
* Fed Funds Rate minus "Core" Consumer Price Index
August @ - 0.3%
030199979593918987
23%
22%
21%
20%
19%
18%
17%
16%
15%
23%
22%
21%
20%
19%
18%
17%
16%
15%
FEDERAL BUDGET IMBALANCESpending & Revenue As Percent of GDP
August '04
15.7%
SPENDING
REVENUE
19.2%
Latest 12 months:
Spending $ 2,275 TrillionRevenue $ 1,864 Trillion
(Blue Line)
(Green Line)
020098969492908886848280
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0Charlotte MSA Includes Mecklenburg, Cabarrus, York, Union, Gaston & Anson Counties
CHARLOTTE & RICHMOND MSA POPULATION GROWTHIn Thousands
Blue Bars = Charlotte MSAGreen Bars = Richmond MSA
Population Growth10-Year Average
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Georgia Virginia North Carolina Michigan
Comparative EmploymentPercent of Total Employment, 2003
U.S. North Carolina Charlotte
Construction 5.2 5.6 6.1
Manufacturing 11.2 15.9 12.9
Trade 15.8 15.7 16.5
Finance 6.1 5.1 8.4
Leisure 9.3 8.8 8.6
Government 16.6 17.0 12.7
Education & Health 12.8 11.3 8.3
Prof. & Business Services
12.3 11.1 14.4
0302010099989796959493929190
14%
12%
10%
8%
6%
4%
14%
12%
10%
8%
6%
4%
TRADITIONAL INDUSTRIES SHARE OF N.C. EMPLOYMENTTraditional Industries: Agriculture, Tobacco, Furniture, Textiles & Apparel
Charlotte EmploymentPercent of Total Employment, 1983
Manufacturing30%
Services16%
Retail Trade16%
Transportation & Public Utilities
9%
Wholesale Trade7%
Construction5%
Finance, Insurance, & Real Estate
6%
Government11%
Services23%
Manufacturing13%
Government13%
Leisure & Hospitality8%
Construction6%
Education &Health Services
7%
Finance, Insurance,& Real Estate
8%
Wholesale & Retail Trade
16%
Transportation& Utilities
4%
Charlotte EmploymentPercent of Total Employment, 2003
(+)
• Major Financial Center
• Growing headquarters center.
• Above average industrial diversity.
• Well-educated workforce.
Charlotte
GastonLincolnMecklenbergUnion
5%
4%
3%
2%
1%
0%
CHARLOTTE MSA POPULATION: SUBURBANIZATIONPercent Change
CabarrusYork, SC Rowan
Blue Bar = Percent Change in 2003Green Bar = Average Annual Growth, 1997-2003
OUTSOURCINGMacro Story
• Global Allocation of Resources
Net vs. Gross Job Gains/Losses
• EfficiencyProfits, Disposable Income
• PricesGoods, Services
• Shareholder ValueObjectives of Management?
OUTSOURCINGMicro Story
• Workers, SuppliesJob Creation/Destruction
• IndustriesManufacturing, 1979
• CommunitiesTrade Adjustment
OUTSOURCINGCost of Inflexibility
• Work Follows SalesEmigration
• Long Term ChangeEducation
• ProductivityDominate Job Creation Trends
Charlotte(-)
• Declining Textiles
• Airlines
• Professional Schools/Tech
• High Taxes
• Unfinished Highway