what of the future? gabriel martinez, ph.d. ave maria university august 2007 14,000 3.4% 0.6%
TRANSCRIPT
What of the future?
Gabriel Martinez, Ph.D.
Ave Maria University
August 2007
14,000
3.4%
0.6%
Dow Jones Industrial Average
10000
12000
14000
Jan-06 Jul-06 Jan-07 Jul-07
Volatility Index
0
10
20
30
Jan-06 Jul-06 Jan-07 Jul-07
Value of the DollarValue of the Dollar
-30
-20
-10
0
10
20
30
2000 2002 2004 2006
Yen for 1 Dollar Euro for 1 Dollar Trade-Weighed
% I
ncre
ase
http://research.stlouisfed.org/fred2/
Real Gross Domestic Product
0
1
2
3
4
5
6
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
% G
row
th
Interest Rates
0
2
4
6
819
99
2000
2001
2002
2003
2004
2005
2006
2007
Area 4 2-year Treasury
10-year Treasury Fed Funds
Global Growth Projections
0
1
2
3
4
5
6
2005 2006 2007 2008
US Europe Japan Latin America
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Aug-13 Aug-15 Aug-17 Aug-19 Aug-21 Aug-23 Aug-25 Aug-27
Implied probability
SEPTEMBER FOMC MEETING OUTCOMES
4.25%
5.00%
5.25%
5.50%
4.75%
4.50%
(Advance) Durable goods report, New home sales
Existing home sales
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Aug-06 Aug-09 Aug-12 Aug-15 Aug-18 Aug-21 Aug-24 Aug-27
Implied probability
OCTOBER FOMC MEETING OUTCOMES
4.25%
5.00%
5.25%
5.50%
4.75%
4.50%
(Advance) Durable goods report, New home sales
Existing home sales
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Aug-06 Aug-09 Aug-12 Aug-15 Aug-18 Aug-21 Aug-24 Aug-27
Implied probability
DECEMBER FOMC MEETING OUTCOMES
5.00%
5.25%
5.50%
4.75%
4.25%4.50%
4.00%
(Advance) Durable goods report, New home sales
Existing home sales
Consumption
0
1
2
3
4
5
6
719
93
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
http://research.stlouisfed.org/fred2/
% G
row
th
Growth in Retail and Food Sales
-6
-4
-2
0
2
4
6
8
10
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
http://research.stlouisfed.org/fred2/
% G
row
th
Consumer Credit Outstanding
0
2
4
6
8
10
12
14
16
18
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
% G
row
th
Household Debt Service and Financial Obligations
0
5
10
15
20
25
2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
% o
f P
erso
nal
Inco
me
afte
r T
axes
Consumer Sentiment Index
70
75
80
85
90
95
100
105
110
115
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
Light Weight Vehicle Sales: Autos & Light Trucks
-15
-10
-5
0
5
10
15
20
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
% G
row
th (
4-m
onth
ave
rage
)
Average Hourly Earnings
0
1
2
3
4
5
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
% G
row
th
Unemployment RateUnemployment Rate
0
2
4
6
8
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
Duration of Duration of Unemployment in Unemployment in
MonthsMonths
0
2
4
6
8
10
12
14
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
Initial Claims for Initial Claims for Unemployment Unemployment
InsuranceInsurance
200,000
300,000
400,000
500,000
1992 1994 1996 1998 2000 2002 2004 2006
http://www.ows.doleta.gov/unemploy/wkclaims/report.asp?
Total Nonfarm Payrolls: Total Nonfarm Payrolls: All EmployeesAll Employees
-2
0
2
4
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
% G
row
th
InvestmentInvestment
-10
-5
0
5
10
15
1993 1995 1997 1999 2001 2003 2005 2007
% G
row
th
http://research.stlouisfed.org/fred2/
Corporate Profits after TaxCorporate Profits after Tax
-20
-10
0
10
20
30
40
1993 1995 1997 1999 2001 2003 2005 2007
% G
row
th
http://research.stlouisfed.org/fred2/
Manufacturers' New Orders: Manufacturers' New Orders: Durable GoodsDurable Goods
-25
-20
-15
-10
-5
0
5
10
15
20
25
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
% G
row
th
Manufacturers' New Orders: Manufacturers' New Orders: Nondefense Capital Goods Excluding Nondefense Capital Goods Excluding
AircraftAircraft
-30
-20
-10
0
10
20
30
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
% G
row
th
Industrial ProductionIndustrial Production
-8
-6
-4
-2
0
2
4
6
8
10
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
% G
row
th
Inventory to Sales RatioInventory to Sales Ratio
-8
-6
-4
-2
0
2
4
6
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
% G
row
th
ISM Manufacturing: PMI ISM Manufacturing: PMI Composite IndexComposite Index
40
45
50
55
60
65
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent that it is generally declining.
Total Capacity UtilizationTotal Capacity Utilization
70
72
74
76
78
80
82
84
86
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
Private Nonresidential Fixed Private Nonresidential Fixed InvestmentInvestment
-15
-10
-5
0
5
10
15
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
National Home Builder’s Housing Market Index
0
10
20
30
40
50
60
70
80
90
1993 1995 1997 1999 2001 2003 2005 2007
http://www.nahb.org
Housing Starts
1000
1200
1400
1600
1800
2000
2200
2400
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/ Thousands of Units
Building Permits
1000
1200
1400
1600
1800
2000
2200
2400
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/ Thousands of Units
Existing Home Sales
Existing Home Sales
(millions)
4
5
6
7
8
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
http://research.stlouisfed.org/fred2/ Home sales in millions of homes
Month’s Supply of Homes
Month's Supply
0
2
4
6
8
10
12
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
http://research.stlouisfed.org/fred2/ Home sales in millions of homes
Median Home Prices
-10%
-5%
0%
5%
10%
15%
20%
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
http://research.stlouisfed.org/fred2/ Home sales in millions of homes
% G
row
th
Mortgage Rate
4
4.5
5
5.5
6
6.5
7
Ja
n-0
4
Ap
r-0
4
Ju
l-0
4
Oc
t-0
4
Ja
n-0
5
Ap
r-0
5
Ju
l-0
5
Oc
t-0
5
Ja
n-0
6
Ap
r-0
6
Ju
l-0
6
Oc
t-0
6
Ja
n-0
7
Ap
r-0
7
Ju
l-0
7
http://research.stlouisfed.org/fred2/ Home sales in millions of homes
.. ...
....... .. ..... . .
. ... .
...
.. ....
.. .. .
.
... . . . ...
...
. . . ....
. . ..
.
.... . ..
...
..
.. ..
..
.. ..
....
.. . .2006m12
2007m1 2007m22007m3
2007m42007m5
2007m6
2007m7
100
000
150
000
200
000
250
000
me
dpric
e
5000000 5500000 6000000 6500000 7000000 7500000Existing Home Sales
Los precios no volverán a resurgir hasta que las ventas vuelvan a su tendencia y a su pico de 7,250,000.
Actual and Predicted Home Prices
$200,000
$205,000
$210,000
$215,000
$220,000
$225,000
$230,000
$235,000
$240,000Ja
n-0
6
Jul-
06
Jan
-07
Jul-
07
Jan
-08
Prices (actual) Prices (Predicted) Prices (New Prediction)
Actual and Predicted Family Income
$56,000$56,500$57,000$57,500$58,000$58,500$59,000$59,500$60,000$60,500$61,000
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08
Family Income (Actual) Family Income (Predicted)
Family Income (New Prediction)
Actual and Predicted Mortgage Rate
5
5.5
6
6.5
7
7.5
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08
Mortgage Rate (Actual) Mortgage Rate (Predicted)
Mortgage Rate (New Prediction)
Per
cent
age
Poi
nts
Demand (NAHB HMI) and Supply (Housing Starts), 2005-2007
0
20
40
60
80
100
Jun-0
5
Aug-05
Oct
-05
Dec-0
5
Feb-0
6
Apr-06
Jun-0
6
Aug-06
Oct
-06
Dec-0
6
Feb-0
7
Apr-07
Jun-0
7
Aug-07
0
1000
2000
3000
HMI Housing Starts
Paralized supply, falling demand
Affordability Index
80
100
120
140
2000
2001
2002
2003
2004
2005
2006
2007
2008
afford trendcycle_afford newpredictafford
Stable prices, higher mortgage rates, and slower income growth keep “affordability” from rising
Consumer InflationConsumer Inflation
0
1
2
3
4
5
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
Expectations of InflationExpectations of Inflation
0
1
2
3
4
5
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
Producer InflationProducer Inflation
-4
-2
0
2
4
6
8
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/
Cost of LaborCost of Labor
Employment Cost IndexUnit Labor
Cost
-2
-1
0
1
2
3
4
5
6
1993 1995 1997 1999 2001 2003 2005 2007
% G
row
th
http://research.stlouisfed.org/fred2/
Oil PriceOil Price
0
10
20
30
40
50
60
70
80
1993 1995 1997 1999 2001 2003 2005 2007
http://research.stlouisfed.org/fred2/