2015 Legislative Economic Briefing · The 2012q4 figure is an estimate by IHS Global Insight....

Legislative Economic BriefingJanuary 15, 2015

Mississippi University Research CenterMississippi Institutions of Higher Learning

Darrin Webb, State [email protected]

(601)432‐6556

To subscribe to our publications, including Mississippi’s Business email Janna Taylor at [email protected].

Visit our website for this presentation as well as state and county level economic data.www.mississippi.edu/urc

Overview• US economy is gaining momentum

– Lower gas prices is supporting stronger consumer spending– Income growth is beginning to improve and consumers & businesses

are relatively upbeat– Investment growth remains strong

• Moderated somewhat by lower investment in oil and gas equipment and structures

– We face a sluggish global economy and exports are likely to moderate. The housing sector still lacks momentum. Nevertheless we expect growth to improve in 2015 over 2014

• MS economy is growing but underperforming Nation & Region• FY 2015 General Fund is out‐performing the economy; we

expect to make both the FY 2015 and FY 2016 estimates

January 15, 2015 MS University Research Center, IHL 2

NATIONAL TRENDS


Annualized Quarterly Growth in Real GDP

‐2.1%

4.5% 4.9%

2.6%

‐10.0%

‐8.0%

‐6.0%

‐4.0%

‐2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

2000q1 2001q1 2002q1 2003q1 2004q1 2005q1 2006q1 2007q1 2008q1 2009q1 2010q1 2011q1 2012q1 2013q1 2014q1

Darker Bars Represent National Recessions. The 2012q4 figure is an estimate by IHS Global Insight.

MS University Research Center, IHL 4January 15, 2015

The U.S. economy enjoyed a very strong second and third quarters. Growth almost certainly cooled in the fourth quarter.

Average US Jobs Added By Month By Year


22,500

(4,167

)

(177

,000

)

288,16

7

323,33

3

208,50

0

158,50

0

262,75

0

270,16

7

161,91

7

25,917

(69,66

7)

97,500

234,75

0 320,91

7

179,91

7

235,41

7

284,00

0

253,91

7

264,75

0

162,16

7

(144

,583

)

(42,33

3)

8,75

0 169,41

7

208,83

3

173,75

0

95,000

(298

,000

)

(423

,917

)

88,167

173,58

3

186,33

3

194,25

0

240,90

9

(500,000)

(400,000)

(300,000)

(200,000)

(100,000)

‐

100,000

200,000

300,000

400,0001980

1985

1990

1995

2000

2005

2010

Average jobs added per month has gradually improved over the past four years. In 2014 the

average was 240 Thousand. This is the strongest annual average since 1999.

US Nonfarm Employment

MS University Research Center, IHL 6

124,000

126,000

128,000

130,000

132,000

134,000

136,000

138,000

140,000

142,000

Tho

usa

nd

s

Peak‐to‐trough loss 8.8 million jobs or 6.4%

Gains since trough 10.4 million jobs.

January 15, 2015

Institute For Supply Management Indices

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

Jan‐07

Jan‐08

Jan‐09

Jan‐10

Jan‐11

Jan‐12

Jan‐13

Jan‐14

ISM Indices: abo

ve 50 is expand

ing

Manufacturing Index Nonmanufacturing Index


An ISM Index above 50 says the industry is expanding. Below 50 indicates a contraction.

Real US Retail SalesAdjusted for Inflation

$280,000

$290,000

$300,000

$310,000

$320,000

$330,000

$340,000

$350,000

$360,000

$370,000

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Mon

thly

Sal

es M

illio

ns o

f 200

4 $

2010 Avg. Annual Growth

3.8%



4.2%


3.0%

2014* Avg. Annual Growth

2.3%


2.7%

2014 Avg. Growth reflects Jan‐August

Weekly U.S. Regular Retail Gasoline PricesDollars Per Gallon

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

Jan 03,2000

Jan 03,2001

Jan 03,2002

Jan 03,2003

Jan 03,2004

Jan 03,2005

Jan 03,2006

Jan 03,2007

Jan 03,2008

Jan 03,2009

Jan 03,2010

Jan 03,2011

Jan 03,2012

Jan 03,2013

Jan 03,2014


Prices have fallen dramatically since mid‐year. Low gasoline prices are especially beneficial to low income areas.

US Light Vehicle Sales

9.00

11.00

13.00

15.00

17.00

19.00

21.00

23.00

Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12 Jan‐13 Jan‐14

Millions of U

nits, SAA

R


Average sales for 2014 – 16.4 million units.

US Consumer Sentiment

50.0

60.0

70.0

80.0

90.0

100.0

110.0

120.0Jan‐90

Jan‐91

Jan‐92

Jan‐93

Jan‐94

Jan‐95

Jan‐96

Jan‐97

Jan‐98

Jan‐99

Jan‐00

Jan‐01

Jan‐02

Jan‐03

Jan‐04

Jan‐05

Jan‐06

Jan‐07

Jan‐08

Jan‐09

Jan‐10

Jan‐11

Jan‐12

Jan‐13

Jan‐14

University

of M

ichigan Index, 1966 = 100


Index is at the highest level in nearly 8 years.

National Federation of Independent Businesses Optimism Index

Jan‐07

Jul‐0

7

Jan‐08

Jul‐0

8

Jan‐09

Jul‐0

9

Jan‐10

Jul‐1

0

Jan‐11

Jul‐1

1

Jan‐12

Jul‐1

2

Jan‐13

Jul‐1

3

Jan‐14

Jul‐1

4

80

82

84

86

88

90

92

94

96

98

100

NFIB Optim

ism In

dex, 1986=100


Small Businesses confidence has improved significantly over

the past year.

Year‐Over‐Year Growth in Real Personal Income Less Transfer Payments

by Quarter

‐8%

‐6%

‐4%

‐2%

0%

2%

4%

6%

8%

10%

Mar‐60

Mar‐62

Mar‐64

Mar‐66

Mar‐68

Mar‐70

Mar‐72

Mar‐74

Mar‐76

Mar‐78

Mar‐80

Mar‐82

Mar‐84

Mar‐86

Mar‐88

Mar‐90

Mar‐92

Mar‐94

Mar‐96

Mar‐98

Mar‐00

Mar‐02

Mar‐04

Mar‐06

Mar‐08

Mar‐10

Mar‐12

Mar‐14


Gray Areas Represent National Recessions.

Declines are characteristic of recessions. The series went negative in the 4th quarter of 2013. During 2014,

the series remained positive, but weak.

U.S. Employment Cost IndexWage and Salaries for All Civilian WorkersGrowth Over The Prior Year by Quarter

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Mar‐01

Dec‐01

Sep‐02

Jun‐03

Mar‐04

Dec‐04

Sep‐05

Jun‐06

Mar‐07

Dec‐07

Sep‐08

Jun‐09

Mar‐10

Dec‐10

Sep‐11

Jun‐12

Mar‐13

Dec‐13

Sep‐14


We saw modest gains in 2014, but have a long way to go before we have “normal” wage growth.

STATE TRENDS


96

98

100

102

104

106

108

Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12 Jan‐13 Jan‐14

Inde

x 20

04=

100

MS Index of Coincident Indicators

16MS University Research Center, IHLJanuary 15, 2015

The MSCI fell in the first quarter early of 2014, improved in the second but has had very little

upward momentum in the second half of the year.

The Mississippi Index of Coincident Indicators reflects economic conditions existing in a given month. The index is constructed by the Federal Reserve Bank of Philadelphia and re‐indexed to 2004. The Index is based on changes in nonfarm employment, the unemployment rate, average manufacturing workweek length and wage and salary disbursements.

Regional ComparisonNovember Coincident Index as Percentage of Pre‐recession Peak

96.0%

101.0%

97.0%

103.3% 103.4%102.5%

100.1%

103.3%104.2%

102.8%

106.7%

114.7%

107.9%

85.0%

90.0%

95.0%

100.0%

105.0%

110.0%

115.0%

120.0%

AL AR FL GA KY LA MS NC OK SC TN TX US


Average Annual Growth in EmploymentAL

AL

AL

AL

AL AL AL

AR

AR

AR

AR AR

AR

AR

FL

FL

FL

FL

FL

FL

FL

GA

GA

GA

GA GA

GA GA

KY

KY

KY

KY KY

KY

KYLA

LA

LA

LA

LA LA LA

MS

MS

MS

MS

MS

MS

MS

NC

NC

NC

NC

NC

NC NC

OK

OK

OK

OK

OK

OK

OK

SC

SC

SC

SC

SC

SC SC

TN

TN

TN

TN TN

TN

TNTX

TX

TX

TX

TX TX

TX

US

US

US

US

US

US US

‐8.0%

‐6.0%

‐4.0%

‐2.0%

0.0%

2.0%

4.0%

2008 2009 2010 2011 2012 2013 2014*


2014* reflects the Y/Y growth for January‐November.

MS Index of Leading Indicators

80

85

90

95

100

105

110

115

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Inde

x 20

04=

100

19MS University Research Center, IHL

The Leading Index improved significantly in 2014, but growth followed and up‐down‐up

pattern throughout most of the year.

January 15, 2015

The Mississippi Index of Leading Indicators reflects economic conditions expected for the coming months. The index is constructed by the University Research Center and indexed to 2004. There are 7 components of the Index: MS Initial Unemployment Claims; MS Income Tax Withholdings; MS Value of Residential Building Permits; MS MFG Employment Intensity Index; ISM Index of US MFG Activity; US Consumer Expectations Index and US Retail Sales.

MS Nonfarm Employment

MS University Research Center, IHL 20

800

850

900

950

1,000

1,050

1,100

1,150

1,200

Thou

san

ds

Employment has improved in recent years but remains well below the peak observed in February 2008. Annual Job growth was 0.9% in 2012

and 2013. Growth was a slightly slower 0.8% in 2014.

1,160.4 May 00

1,109.3 Jun 03

1,119.2 Nov 14

1,160.2 Feb 08

January 15, 2015

1,084.1 Feb 10

Percentage Change in Nonfarm Employment By State, 2013-2014*

-0.06%0.23%0.29%0.34%

0.62%0.63%0.68%0.73%0.78%0.79%0.85%0.88%0.90%0.90%0.93%0.94%1.00%1.02%

1.13%1.18%1.19%1.21%1.23%1.25%1.26%1.26%

1.34%1.39%1.44%

1.62%1.69%1.70%

1.80%1.83%1.88%

2.00%2.03%2.04%2.07%2.12%

2.24%2.29%

2.60%2.64%

2.83%2.91%

3.16%3.38%3.41%

4.62%

-2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%Alaska

New JerseyVirginia

New MexicoIllinois

MarylandVermont

PennsylvaniaMississippi

MichiganConneticut

DCNebraska

OhioSouth Dakota

IdahoKentucky

KansasLouisiana

New HampshireHawaii

WyomingWest Virginia

ArkansasMaine

New YorkIowa

Rhode IslandMontanaMissouri

MassachusettsWisconsinMinnesotaOklahoma

IndianaTennessee

GeorgiaNorth Carolina

ArizonaSouth Carolina

CaliforniaWashington

DelawareColorado

OregonFlorida

UtahTexas

NevadaNorth Dakota

MS ranked 9TH From the Bottom

* Data includes January through November for each year.

U.S. Average 1.8%


Where are the Jobs?Mississippi added an average 8,800 jobs in 2014 over 2013

‐1,000‐700

‐200‐100

200700900

1,4001,8002,000

3,900

‐2,000 ‐1,000 0 1,000 2,000 3,000 4,000 5,000

ConstructionOther Services

InformationFinancial ActivitiesMining & Logging

Professional & Business ActivitiesGovernment

Trade, Transportation & UtilitiesEducational & Health Services

Leisure & HospitalityManufacturing


MS Residential Building PermitsThree Month Moving Average Number of Units

20

220

420

620

820

1,020

1,220

1,420

1,620

1,820

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14


Permits have yet to develop any significant upward momentum. Graph may understate improvement as permits are not required in the county.

MS Construction Employment

20.0

25.0

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

70.0Jan‐90

Jan‐91

Jan‐92

Jan‐93

Jan‐94

Jan‐95

Jan‐96

Jan‐97

Jan‐98

Jan‐99

Jan‐00

Jan‐01

Jan‐02

Jan‐03

Jan‐04

Jan‐05

Jan‐06

Jan‐07

Jan‐08

Jan‐09

Jan‐10

Jan‐11

Jan‐12

Jan‐13

Jan‐14

Thou

sand

s


The large gain in 2013 disappeared in 2014 as some large projects came to a close.

MS Employment For Select Industries

0.0

50.0

100.0

150.0

200.0

250.0

300.0Jan‐90

Jan‐91

Jan‐92

Jan‐93

Jan‐94

Jan‐95

Jan‐96

Jan‐97

Jan‐98

Jan‐99

Jan‐00

Jan‐01

Jan‐02

Jan‐03

Jan‐04

Jan‐05

Jan‐06

Jan‐07

Jan‐08

Jan‐09

Jan‐10

Jan‐11

Jan‐12

Jan‐13

Jan‐14

Thou

sand

s

Manufacturing Retail Trade Health Care and Social Assistance Leisure and Hospitality Government


MS Manufacturing Workweek LengthThree Month Moving Average

37.0

38.0

39.0

40.0

41.0

42.0

43.0

44.0

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14


Workweek length remains relatively high.

Unemployment ClaimsThree Month Moving Average

-

50,000

100,000

150,000

200,000

250,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000Ja

n-00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Con

tin

ued

Un

emp

loym

ent

Cla

ims

Init

ial U

nem

plo

ymen

t C

laim

s

Initial Claims Continued Claims


Year‐Over‐Year Growth in Real Personal Income Less Transfer Payments: Mississippi

by Quarter

‐10%

‐8%

‐6%

‐4%

‐2%

0%

2%

4%

6%

8%


Gray Areas Represent National Recessions.

Declines are characteristic of recessions. The series has been negative in five of the last six quarters.

Mississippi Income Tax WithholdingsGrowth Over Prior Year, Inflation Adjusted

7.0%

5.4% 5.5%

8.0%

6.2%

2.1%

‐1.0%‐0.6%

2.0% 2.2%3.0%

5.2%5.7%

‐0.8%

‐3.4%

‐0.3%‐0.5%

3.1%

1.2%

2.6%

‐4.0%

‐2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014


Growth in 2014 was much stronger than 2013, but less than 2012. The growth in 2014 was largely due to strong collections in the first quarter. The second and third quarters were especially weak.

Inflation Adjusted Average Hourly Manufacturing Earnings in Mississippi

$11.00

$11.50

$12.00

$12.50

$13.00

$13.50

$14.00

$14.50

$15.00Mar‐05

Jun‐05

Sep‐05

Dec‐05

Mar‐06

Jun‐06

Sep‐06

Dec‐06

Mar‐07

Jun‐07

Sep‐07

Dec‐07

Mar‐08

Jun‐08

Sep‐08

Dec‐08

Mar‐09

Jun‐09

Sep‐09

Dec‐09

Mar‐10

Jun‐10

Sep‐10

Dec‐10

Mar‐11

Jun‐11

Sep‐11

Dec‐11

Mar‐12

Jun‐12

Sep‐12

Dec‐12

Mar‐13

Jun‐13

Sep‐13

Dec‐13

Mar‐14

Jun‐14

Sep‐14

Dec‐14


Growth in Wage And Salary Disbursements, By State, 2013-2014*

‐0.74%‐0.21%

0.33%0.35%0.35%0.40%0.51%0.53%0.54%

0.78%0.82%

1.05%1.16%1.34%1.35%1.36%1.52%1.52%1.55%1.58%1.66%1.69%1.71%1.86%1.87%1.93%1.93%2.08%2.12%2.14%2.18%2.25%2.37%

2.58%2.59%2.59%2.59%2.63%2.63%

2.92%3.03%3.17%3.20%3.31%3.32%3.43%

3.64%3.96%

4.16%4.43%

7.23%

-2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%West Virginia

VirginiaVermont

New JerseyMississippi

New MexicoMarylandAlabamaArkansas

MaineIndiana

ConnecticutWisconsin

District of ColumbiaMissouri

PennsylvaniaMinnesotaNebraskaKentucky

HawaiiOhio

LouisianaNorth Carolina

ArizonaIllinois

MontanaOklahoma

TennesseeKansas

Rhode IslandAlaska

IowaDelaware

NevadaGeorgia

MassachusettsSouth Carolina

WyomingMichigan

New HampshireUtah

New YorkSouth Dakota

IdahoFlorida

OregonCalifornia

WashingtonColorado

TexasNorth Dakota

* The first three quarters of each year are compared.

U.S. Average 2.4%


MS ranked 5th from the bottom.

MS General FundGrowth Over Prior Year

2.5%

5.1%

1.3%

9.1%

11.4%

9.7%

2.9%

5.9%6.5%

7.6%

2.8%2.1%

‐2.1%

2.2%

4.0%

7.2%

12.8%

10.5%

3.1%

‐4.2%‐4.9%

2.3%

5.9%5.1%

5.6%

1.1%

3.0%

‐8%

‐3%

2%

7%

12%

17%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016


* FY 2014 and FY 2015 reflect November Revised Estimate.

Fiscal Year to Date Growth: Total 4.1%; Growth Needed Rest of Year to Make November Revised Estimate: ‐1.4%

Excluding AG Settlements and Corporate Tax, FY 2014 GF was up 2.1%;Excluding AG Settlements and Corporate Tax, the Estimate tor FY 2015 GF growth is 3.4%

OUTLOOK


Growth In Real US GDPHistorical and IHS Global Insight Baseline Projections

1.9%

‐0.1%

3.6%

2.7%

4.0%

2.7%

3.8%

4.5%

4.4% 4.7%

4.1%

1.0%

1.8%

2.8%

3.8%

3.3%

2.7%

1.8%

‐0.3%

‐2.8%

2.5%

1.6%

2.3%

2.2% 2.4%

3.1%

2.7%

2.7%

‐4.0%

‐3.0%

‐2.0%

‐1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


Growth In Real MS GDPHistorical and University Research Center Projections

2.4%

5.6%

4.7%

6.1%

2.7%

2.0%

2.0% 2.2% 2.

9%

0.5%

‐0.8%

0.9%

4.0%

2.1%

1.8%

2.6%

2.0%

0.7%

‐3.4%

0.9%

‐0.8%

3.5%

1.6%

1.3%

2.4%

2.1% 2.4%

‐4.0%

‐2.0%

0.0%

2.0%

4.0%

6.0%

8.0%


Economic Outlook of Key Indicators

Indicator 2014 2015 2016

MS Real GDP 1.3% 2.4% 2.1%

US Real GDP 2.4% 3.1% 2.7%

MS Employment (Est. Based) 0.8% 1.5% 1.5%

US Employment (Est. Based) 1.9% 2.0% 1.8%

MS Real Total Personal Income 0.7% 3.9% 2.9%

US Real Total Personal Income 2.5% 3.9% 3.1%

US Inflation as measured by CPI 1.6% 0.1% 2.3%

Excluding Food & Energy 1.8% 2.0% 2.1%


2015 Legislative Economic Briefing · The 2012q4 figure is an estimate by IHS Global Insight....

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Transcript of 2015 Legislative Economic Briefing · The 2012q4 figure is an estimate by IHS Global Insight....