Dr. Daraius Irani - Maryland's Economic Outlook Presentation

Two Steps Forward One Step Back

Daraius Irani, PhD

November 9, 2011

National Economy

Two Steps Forward?

-10%

-5%

0%

5%

10%

15%

Ann

ual R

ate

of E

xpan

sion

Bureau of Economic Analysis

Real Gross Domestic Product, Seasonally Adjusted 1981Q1 through 2011Q3

© Towson University, Division of Economic and Community Outreach

2.5 %

-0.6%

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

$8,200

$8,400

$8,600

$8,800

$9,000

$9,200

$9,400

$9,600

Consumption Exp. Percent change

Two Steps Forward?

Bureau of Economic Analysis

Personal Consumption, Seasonally Adjusted, Jan 2005 through Sept 2011

Pers

onal

Con

sum

ptio

n Ex

pend

iture

s Bi

llion

s of C

hain

ed 2

005

Dol

lars

Ann

ual P

erce

nt C

hang

e


0.5 %

Consumers are Spending but…..

US May June July August September Personal Income

0.3% 0.2% 0.1% -0.1% 0.1%

Disposable Personal Income

0.2% 0.1% 0.0% -0.4% -0.1%

Personal Consumption

0.0% -0.1% 0.5% 0.0% 0.5%

© Towson University, Division of Economic and Community Outreach Bureau of Economic Analysis

Percent Change from Previous Month

The Employment Situation

2,440

2,450

2,460

2,470

2,480

2,490

2,500

2,510

128,000

128,500

129,000

129,500

130,000

130,500

131,000

131,500

132,000

132,500

133,000

US Maryland

2,400

2,450

2,500

2,550

2,600

2,650

124,000

126,000

128,000

130,000

132,000

134,000

136,000

138,000

140,000

US Maryland

Mar

ylan

d To

tal N

onfa

rm E

mpl

oyee

s, in

Tho

usan

ds

US

Tota

l Non

farm

Em

ploy

ees,

in T

hous

ands

U

S To

tal N

onfa

rm E

mpl

oyee

s, in

Tho

usan

ds

Mar

ylan

d To

tal N

onfa

rm E

mpl

oyee

s, in

Tho

usan

ds

Post – Recession Employment Picture

Bureau of Labor Statistics

2001 Recession

2007 Recession


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

Aggregate Weekly Hours Average Hourly Earnings

Ave

rage

Hou

rly

Wag

es

Year

-Ove

r-Ye

ar P

erce

nt C

hang

e

Agg

rega

te W

eekl

y H

ours

Ye

ar-O

ver-

Year

Per

cent

Cha

nge

U.S. Stalled Job Creation and Wages ? Hours, Production and Nonsupervisory Employees, Jan 2006 through Aug 2011

© Towson University, Division of Economic and Community Outreach Federal Reserve Bank

Manpower Hiring Survey

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Expect increase Expect decrease Net Change

Hiring Plans, All Industries, Not Seasonally Adjusted, 2007Q1 through 2011Q4

Inde

x

Moody’s Analytics © Towson University, Division of Economic and Community Outreach

Job Hires vs. Job Separations


2.5%

2.7%

2.9%

3.1%

3.3%

3.5%

3.7%

3.9%

4.1%

4.3%

Hires Separations


Rat

e

Job hires vs. Job Separations, Seasonally Adjusted Jan 2008 through Aug 2011

Return to Peak Employment?

© Towson University, Division of Economic and Community Outreach IHS Global Insight

Checking Consumer and Business

Temperature

Consumer Sentiment Index

40.0

50.0

60.0

70.0

80.0

90.0

100.0

110.0

120.0

Inde

x

Firs

t Qua

rter

196

6=10

0

University of Michigan © Towson University, Division of Economic and Community Outreach

Consumer Sentiment Monthly Index, Jan 2007 through Oct 2011

Pulse of Commerce

70.00

75.00

80.00

85.00

90.00

95.00

100.00

105.00

PCI CERIDIAN INDEX GDP

Ceridian-UCLA Pulse of Commerce Index

Inde

x

PCI Monthly Index, GDP, Seasonally Adjusted Jan 2002 through Sept 2011


Regional PCI Growth

© Towson University, Division of Economic and Community Outreach Ceridian-UCLA Pulse of Commerce Index

ISM: Purchasing Managers Index

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

Oct: 50.8

Dif

fusi

on In

dex

Institute for Supply Management © Towson University, Division of Economic and Community Outreach

ISM Monthly Index, Jan 2005 through Oct 2011

Checking the Housing Picture

0

0.5

1

1.5

2

2.5

Pending Serious Delinquency Inventory Pending FC Inventory Pending REO Inventory

Shadow Inventory Concerns M

illio

ns o

f Uni

ts

Shadow Inventory Detail, Monthly, Jan 2006 through Jul 2011

© Towson University, Division of Economic and Community Outreach CoreLogic

Months’ Supply Shadow Inventory

0

1

2

3

4

5

6

7

8

9

Pending Serious Delinquency Inventory Pending FC Inventory Pending REO Inventory

Num

ber o

f Mon

ths

Months’ Supply Detail, Monthly, Jan 2006 through Jul 2011


Foreclosure Heat Map

RealtyTrac

September 2011


New Houses For Sale in the United States Months Since Completion

0

2

4

6

8

10

12

14

16


Not Seasonally Adjusted, Monthly, Jan 2006 through Jul 2011

Num

ber o

f Mon

ths

Census Bureau

New Houses For Sale in the United States Number of Months to Clear Out Inventories

0

2

4

6

8

10

12

14


Seasonally Adjusted, Months at Current Sales Rate, Jan 2006 through Jul 2011

Num

ber o

f Mon

ths

Census Bureau

Distressed Sales as A Percentage of Total Sales

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Short Sales REO Sales

Monthly, Jan 2006 through July 2011

Perc

ent o

f Tot

al S

ales


Story Behind the Numbers

• Incomes have remained stagnant for prime home buyers

• Negative housing price trends have a negative

wealth effect


Maryland Outlook

Slow Down in Maryland’s Economy?

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

MD US

Annual Rate of Change, Index, Monthly Jan 1997 through Sept 2011

© Towson University, Division of Economic and Community Outreach Federal Reserve Bank

Coi

ncid

ent I

ndex

Maryland Performance

• Maryland added 10,000 private sector jobs in September

• Employment growth is at 0.5 percent – a faster clip than the

0.1 percent for the nation

o Federal Government added 2,100 jobs

o State Government added 100 jobs

o Local Government shed 5,400 jobs

• Since January, 95 percent of new jobs have been created by

the private sector

© Towson University, Division of Economic and Community Outreach Department of Labor, Licensing and Regulation

Personal Income Percent Change

© Towson University, Division of Economic and Community Outreach Bureau of Economic Activity

Mid-Atlantic Region Unemployment Rankings


September Unemployment Rates Seasonally Adjusted

State 2009 2010 2011

Maryland 7.4 7.4 7.4

Pennsylvania 8.5 8.5 8.3

Virginia 7.1 6.7 6.5

Delaware 8.3 8.3 8.1 DC 10.2 9.7 11.1


U.S. Unemployment Rate: 9.1 in September 9.0 in October

Measures of Labor Underutilization

7.3

10.2 9.2 8.8

12 10.7

12.7

15.4 16.2

0

2

4

6

8

10

12

14

16

18

Maryland District of Columbia United States

U-3 U-5 U-6


Labor Underutilization, Averages, 2010Q3 through 2011Q2

Perc

ent


Maryland Mass Layoffs

0

5

10

15

20

25

30

35

0

500

1,000

1,500

2,000

2,500

3,000

Total Initial Claimants Layoff Events

Tota

l Ini

tial C

laim

ants

, To

tal a

ll In

dust

ries


Layo

ff E

vent

s, T

otal

all

Indu

stri

es


Total Initial Unemployment Claimants and Layoff Events, Monthly, Jan 2010 through Sep 2011

Housing

MD Homes Sales vs. Inventories

0

10,000

20,000

30,000

40,000

50,000

60,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Home Sales Inventories

Hom

e Sa

les

Maryland Association of Realtors

MD Home Sales vs. Inventories, Seasonally Adjusted Jan 2000 through Aug 2011


Inve

ntor

y

MD Homes Prices vs. Inventories

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

0

10,000

20,000

30,000

40,000

50,000

60,000

Inventories Home Prices

Ave

rage

Hom

e Pr

ice

Inve

ntor

y

Maryland Association of Realtors

MD Home Sales vs. Inventories, Seasonally Adjusted Jan 2000 through Aug 2011


MD Distressed Properties

82%

12%

6%

Aug-10

83%

9% 8%

Aug-11

Total Sales REO Sales Short Sales


Baltimore – Towson Distressed Properties

83%

12%

5%

Aug-10

87%

7% 6%

Aug-11

Total Sales REO Sales Short Sales


Housing and Foreclosures

• Maryland - September 2011 o 10,662 Foreclosure Homes for Sale o $180,906 Average Foreclosure Sales Price

• US – September 2011 o 1,485,418 Foreclosure Homes for Sale o $173,344 Average Foreclosure Sales Price

© Towson University, Division of Economic and Community Outreach RealtyTrac

What’s Looming Ahead?

Maryland Federal Government and Private Sector Employment

1,800

1,850

1,900

1,950

2,000

2,050

2,100

2,150

2,200

110

115

120

125

130

135

140

145

150

Federal Total Private

Bureau Of Labor Statistics

Seasonally Adjusted, Jan 2000 through Sept 2011

Fede

ral G

over

nmen

t Em

ploy

men

t, th

ousa

nds

Priv

ate

Sect

or E

mpl

oym

ent,

thou

sand

s


Challenges Ahead

• Maryland fiscal leaders cut the State’s economic outlook

• The State’s Board of Revenue Estimates

expects growth of 2.8 percent – downgraded from 4.7 percent.

• Increased Taxes (?) • Federal Budget Cuts


Maryland’s Forecast

RESI Employment Outlook

2,350,000

2,400,000

2,450,000

2,500,000

2,550,000

2,600,000

-3.5%

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

Growth TNA

Maryland Historical & Projected TNA Employment Growth, 2007Q1 through 2013Q4

RESI, Bureau of Labor Statistics

Perc

ent c

hang

e fr

om sa

me

qu

arte

r one

yea

r ago


TNA

Em

ploy

men

t Lev

el

RESI Employment Outlook

-2.3% -1.8%

-1.1% 0.1%

0.2% 0.5%

0.7% 0.9%

1.1% 1.4%

1.6% 1.8%

2.5% 2.6%

2.8%

-3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0%

Information Utilities

Manufacturing Real Estate

Financial Svcs Mgmt of Companies

Educational Svcs. Trade

Transp./Warehousing Government

Accomm/Food Svcs Healthcare Svcs. Professional/Sci.

Arts/Entertainment Admin/Waste

Maryland Projected Employment Growth, Percent, 2011 to 2012

RESI, Bureau of Labor Statistics © Towson University, Division of Economic and Community Outreach

RESI Outlook - Summary

RESI, Bureau of Labor Statistics, Bureau of Economic Analysis

Maryland Indicators - Historical & Projected Annual Figures

2009 2010 2011 2012 2013

Total Non-Agricultural Employment

(annual growth)

-3.0% -0.3% 0.7% 1.1% 1.4%

Total Personal Income

(annual growth)

0.3% 2.8% 4.5% 3.2% 3.7%


Dr. Daraius Irani - Maryland's Economic Outlook Presentation

Economy & Finance

Transcript of Dr. Daraius Irani - Maryland's Economic Outlook Presentation