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The Goldman Sachs Group, Inc.
Goldman Sachs Research
Global Themes and Risks
Presentation prepared for meetings in Israel, 31 January-3 February, 2012
Abby Joseph Cohen, CFA
Rachel Siu
Koby Sadan
Goldman, Sachs & Co.
Goldman, Sachs & Co.
Goldman, Sachs & Co.
1-212-902-4095
1-212-357-0493
1-212-902-7009
[email protected]
[email protected]
[email protected]
The Global Markets Institute is the public policy research unit of Goldman Sachs Global Investment Research. Its mission is to provide research and
high-level advisory services to policymakers, regulators and investors around the world. The Institute leverages the expertise of Research and other
Goldman Sachs professionals, as well as highly regarded partners, to offer written analyses and host discussion forums.
Exports and business equipment lead all other GDP sectors
Private construction showing some life; government spending now
turning down
170
165
160
155
Exports
150
145
Business
Equipment
and Sof tware
Index: 2003 Q1=100
140
135
130
125
Personal
Consumption
Expenditures
120
115
110
Government
Expenditures
105
100
Business
Structures
95
90
85
1Q 03 3Q 03 1Q 04 3Q 04 1Q 05 3Q 05 1Q 06 3Q 06 1Q 07 3Q 07 1Q 08 3Q 08 1Q 09 3Q 09 1Q 10 3Q 10 1Q 11
3Q11
Data from 2003 Q1 through 2011 Q3
Source: Bureau of Economic Analysis.
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Technology and capital spending have
expanded beyond earlier peaks
365
355
345
335
325
315
Industrial Production, indexed to January 2003
305
295
285
275
265
255
245
235
Semiconductor and related equipment
225
215
205
195
185
Computer and
peripheral equipment
175
165
155
Communications
equipment
145
135
125
115
105
Industrial production excluding
selected high-technology industries
95
85
75
1/03 5/03 9/03 1/04 5/04 9/04 1/05 5/05 9/05 1/06 5/06 9/06 1/07 5/07 9/07 1/08 5/08 9/08 1/09 5/09 9/09 1/10 5/10 9/10 1/11 5/11 9/11
Monthly data from 1/2003 through 12/2011
Source: Federal Reserve Board.
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Changes in industrial production
Stronger growth in Israel, lesser impact from the GFC
150
140
Index: Jan 2003=100
130
Israel
120
US
110
100
90
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
80
Source: Federal Reserve Board, Bank of Israel.
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Employment changes during selected
recessions and recoveries
Current
2001
1958
Percent Job Losses Relative to Peak Employment
1.0%
0.0%
-1.0%
-2.0%
Structural
Cyclical
-3.0%
The current weakness is linked
to the combination of both
cyclical and structural factors
-4.0%
-5.0%
-6.0%
-7.0%
0
5
10
15
20
25
30
35
40
45
Months from Peak Employment
Source: Brookings, Bureau of Labor Statistics, Goldman Sachs Global Markets Institute.
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Employment levels
Disappointing employment growth in the US
140
Index: Jan 2003=100
130
120
Israel
110
US
100
90
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
80
Note: Israel employment refers to number of jobs, excluding Palestinian Authority and US employment refers to total nonfarm employees.
Source: Bureau of Labor Statistics, Central Bureau of Statistics.
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Employment gap by education
Unemployment rates for adults, 25 years and over
16
14
Less than a high
school diploma
High school
diploma
Unemployment rate (%)
12
10
8
Some college or
associate degree
6
4
Bachelor's degree
and higher
2
0
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Source: Bureau of Labor Statistics
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Share price performance for major indices
Significant divergences have emerged
230
S&P 500
Dow Jones EURO STOXX 50
FTSE 100
210
Deutsche Aktien Xchange 30
Nikkei 225
190
KOSPI 200
Hang Seng Index
Index: September 22, 2005 = 100
KOSPI 200
Heng Seng
Index
170
150
130
Deutsche Aktien
Xchange 30
FTSE 100
110
S&P 500
90
70
50
Nikkei 225
Dow Jones EURO STOXX 50
30
9/05
1/06
5/06
9/06
1/07
5/07
9/07
1/08
5/08
9/08
1/09
5/09
9/09
1/10
5/10
9/10
1/11
5/11
9/11
1/12
Source: FactSet.
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Global growth outlook
Global GDP projected at 3.3% in 2012, with recession in Europe
($ Billions)
US
Eurozone
Germany
France
Italy
Japan
United Kingdom
China
Canada
Brazil
Mexico
Korea
Australia
Israel
2010 GDP
14,527
12,364
3,334
2,604
2,087
5,363
2,272
5,892
1,568
2,099
1,035
1,014
1,235
202
2008
(0.3) %
0.3
0.8
(0.2)
(1.3)
(1.0)
(1.1)
9.6
0.7
5.2
1.2
2.3
2.5
4.0
2009
(3.5) %
(4.2)
(5.1)
(2.6)
(5.2)
(5.5)
(4.4)
9.2
(2.8)
(0.3)
(6.1)
0.3
1.4
0.8
Growth Rates
2010
2011(E)
3.0 %
1.8 %
1.8
1.5
3.6
3.0
1.4
1.6
1.2
0.6
4.4
(0.8)
2.1
0.9
10.4
9.2
3.2
2.4
7.5
3.0
5.4
6.2
2.6
4.9
3.8
3.7
2.0
4.8
2012(E)
2.1 %
(0.8)
0.1
(0.4)
(1.6)
2.0
0.7
8.6
2.2
2.8
2.8
3.5
2.5
2.3
2013(E)
2.2 %
0.7
1.5
0.9
(0.1)
1.5
2.3
8.7
2.5
4.1
3.9
4.1
3.7
4.0
Source: Goldman Sachs Economics Research.
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US federal debt as a percentage of GDP
140
Great Depression/
World War II
120
Credit Crisis/
2008-09
Recession
Percent of GDP
100
80
Reagan
Administration
60
40
Civil War
20
0
1792 1802 1812 1822 1832 1842 1852 1862 1872 1882 1892 1902 1912 1922 1932 1942 1952 1962 1972 1982 1992 2002 2012
Source: USGovernmentSpending.com.
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Disclosures
January 26, 2012
Disclosures
Disclosures
This report has been prepared by the Global Markets Institute, the public policy research unit of the Global Investment Research Division of The Goldman Sachs
Group, Inc. (“Goldman Sachs”). As public policy research, this report, while in preparation, may have been discussed with or reviewed by persons outside of the
Global Investment Research Division, both within and outside Goldman Sachs, and all or a portion of this report may have been written by policy experts not
employed by Goldman Sachs.
While this report may discuss implications of legislative, regulatory and economic policy developments for industry sectors, it does not attempt to distinguish
among the prospects or performance of, or provide analysis of, individual companies and does not recommend any individual security or an investment in any
individual company and should not be relied upon in making investment decisions with respect to individual companies or securities.
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