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THE ECONOMY IN 2017:
MUCH LIKE 2016, I THINK!
Presented by:
Elliot F. Eisenberg, Ph.D.
President: GraphsandLaughs, LLC
January 24, 2017
St. Paul, MN
The Economy
is Solid!
GDP = C+I+G+(X-M)
Households are Repairing their Balance Sheets
Trillions in Net Worth Recovered, at a New Record Level
Households Deleveraging is Done!!!!!!
Lack of income growth hurts, but debt is growing once again. Down 6.5% from peak
Single-Family and Multifamily Starts – A Weak Recovery
Lack of lots, gun shy lenders, high prices, rising rates, SF gets better slowly
To Many Big Houses
New Home Prices Are Too High Due to Regulation
University of MI Consumer Confidence is Good
Index is now at or near a cyclical high, after being flat for about two years.
Small Business Confidence is OK
Spectacular rise since the presidential election. Well above the 42 year average of 98
US Light Vehicle Sales are High but Flat
Annual Y-o-Y Percent Change in PCE
A solid growth rate of 2.75%
Oil Prices are Firming
Cheaper oil is a benefit to households, but not the economy.
Corn Prices are in a long Bear Market
Corn prices have flat-lined at a level first reached in a decade ago.
Corporate Profits are Again Rising After Weakening
OK. Now, Look at Capital Goods Orders!
Minus Defense and Aircraft
Fiscal Policy Looks Increasingly Expansionary
Defense, infrastructure, tax cuts will boost the deficit
The Dollar is Strengthening Against all Currencies
It will hurt employment growth but will reduce inflation
Strong
Stronger
Weak
GDP Growth Goes Nowhere Slowly
Trump probably boosts GDP growth by 25 or 30 bps due to tax cuts as infrastructure.
Best of All, No Recession is in the Cards!
Designed to track real macroeconomic activity in real time
How About
Labor?
Y-o-Y Percent Change in Hourly Earnings
Changes in Median Wage Growth Looks Good!
Looks only at those continuously full-time employed
Household Income by Race
Unemployment By Education
The rates for the better educated have stopped falling but the rate for those without a high
school diploma are still declining. All but blue are slightly elevated.
Household Income Growth by Quintile
Household Income by Quintile
Differences in Household Income by Education
Between 1990 and 2013: Women are doing much better than Men!
Household Income by Gender
Among men who work, they earn what they did back in the late 1960s. Women’s wages grow
Cumulative Change in Household Income
It is Finally Starting to Rise!
Hopefully it will continue to do so.
Both Men and Women Are Now Working Less
But, the LFRP for men and women appears to have stopped falling of late.
Fewer of Us are Working!
Especially Youngsters. ……More Renters? Among 25-54 year old persons it’s looking up!
25-54
20-24
Tot Pop
16-19
55+
Fewer of Us are Working, but There is Improvement!
Especially when you strip out demographics
Inflation Becomes a Concern
Little labor force slack left. Maybe 1% of labor force.
Upward Mobility in America
Location, segregation, social capital, inequality, marriage
Inflation?
It’s Here!
Import Prices for all Commodities: Inflation!!
Rising nicely, but largely due to energy price increases
Producer Prices Show Signs of Inflation!!
Consumer Price Index: Inflation is Up a Bit
Headline inflation is rising due to energy but Core is largely flat.
Core PCE Price Index: Inflation is Rising!
It’s due to rising wages, a weakening dollar and rising energy prices.
Federal Reserve Behavior
• Fed funds is 0.625%
• 12/31/17: 1.375% 10-yr Treasury @ 2.60%
• 12/31/18: 2.125% 10-yr Treasury @ 3.05%
• 12/31/19: 2.875%
• Hike in June? Lots of Trump Uncertainty!
What About
Things Here?
The Future Looks Better than the Present
State Unemployment Rates
Significant differences exist: However, unemployment is below 7% everywhere!
Unemployment Rates in The Twin Cities
All are insanely low! Carver and Scott are lowest. Anoka and Ramsey are relatively high.
Population growth is Slowing and Converging
Scott and Carver grow fastest. Anoka and Dakota are slowest growing.
Labor Force Growth in The Twin Cities
All are converging. Carver and Scott were last to converge.
Per Capita Personal Income Around Here
Minneapolis and Carver are highest. Anoka and Ramsey are lowest. Scott is on the move.
Let’s Do this Without A Lawyer, Thank You!
Foreclosure inventory is 1% of homes with mortgage, still double the historic average.
Housing Prices In and Around Minneapolis
MSP is most volatile, Rochester is least volatile and is at a record. MSP & St. Cloud recover.
Housing Starts in Minneapolis-St Paul
Single-family is largely flat, Multifamily is strong and is maybe strengthening.
Interstate Migration Patterns
2016
ANY QUESTIONS?
Elliot F. Eisenberg, Ph.D.
Cell: 202.306.2731
[email protected]
www.econ70.com
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Thank YOU all very very much!
@ECON70