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The February 2009 NABE Outlook
Lynn Reaser
NABE Vice President
Bank of America
William Strauss
Federal Reserve Bank of Chicago
Richard DeKaser
Woodley Park Research
Charles Steindel
Federal Reserve Bank of New York
Parul Jain
MacroFin Analytics
Embargoed until Monday, February 23, 2009 at 12:01 AM EST. Survey conducted Jan 29-Feb 12, 2009 and released
February 23, 2009. Disclaimer: the views expressed in this report are those of the analysts and do not necessarily
represent the views of their affiliated companies or institutions.
Most respondents see recession ending this year
Percent of respondents
75
50
25
(0)
0
First half
2009
Second half
2009
2010
2
Later
No response
Real GDP forecast to fall in 2009, rebound in 2010
Percent change, Q4/Q4
4.00
3.00
2.00
1.00
0.00
-1.00
2006
2007
2008
3
2009f
2010f
Forecast has “V”-shaped form
Real gross domestic product, percent change over prior quarter, annualized rate
4.0
2.0
0.0
-2.0
-4.0
-6.0
2008
2009f
2010f
4
GDP components
Based on annual totals, 2000 chained dollars
(% Chg. over year ago
except inventories)
2008
Actual
2009
Forecast
2010
Forecast
Real GDP
1.3
-1.9
2.4
Consumption
0.3
-1.3
2.2
Structures
11.8
-6.3
-4.8
Equipment & Software
-2.9
-12.2
1.5
Residential Investment
-20.8
-16.0
6.4
Inventory Change (Bils.)
-21.0
-42.2
20.0
Government
2.9
2.8
2.2
Exports
6.5
-5.1
3.3
Imports
-3.3
-6.0
4.4
Business Fixed Investment
5
Fiscal stimulus effects seen in both 2009 and 2010
Percent of respondents, impact on real GDP in percentage points
50
4Q2009 over 4Q2008
4Q2010 over 4Q2009
40
30
20
10
0
(0)
Negative
impact
0.0 to 0.5
0.6 to 1.0
6
1.1 to 1.5
More than
1.5
No
response
Job losses expected through 2009
Nonfarm employment,. average monthly change, thousands
200
100
0
-100
-200
-300
2006
2007
2008
7
2009f
2010f
Jobless rate expected to peak at 9.0%
Percent, quarterly averages
10.00
8.00
6.00
4.00
2.00
0.00
2008
2009f
2010f
8
Economists see prolonged period before payrolls
surpass their 2007Q4 peak
Percent of respondents
70
60
50
40
30
20
10
(0)
(0)
2009
2010
0
2011
9
Later
No response
Consumer prices expected to fall in 2009, rise in 2010
Percent change, annual averages
4.00
3.00
2.00
1.00
0.00
-1.00
2006
2007
2008
10
2009f
2010f
Motor vehicle sales forecast to fall further in 2009
with some recovery in 2010
Millions of units
20
16
12
8
4
0
2006
2007
2008
11
2009f
2010f
Home sales and housing starts forecast to bottom in
2009, with some lag in prices
Percent of respondents
Home sales
Housing starts
Home prices
50.00
40.00
30.00
20.00
10.00
0.00
Q408
First half
2009
Second half
2009
12
Later
No response
Great Lakes and Far West expected to be most
affected by recession
Measured by unemployment rates, percent of respondents
New England
6.9%
Rocky Mountain 1.4%
Far West
27.8%
Plains
1.4%
Great Lakes
31.9%
Southeast
12.5%
Southwest
2.8%
13
Mideast
15.3%
Fed funds and 10-year Treasury rates forecast
to rise in 2010
Percent, quarter-end
5.0
4.0
10-year Treasury
3.0
2.0
Fed Funds
1.0
0.0
2008
2009f
2010f
14
Forecast Summary
• Forecast panel sees economy turning higher in
second half
• 2010 GDP rebound expected to be above-trend
• Housing and autos predicted to reach their lows in
2009
• Job recovery forecast to be slow
• Both deflation and inflation risks are contained
• Higher interest rates forecast in 2010
15