Download Assessing the Economic Recovery

Assessing the Economic Recovery
Eric S. Rosengren
President & CEO
Federal Reserve Bank of Boston
University of Massachusetts Boston
John W. McCormack Graduate School of Policy
and Global Studies
Boston, Massachusetts
November 4, 2013
EMBARGOED UNTIL MONDAY, NOVEMBER 4, 2013 AT 4:25 P.M. OR UPON DELIVERY
www.bostonfed.org
Figure 1
Treasury Yield Curves
May 1, 2013, September 16, 2013, and October 31, 2013
Percent
4
September 16, 2013
3
October 31, 2013
2
May 1, 2013
1
0
0
5
10
15
Maturity in Years
Source: U.S. Department of the Treasury
20
25
30
Figure 2
Primary Dealer Survey Results: Distribution of
Probabilities for the Timing of First Reduction
Survey Results as of September 9, 2013 and Updated as of September 23, 2013
Percent
Percent
70
70
Following September FOMC Meeting
Prior to September FOMC Meeting
60
60
50
50
40
40
Treasuries
Agency MBS
30
30
20
20
10
10
0
Treasuries
Agency MBS
0
Sep 2013
Oct 2013
Dec 2013
> 2013
Sep 2013
Oct 2013
Dec 2013
Source: Federal Reserve Bank of New York, Survey of Primary Dealers, September 2013
> 2013
Figure 3
Federal Reserve System Assets and Projections
March 2008 - October 2013 Actual, November 2013 - April 2014 Projected
Trillions of Dollars
5
No Tapering Through March 2014
4
Tapering Beginning December 2013
No tapering through March 2014:
Purchases reduced to $75 billion in April 2014.
No Tapering Through March 2014
3
2
Tapering beginning
Purchases reduced
Purchases reduced
Purchases reduced
Purchases reduced
1
December 2013:
to $75 billion in December 2014.
to $50 billion in January 2014.
to $25 billion in March 2014.
to $0 in April 2014.
0
Mar-2008
Mar-2009
Mar-2010
Mar-2011
Mar-2012
Mar-2013
Source: Federal Reserve Statistical Release H.4.1 / Haver Analytics and author's calculations
Mar-2014
Figure 4
Employment Change from Peak Employment
Most Recent and Three Previous Peaks
Percent Change from Peak Employment
1
0
-1
-2
-3
July 1981
-4
June 1990
-5
February 2001
-6
January 2008
-7
-30
-26
-22
-18
-14
-10
-6
-2
2
6
10
14
18
22
Months Before and After Employment Trough
Source: BLS, NBER / Haver Analytics
26
30
34
38
42
Figure 5
Government Employment
2003:Q1 - 2013:Q3
Millions of Workers
1
23.0
Reflects Temporary
Decennial Census Workers
1
22.5
1
22.0
0
21.5
0
0
21.0
2003:Q1
2005:Q1
Recession
2007:Q1
2009:Q1
2011:Q1
Note: Includes federal, state, and local government workers.
Source: BLS, NBER / Haver Analytics
2013:Q1
Figure 6
Government Employment
Change from Official Trough
Current and Three Previous Recoveries
Index, Official Trough = 100
108
Official Trough:
November 1982
March 1991
November 2001
June 2009
Reflects Temporary
Decennial Census
Workers
106
104
102
100
98
96
0
6
12
18
24
30
36
42
48
Months from Trough of Recession
Source: BLS, NBER / Haver Analytics
12
Figure 7
Housing Starts
2003:Q1 - 2013:Q2
Thousands of Units, Seasonally Adjusted Annual Rate
1
2,400
1
1,600
1
0
800
0
0
0
2003:Q1
2005:Q1
2007:Q1
Recession
Source: Census Bureau, NBER / Haver Analytics
2009:Q1
2011:Q1
2013:Q1
Figure 8
Auto and Light Truck Sales
2003:Q1 - 2013:Q3
Millions of Units, Seasonally Adjusted Annual Rate
1
20
1
15
1
10
0
5
0
0
0
2003:Q1
2005:Q1
2007:Q1
Recession
Source: BEA, NBER / Haver Analytics
2009:Q1
2011:Q1
2013:Q1
Figure 9
Change in Real GDP from Official
Business Cycle Peak
Most Recent and Three Previous Peaks
Percent Change from Official Peak
25
Official Peak:
20
1981:Q3
1990:Q3
2001:Q1
2007:Q4
15
10
5
0
-5
-10
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
8
9
Quarters Before and After Official Trough
Source: BEA, NBER / Haver Analytics
10 11 12 13 14 15 16
Figure 10
Change in Real GDP from Official Trough
Current and Three Previous Recoveries
Index, Official Trough = 100
130
Official Trough:
1982:Q4
1991:Q1
2001:Q4
2009:Q2
120
110
100
90
0
1
2
3
4
5
6
7
8
9
10
11
Quarters from Official Trough of Recession
Source: BEA, NBER / Haver Analytics
12
13
14
15
16
Figure 11
Estimates of Annual Real GDP Growth
Needed to Return to Full Employment
Percent
6
2014
2015
2016
2017
2018
Recovery from:
5.2
1982:Q4 Trough
1991:Q1 Trough
2001:Q4 Trough
2009:Q2 Trough
5
5.2
4
3.8
3.3
3
3.0
3.3
2.8
3.1
2.2
2
1
0
Annual Growth Needed to Return to 5.25%
Unemployment Rate by Year End
For Comparison: Average Annual Growth in First
Four Years of Recovery from Last Four Recessions
Note: Estimates are based on a modified Okun's Law and potential GDP growth of 2.1%.
Source: BEA, NBER / Haver Analytics and author’s calculations
Figure 12
Estimates of Annual Real GDP Growth
Needed to Return to Full Employment
Percent
6
2014
5.2
4
2015
2016
2017
Projected Real GDP Growth:
2014
2014-2015
2014-2016
2018
3.8
3.3
3.0
2.8
3.0
3.1
3.1
2
0
Annual Growth Needed to Return to 5.25%
Unemployment Rate by Year End
Note: Estimates are based on a modified Okun's Law and
potential GDP growth of 2.1%.
For Comparison: Economic Projections of Federal
Reserve Board Members and Bank Presidents
Note: Projections are the averages of the midpoints of the
central tendencies for the years specified.
Source: BEA, NBER, FOMC Summary of Economic Projections / Haver Analytics and author’s calculations