Presentation Transcript
Regional Economic Forecast: Regional Economic Forecast Lisa M. Grobar, Director
Economic Forecast Project
Joseph P. Magaddino
Chairman, Department of Economics
California State University, Long Beach
OER@CSULB.EDU
An Overview of the National Economy: An Overview of the National Economy
Slide3:
The Booming Economy
1997 1998 1999 2000
Real GDP 4.4 4.4 4.2 5.1
Inflation 2.3 1.6 2.2 3.4
Unemployment 4.9 4.5 4.2 4.1
Treasury Bond, 30 Yr. 5.1 4.8 5.9 6.2
Contraction or Recession?: Contraction or Recession? Housing and auto sectors in contraction
Manufacturing sector in recession
Stock Market Correction
Consumer Sentiment Plunges
GDP Growth Rates and Federal Funds Rate: GDP Growth Rates and Federal Funds Rate
Slide6: National Outlook 2000 2001-2005
GDP Growth 5.1% 2.4-3.5%
Inflation 3.4% 2.5-2.8%
Unemployment 4.1% 4.7-4.9%
Treasury Bond, 30 yr. 6.2% 6.1-5.7%
Contributions to GDP 1997-2000: Contributions to GDP 1997-2000
Exports and Imports 1990-2000: Exports and Imports 1990-2000 (in billion $)
Government Expenditures Rates of Growth: Government Expenditures Rates of Growth
The Spending Binge Slows! Consumer Expenditures Growth Rates : The Spending Binge Slows! Consumer Expenditures Growth Rates
Gross Private Investment & Investment in Equipment and Software: Rates of Growth, 1994-99: Gross Private Investment & Investment in Equipment and Software: Rates of Growth, 1994-99
Productivity During 3 Expansions: Productivity During 3 Expansions
Output Per Hour & GDP Growth Rates [Potential Growth at 3.5-4%]: Output Per Hour & GDP Growth Rates [Potential Growth at 3.5-4%]
Regional Economic Forecast 1999-2004 : Regional Economic Forecast 1999-2004
Regional Total Nonfarm Employment Growth [quarterly growth rates]: Regional Total Nonfarm Employment Growth [quarterly growth rates]
County Employment Growth Rates 1999 & 2000 YTD: County Employment Growth Rates 1999 & 2000 YTD
2000: What has been different? : 2000: What has been different? We are feeling the effects of higher interest rates, especially in outlying counties
construction slower, but still healthy growth
durable goods, FIRE, also impacted
LA’s economy improving relative to 99
this, in spite of continuing losses in aerospace
Regional Total Nonfarm Employment Growth: Regional Total Nonfarm Employment Growth
percent
Regional Construction Employment Growth: Regional Construction Employment Growth
percent
Regional Durable Manufacturing Employment Growth: Regional Durable Manufacturing Employment Growth
percent
Declines in Durable Manufacturing: Declines in Durable Manufacturing Much of the region’s decline due to Los Angeles County
Last year, durable goods employment is down 1.4%.
Of the 4,900 jobs lost, 6,900 were in the aircraft sector.
Aerospace continues to be a drag on the region’s economy
Regional Nondurable Manufacturing Employment Growth: Regional Nondurable Manufacturing Employment Growth
percent
Regional TCU Employment Growth: Regional TCU Employment Growth
percent
Regional FIRE Employment Growth: Regional FIRE Employment Growth
percent
Regional Trade Employment Growth: Regional Trade Employment Growth
percent
Regional Service Employment Growth: Regional Service Employment Growth
percent
Regional Government Employment Growth: Regional Government Employment Growth
percent
A Bull Market for Teachers!: A Bull Market for Teachers! In 1999 region added 36,000 in state & local government
24,000 of these jobs were in local education
Total Nonfarm Employment Growth Region and the Nation : Total Nonfarm Employment Growth Region and the Nation
Summary: Regional Economic Forecast: Summary: Regional Economic Forecast After strong growth in 2000, the pace of job creation will slow a bit in 2001-02
Region will not slow as much as the nation
Region will continue to outperform US through 2005
Economic Forecast: Los Angeles County 2000-2005: Economic Forecast: Los Angeles County 2000-2005
Los Angeles County Total Nonfarm Employment : Los Angeles County Total Nonfarm Employment
Number of Jobs Added in 2000: Number of Jobs Added in 2000
LA Durable Manufacturing Employment Growth: LA Durable Manufacturing Employment Growth
percent
LA Retail Trade Employment Growth: LA Retail Trade Employment Growth
percent
LA Services Employment Growth: LA Services Employment Growth
percent
LA Government Employment Growth: LA Government Employment Growth
percent
LA’s large sectors doing well: LA’s large sectors doing well
LA Nonfarm Employment Forecast: LA Nonfarm Employment Forecast
percent
Population Growth: LA County, State & Nation: 1980-1999: Population Growth: LA County, State & Nation: 1980-1999
SOURCE: U.S. Census Bureau; California Department of Finance; California Association of REALTORS®
Sources of Population Growth Los Angeles County: Sources of Population Growth Los Angeles County SOURCE: CA Dept. of Finance
NET IMMIGRATION VS. DOMESTIC MIGRATION Los Angeles County: NET IMMIGRATION VS. DOMESTIC MIGRATION Los Angeles County Domestic net migration still negative: -39,337
Foreign immigration remains strong SOURCE: CA Dept. of Finance
Housing Prices : Los Angeles County: Housing Prices : Los Angeles County
Slide44: Median Housing Prices Los Angeles County
Slide45: Appreciation Rates Los Angeles County
Factors Influencing Housing Appreciation : Factors Influencing Housing Appreciation Fundamentals
job growth
personal income growth
interest rates
population growth: net migration
Intra-regional substitution effects
Expectations
MORTGAGE RATES: MORTGAGE RATES Fed has raised short term rates by 175 basis points five times since June 1999
Fed cut short term rate by 100 basis points in Jan 2001
SOURCE: Federal Home Loan Mortgage Corp.
Housing Affordability Index Los Angeles County: Housing Affordability Index Los Angeles County Source: California Association of Realtors
Housing Affordability Index Orange County: Housing Affordability Index Orange County Source: California Association of Realtors
Unsold Housing Inventory Index Los Angeles County: Unsold Housing Inventory Index Los Angeles County Source: California Association of Realtors
Housing Appreciation Forecast Los Angeles County: Housing Appreciation Forecast Los Angeles County
Housing Prices Los Angeles County : Housing Prices Los Angeles County Recovery in housing coincided with regional growth accelerating faster than the nation
Current prices meet or exceed previous highs; affordability not a problem….. Yet!
Higher interest rates have dampened housing market a bit
“Fundamentals” for future appreciation remain strong