Transcript Economic Outlook

Economic Outlook
October 5, 2009
Table of Contents
I.
National Economic Overview
II.
Residential Real Estate Summary
III.
South Carolina
Appendix
| Government Finance Officers Association of South Carolina
2
National Economic Overview
| Government Finance Officers Association of South Carolina
3
U.S. Economic Overview
The Recession Appears to Have Ended This Summer, but the Recovery Will be Slow and Agonizing
Highlights



Nonfarm Employment Change
Real GDP
We believe the recession may have ended
in June. The downturn turned into the
longest of the post-war period at 19
months, but some signs of stabilization
are appearing.
We are beginning to see some small
positives in many key indicators mixed in
with smaller declines.
The labor market remains the primary
concern as job losses have reached 7.2
million on their way to more than 8.0
million before the end of the cycle. This
will easily exceed every downturn since
the aftermath of World War II. The
unemployment rate should exceed 10
percent later this year.
Bars = CAGR
10.0%
Line = Yr/Yr Percent Change
Change in Employment, In Thousands
10.0%
600
GDPR - Yr/Yr Percent Change: Q2 @ -3.8%
8.0%
8.0%
6.0%
400
400
200
200
6.0%
Forecast
4.0%
4.0%
2.0%
2.0%
0.0%
0.0%
-2.0%
-2.0%
-4.0%
-4.0%
-6.0%
-6.0%
0
0
-200
-200
-400
-400
-600
-8.0%
-8.0%
2000
2002
2004
2006
2008
2010
-600
Nonfarm Employment Change: Sep @ -263,000
-800
2000
-800
2001
Wells Fargo U.S. Economic Forecast
 Level One
 Level Two
Real Gross
Domestic
 Level
Three Product 1
Personal Consumption
Level Four
Business Fixed Investment
Equipment and Software
Consumer Price Index2
Corporate Profits Before Taxes 2
10-Year Treasury Note
Actual
2006
600
GDPR - CAGR: Q2 @ -0.7%
2007
2009
2003
2004
2005
2006
2007
2008
2009
Employment Change in Recessions
Percentage Change Peak-to-Trough
0%
Forecast
2008
2002
2010
2011
-1%
2.7
2.9
7.9
7.4
3.2
2.1
2.7
6.2
2.6
2.9
0.4
-0.2
1.6
-2.6
3.8
-2.5
-0.9
-18.4
-18.7
-0.6
2.1
0.7
-1.6
2.6
1.3
2.5
1.5
4.5
6.5
2.0
-2%
10.5
4.71
-4.1
4.04
-11.8
2.25
-10.1
3.60
7.8
4.00
9.8
5.00
-6%
Forecast as of: September 9, 2009 1C ompound Annual Growth Rate 2Year-over-Year Percent C hange
0%
-1%
-1.3%
-1.5%
-1.5%
-2%
-2.0%
-2.3%
-3%
-3%
-2.8%
-3.1%
-3.4%
-4%
-4%
-4.4%
-5%
-5%
-5.2%
-5.2%
-5.8% -6%
-7%
-7%
19481949
Cycle
19531954
Cycle
19571958
Cycle
19601961
Cycle
19691970
Cycle
19731975
Cycle
1980
Cycle
19811982
Cycle
19891991
Cycle
2001
Cycle
2007ToDate
Forec
ast
Source: Federal Reserve Board, U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
4
U.S. Economic Overview
The Domestic Economy Has Been Extremely Weak but Is on Track for a Modest Recovery
Highlights
 Real "core" GDP, or private
Real "Core" GDP
Bars = CAGR
10.0%
domestic final sales, lines up well
with the persistent weakness in the
domestic economy more clearly
than GDP. The measure has been
negative in the past six quarters,
and we expect it to turn positive for
the second half of this year.
 International trade collapsed last
year. Imports have fallen
dramatically this year, while exports
have fallen less.
 Businesses have struggled to bring
inventories in line with demand.
Massive liquidations occurred in
the first and second quarters. We
expect the drawdown process to
proceed, albeit more slowly, for
several more quarters.
 Nominal GDP, a measure of
revenue growth for the economy,
has already seen the steepest
decline since 1958 and will likely
turn positive in the second half of
this year.
Trade Balance in Goods
Line = Yr/Yr Percent Change
10.0%
7.5%
7.5%
Forecast
5.0%
5.0%
2.5%
2.5%
0.0%
0.0%
-2.5%
-2.5%
-5.0%
-5.0%
-7.5%
-7.5%
-10.0%
"Core" GDP - CAGR: Q2 @ -2.8%
"Core" GDP - Yr/Yr Percent Change: Q2 @ -5.2%
-12.5%
2000
2002
2004
2006
2008
3-Month Moving Average, Billions of Dollars
$0
-$10
-$20
-$30
-$30
-$40
-$40
-$50
-$50
-$60
-$60
-10.0%
-$70
-$70
-12.5%
-$80
2010
-$80
97
98
99
00
02
03
04
05
06
07
08
09
$125
Compound Annual Growth Rate
12.0%
12.0%
$100
$75
Forecast
$75
$50
$50
$25
$25
$0
9.0%
Forecast
9.0%
6.0%
6.0%
3.0%
3.0%
0.0%
0.0%
-3.0%
-3.0%
$0
-$25
-$25
-$50
-$50
-$75
-$75
-$100
-$100
-$125
-$125
-$150
-$200
2000
01
Nominal GDP
Billions of Dollars, Annual Rate
$100
-$175
-$10
-$20
Change in Real Inventories
$125
$0
Nominal Trade Balance: Jul @ -$39.4 Billion
Real Trade Balance: Jul @ -$36.9 Billion
-$150
-$200
2002
2004
2006
2008
-6.0%
Nominal GDP - CAGR: Q2 @ -0.8%
Nominal GDP - Yr/Yr Percent Change: Q2 @ -2.4%
-$175
Change in Private Inventories: Q2 @ -$160.2B
2010
-9.0%
-6.0%
-9.0%
2000
2002
2004
2006
2008
2010
Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
5
Consumer Overview
Consumer Spending Plunged in the Late 2008 and Early 2009, but the Declines Moderated This Spring
Discretionary
Spending Spending
Discretionary
Consumer
May-2009
Other
Discretionary
20%
Housing Away
from Home
1%
Alcohol & Tobacco
3%
Clothing & Shoes
4%
Recreation
4%
Furniture &
HHEquip
4%
Motor Vehicles
3%
Food Away from
Home
5%
Negative
Non-Discretionary
56%
Positive
Retail Sales Ex. Auto & Gas Stations vs. Income
3-Month Moving Average
 Collapsing Labor Market
 The torrent of layoffs and job
losses is unlikely to abate until
next year.
 Housing & Home Equity
 Housing prices and home equity
are still likely headed lower,
weighing further on consumer
spending and sentiment.
15%
15%
Stock Market
Bubble
12%
Tax Cut 2
Housing Refi
Boom
Tax
Rebates
Tax Cut 1
12%
9%
9%
6%
6%
3%
3%
0%
0%
-3%
-3%
-6%
-6%
-9%
-9%
Disposable Personal Income, Yr/Yr % Change: Aug @ -0.2%
3-Month Annual Rate: Aug @ -1.0%
-12%
-12%
96
97
98
99
00
01
02
03
04
05
06
07
08
09
 Fiscal Stimulus
 A reduction in payroll
withholdings provided a lift to
take-home pay in the middle of
this year.
 Consumer Confidence
 While confidence is still low,
consumer expectations for the
future have rebounded off of
their lows.
Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
6
Credit Spreads & The Yield Curve
Fed and Treasury Actions Have Helped Narrow Credit Spreads
Highlights



Conventional Mortgage to 10-Year Treasury Spread
TED Spread
Credit markets began a steady thaw late last
year, and progress has continued in recent
weeks. The TED spread has moved to its
lowest level since the credit crunch began and
is now at a more normal level.
Corporate borrowing has improved as credit
spreads have narrowed. Credit is still
relatively expensive and difficult to qualify for
for small businesses and consumers.
Mortgage rates were pushed sharply lower by
the Fed’s intervention in the MBS market,
reaching historically low levels in April.
Thirty-year fixed mortgage rates have
remained around five percent since then.
450
400
350
350
300
300
250
250
200
200
150
150
100
100
50
0
2004
2005
2006
2007
2008
275
275
250
250
225
225
200
200
175
175
150
150
50
125
125
0
100
2004
2009
700
Basis Points
300
300
250
250
500
500
200
200
400
400
150
150
300
300
100
100
200
200
50
100
2008
2009
0
2005
50
0
2006
2007
2008
2009
1,600
5-Year AAA CMBS: Sep @ 400 bps
600
2007
2006
Basis Points
1,600
CDX: Sep @ 104 bps
600
2006
100
2005
5-Year and 10-Year AAA CMBS Spreads
CDX IG Index
Basis Points
2005
300
Mortgages: Sep @ 161 bps
400
Baa Corporates: Sep @ 284 bps
100
2004
300
TED: Sep @ 17 bps
Baa Corporate Spread
700
Basis Points
Basis Points
450
2007
2008
2009
1,400
10-Year AAA CMBS: Sep @ 550 bps
1,400
1,200
1,200
1,000
1,000
800
800
600
600
400
400
200
200
0
2005
0
2006
2007
2008
2009
Source: British Bankers’ Association, Federal Reserve Board, Freddie Mac and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
7
Global Growth & The Dollar
The Global Recession Drags On
Highlights



Real Global GDP Growth
After declining in 2009, global economic
growth is poised to rebound in 2010.
European economies have contracted
more than the U.S. economy, but there
are tentative signs that European
recessions are coming to an end.
The dollar should continue to grind
higher against most major currencies
over the next few quarters as U.S. growth
prospects continue to improve.
Central Bank Policy Rates
Year-over-Year Percent Change
7.5%
7.5%
9.0%
8.0%
6.0%
6.0%
Period Average
7.0%
4.5%
4.5%
3.0%
3.0%
1.5%
1.5%
0.0%
0.0%
-1.5%
-1.5%
1970
1975
1980
1985
1990
1995
2000
2005
2010
9.0%
US Federal Reserve: Oct @ 0.25%
Bank of England: Oct @ 0.50%
ECB: Oct @ 1.00%
Reserve Bank of Australia: Oct @ 3.25%
6.0%
5.0%
5.0%
4.0%
4.0%
3.0%
3.0%
2.0%
2.0%
1.0%
1.0%
0.0%
2000
0.0%
2001
2002
(End of Quarter Rates)
Euro ($/€)
U.K. ($/£)
Japan (¥/$)
Canada (C$/US$)
Switzerland (CHF/$)
China (CNY/$)
Mexico ($/MXN)
1.45
1.62
92
1.11
1.04
6.82
13.25
1.42
1.58
94
1.15
1.06
6.81
13.00
Q2
1.37
1.54
98
1.15
1.11
6.80
12.75
2004
2005
2006
2007
2008
2009
Major Curency Index, 1973 = 100
115
110
2010
Q1
2003
Trade Weighted Dollar
115
Q4
7.0%
6.0%
Wells Fargo Bank Currency Strategy Group Forecast
2009
8.0%
110
105
Q3
1.32
1.52
102
1.12
1.16
6.79
12.50
Q4
1.28
1.50
106
1.10
1.20
6.78
12.25
105
Forecast
100
100
95
95
90
90
85
85
80
80
75
75
70
70
Trade Weighted Dollar: Q3 @ 74.7
65
65
2000
2002
2004
2006
2008
2010
Forecast as of: September 16, 2009
Source: Bloomberg LP, Federal Reserve Board, International Monetary Fund and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
8
Unemployment by County
Large Portions of the United States Face Serious Unemployment Issues
Unemployment Rate
Unemployment Rate
August 2009
Greater than 12.5%
6.0% to 8.0%
10.0% to 12.5%
Less than 6.0%
8.0% to 10.0%
Source: US Department of Labor and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
9
Residential Real Estate Summary
| Government Finance Officers Association of South Carolina
10
Homebuilding
Construction May Have Bottomed, but This Will Likely Not Be the End of the Problems for Housing
Highlights
Housing Starts
Millions of Units
2.4
 We estimate an overbuild of roughly 2.0 million units occurred at the cycle
peak, and, unfortunately, little progress was made in reducing inventories in
2008 despite the collapse in new home construction. Inventory levels have
improved this year but still remain elevated. This will continue to pressure new
construction activity and prices.
 Housing starts remain at low levels, although they have inched up recently.
Starts probably bottomed during the first half of this year, but we are at least
two years away from seeing starts move back above 1 million units.
 Excess supply from builders and the rising tide of foreclosed properties have
driven prices sharply lower. Price declines have moderated in recent months.
Progress will likely remain uneven, and we do not expect to see house prices
trough until 2010.
2.1
2.1
1.8
1.8
1.5
1.5
1.2
1.2
0.9
0.9
0.6
0.6
0.3
0.3
0.0
0.0
80
82
84
86
Wells Fargo Housing Outlook
Home Construction
Total Housing Starts, in thousands
Single-Family Starts, in thousands
Multi-Family Starts, in thousands
1,811.9
1,473.6
338.3
Home Sales
New Home Sales, Single-Family, in thousands
Total Existing Home Sales, in thousands
1,049.3
6,482.9
Actual
2007
1,341.8
1,035.8
306.1
768.7
5,652.8
2008
900.3
615.8
284.5
481.3
4,913.0
Case-Shiller C-10 Home Price Index, % Change
7.5
7.4
2.2
-4.4
-2.5
-16.7
90
92
94
96
98
00
02
04
06
08
10
Home Prices
2009
580.0
440.0
140.0
390.0
4,800.0
Forecast
2010
790.0
590.0
200.0
550.0
5,200.0
2011
990.0
770.0
220.0
750.0
5,300.0
-4.6
-15.4
-0.6
-3.0
0.5
0.0
24%
20%
20%
16%
16%
12%
12%
8%
8%
4%
4%
0%
0%
-4%
-4%
-8%
-8%
-12%
-12%
Median Sale Price: Aug @ $177,500
Median Sales Price 3-M Mov. Avg.: Aug @ -13.3%
FHFA (OFHEO) Purchase Only Index: Jul @ -4.2%
S&P Case-Shiller Composite 10: Jul @ -12.8%
-16%
Home Prices
FHFA (OFHEO) Home Price Index, % Change
88
Year-over-Year Percentage Change
24%
2006
2.4
Dashed Line is Underlying Demographic Trend
-20%
-16%
-20%
-24%
-24%
97
99
01
03
05
07
09
Forecast as of: September 25, 2009
Source: Federal Housing Finance Agency, National Association of Realtors, S&P Corp, U.S. Department of Commerce and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
11
Residential Real Estate
While Construction May Have Seen a Trough, We Expect Prices to Continue Declining for Some Time
Highlights
S&P Case-Shiller Home Prices
Existing & New Single Family Home Sales
 New home sales have improved
markedly in recent months. Sales
fell sharply last autumn despite
lower mortgage rates and increased
incentives from builders.
 Existing sales have held up better
and have also increased recently.
A large portion, however, is
foreclosure and distressed sales.
The first-time homebuyers’ tax
credit is likely providing a lift to
home sales. The tax credit,
however, is due to expire at the end
of the year.
 The near-term relevance of the
housing affordability measure has
diminished, because prices have
been pushed down by foreclosure
activity and fewer people can
qualify for conventional mortgages.
 Credit standards loosened
somewhat in the third quarter but
still remain tight. Continued
caution is understandable given the
rise in delinquency rates and
foreclosures.
Seasonally Adjusted Annual Rate - In Millions
1.6
Percent Decline from Local Market Peak
7.0
6.5
1.4
6.0
1.2
5.5
1.0
5.0
0.8
4.5
0.6
4.0
0.4
Dallas
Denver
Charlotte
Cleveland
Boston
Atlanta
New York
Portland
Seattle
Chicago
Washington
Minneapolis
San Diego
Tampa
Los Angeles
San Francisco
Detroit
Miami
Phoenix
Las Vegas
3.5
New Home Sales: Aug @ 429 Thousand (Left Axis)
29.8%
30.6%
39.7%
40.0%
40.2%
41.0%
44.7%
47.6%
53.1%
54.8%
C-10
C-20
Existing Home Sales: Aug @ 4.5 Million (Right Axis)
0.2
2002
4.2%
8.2%
10.8%
12.6%
15.3%
19.4%
19.5%
19.5%
22.3%
23.9%
31.1%
30.2%
3.0
2003
2004
2005
2006
2007
2008
2009
0%
Base = 100
10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%
Net Percent of Banks Tightening Standards
Housing Affordability, NAR-Home Sales
180
5%
Mortgages for Individuals
180
100%
100%
All Mortgages (Through Q1-2007)
170
170
160
160
150
150
140
140
130
130
120
120
Prime Mortgages: Q3 @ 21.6%
80%
110
Nontraditional Mortgages: Q3 @ 45.8%
80%
60%
60%
40%
40%
20%
20%
110
0%
100
90
90
92
94
96
98
00
02
0%
100
Housing Affordability Index: Aug @ 159.1
6-Month Moving Average: Aug @ 165.7
04
06
08
-20%
1990
-20%
1992
1994
1996
1998
2000
2002
2004
2006
2008
Source: Federal Reserve Board, National Association of Realtors, S&P Corp, U.S. Department of Commerce and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
12
Home Price Declines from Peak
Home Price Declines Will Likely Continue into 2010
FHFA (OFHEO) Home Price Index
FHFA: Q1-2009
Percent Decline from Peak Value
No C hange
3% to 9%
0% to 1%
More than 9%
1% to 3%
Source: FHFA and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
13
South Carolina
| Government Finance Officers Association of South Carolina
14
South Carolina
South Carolina’s Persistently High Unemployment Rate Remains Troublesome
Highlights




South Carolina Nonfarm Employment
South Carolina’s unemployment rate is
the sixth highest in the nation. In July,
the unemployment rate hit the highest
level since the series began.
Manufacturing layoffs are a major drag
on the state, particularly in rural areas.
Employment growth collapsed earlier but
has slowly edged up, although the trend
remains down. Layoffs have risen quickly
throughout the state.
Population growth remained strong,
though slightly off the record-setting
highs of 2007. The state’s relatively
affordable housing continues to attract
new residents, but recently the strongest
gains have been in the Upstate and
Charlotte’s South Carolina suburbs.
Housing construction activity has slowed
more than 70 percent from its cycle peak
in mid-2005, with much of the
deceleration occurring along the coast.
Investor activity drove up property values
along the coast, and natural disasters
increased insurance premiums. These
factors combined to hurt affordability in
Myrtle Beach, Charleston and Hilton
Head.
South Carolina Relative Employment
3-Month Moving Averages
8%
8%
6%
6%
4%
4%
2%
2%
0%
0%
-2%
-2%
-4%
-4%
-6%
-6%
January 2000 = 100
124
124
South Carolina: Aug @ 99.9
Myrtle Beach: Aug @ 111.5
Greenville: Aug @ 110.2
Columbia: Aug @ 106.4
Charleston: Aug @ 102.6
120
116
120
116
112
112
108
108
104
104
100
100
3-Month Annual Rate: Aug @ -0.3%
Year-over-Year Percent Change: Aug @ -4.3%
-8%
-8%
96
-10%
92
96
Household: Year/Year Percent Change: Aug @ -3.9%
-10%
90
92
94
96
98
00
02
04
06
08
92
00
01
South Carolina Unemployment Rate
03
04
05
06
07
08
09
South Carolina Housing Permits
Seasonally Adjusted
14%
02
14%
Thousands of Permits, Seasonally Adjusted Annual Rate
60
60
Single-Family: Aug @ 15,144
Single-Family, 12-Month Moving Avg.: Aug @ 13,287
Multi-Family, 12-Month Moving Avg.: Aug @ 2,623
Unemployment Rate: Aug @ 11.5%
12-Month Moving Average: Aug @ 10.1%
12%
12%
50
10%
10%
40
40
8%
8%
30
30
6%
6%
20
20
4%
4%
10
10
2%
0
2%
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
50
0
90
92
94
96
98
00
02
04
06
08
Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
15
Columbia
The Pace of Declines Is Slowing in the State Capital
Highlights




Columbia MSA Nonfarm Employment
Employment growth has turned positive
after dropping sharply at the end of last
year. The growth can largely be attributed
to employment gains in the education and
healthcare sectors. While a high level of
public employment, notably at the state
capital and the University of South
Carolina, normally would provide some
insulation to job losses, the state’s budget
shortfall and poor tax collections will be
damaging.
The unemployment rate moved steadily
higher over the past year but has recently
edged down. State government and the
university provide a great deal of stability.
Population growth recorded another nearrecord year in 2008 as the area remained
relatively affordable compared to other
Sunbelt states.
Building activity is well off its cycle highs,
but the boom in Columbia was not nearly
as large as along the coast. Recent data
show improvement in single-family
residential construction.
3-Month Moving Averages
10%
3-Month Annual Rate: Aug @ 2.5%
Year-over-Year Percent Change: Aug @ -1.5%
Household: Yr/Yr Percent Change: Aug @ -1.6%
8%
Columbia MSA Housing Permits
10%
6%
4%
4%
2%
2%
0%
0%
-2%
-2%
-4%
-4%
-6%
-6%
-8%
-8%
92
94
96
98
00
02
04
06
8
8
6
6
4
4
2
2
0
08
0
90
92
Columbia MSA Unemployment Rate
94
96
98
00
02
04
06
08
Columbia MSA Population Growth
Seasonally Adjusted
10%
10
Single-Family, 12-Month Mov. Avg.: Aug @ 2,527
Multi-Family, 12-Month Mov. Avg.: Aug @ 703
Single-Family: Aug @ 2,784
8%
6%
90
Seasonally Adjusted Annual Rate
10
10%
In Thousands
15
15
Unemployment Rate: Aug @ 8.9%
12-Month Moving Average: Aug @ 8.1%
8%
8%
10
6%
6%
4%
4%
10
5
2%
2%
90
92
94
96
98
00
02
04
06
08
5
0
0
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
16
Charleston
Charleston Has Slowed Along with the Nation
Highlights




Charleston MSA Nonfarm Employment
After several exceptionally strong years of
growth, Charleston’s economy has cooled
off considerably. Nonfarm employment has
declined 2.6 percent since the recession
began, but recent data show a slight
reversal of the downward trend.
The unemployment rate has shot up
considerably. Manufacturing employment
has declined sharply, down 7.5 percent
year over year. The economy is largely
dependent on consumer-driven industries,
such as leisure and hospitality and retail
trade. The projected slow growth in
consumer spending will dampen the
coastal destination’s recovery.
In addition to tight credit, higher insurance
costs and a weak second-home market are
combining to restrain demand. The
underlying trend in residential
construction remains down, but the singlefamily sector has shown recent
improvements.
Population growth for the past few years
have been robust. The economic downturn,
however, has caused a lack of household
formation and mobility, thus population
growth for 2009 should slow.
3-Month Moving Averages
16%
Charleston MSA Housing Permits
16%
12%
12%
8%
8%
4%
4%
0%
0%
-4%
-4%
3-Month Annual Rate: Aug @ -0.2%
Year-over-Year Percent Change: Aug @ -2.9%
Household: Yr/Yr Percent Change: Aug @ -3.0%
-8%
-8%
-12%
-12%
90
92
94
96
98
00
02
04
06
08
Seasonally Adjusted Annual Rate
12
Single-Family: Aug @ 3,084
10
Seasonally Adjusted
10
8
8
6
6
4
4
2
2
0
0
90
92
Charleston MSA Unemployment Rate
11%
12
Single-Family, 12-Month Mov. Avg.: Aug @ 2,631
Multi-Family, 12-Month Mov. Avg.: Aug @ 527
94
96
98
00
02
04
06
08
Charleston MSA Population Growth
11%
In Thousands
20
20
Unemployment Rate: Aug @ 9.2%
12-Month Moving Average: Aug @ 8.2%
10%
10%
9%
9%
8%
8%
7%
7%
6%
6%
5%
5%
4%
4%
3%
3%
2%
2%
90
92
94
96
98
00
02
04
06
08
15
15
10
10
5
5
0
0
-5
-5
-10
-10
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
17
Greenville
Employment Problems Dominate the Landscape
Highlights




Greenville MSA Nonfarm Employment
After losing 7,900 jobs over the past year,
job losses appear to be moderating. Job
losses have been broad-based with
construction, manufacturing and trade
recording the largest declines. Auto-related
manufacturers are quite concentrated in
Greenville and have been struggling.
The unemployment rate has spiked over
the past year, largely due to record
population growth in the region as well as
the severely weakened national economy.
Housing construction activity has slowed
significantly, with the 12-month moving
average now down nearly 70 percent over
the past two years. Slowing construction
activity should give existing inventories of
new homes time to work through the
system. The lack of a housing boom has
allowed Greenville to largely avoid the
requisite bust.
A successful diversification into the service
sector should help support Greenville’s
economy in the long run as old line
manufacturing declines. This will be aided
by strong population growth and increases
in R&D spending.
Greenville MSA Housing Permits
3-Month Moving Averages
15%
15%
3-Month Annual Rate: Aug @ -0.1%
Year-over-Year Percent Change: Aug @ -2.8%
Household: Yr/Yr Percent Change: Aug @ -2.9%
12%
12%
9%
9%
6%
6%
3%
3%
0%
0%
-3%
-3%
-6%
-6%
-9%
-12%
91
93
95
97
99
01
03
05
07
Thousands of Permits, Seasonally Adjusted Annual Rate
8.0
7.0
6.0
5.0
5.0
4.0
4.0
3.0
3.0
2.0
2.0
-9%
1.0
1.0
-12%
0.0
09
0.0
90
92
11%
Unemployment Rate: Aug @ 10.1%
12-Month Moving Average: Aug @ 8.8%
9%
8%
8%
7%
7%
6%
6%
5%
5%
4%
4%
3%
3%
2%
2%
1%
1%
92
94
96
98
00
02
96
98
00
02
04
06
08
In Thousands
15
15
10%
9%
90
94
Greenville MSA Population Growth
Seasonally Adjusted
10%
7.0
6.0
Greenville MSA Unemployment Rate
11%
8.0
Single-Family: Aug @ 1,872
Single-Family, 12-Month Mov. Avg.: Aug @ 1,506
Multi-Family, 12-Month Mov. Avg.: Aug @ 45
04
06
08
12
12
9
9
6
6
3
3
0
0
82
84
86
88
90
92
94
96
98
00
02
04
06
08
Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
18
Myrtle Beach
A Weak Consumer Hampers on This Beach Destination
Highlights
Myrtle Beach MSA Nonfarm Employment
 With tourism being the big driver
and consumers cutting back on
vacations, Myrtle Beach has taken
a significant hit on the
employment front. The
unemployment rate surged to a
record high of 12.7 percent in
February, but has come down
since.
 Homebuilding surged in 2005,
with both single-family and
condominium developments
soaring to unprecedented heights.
 Myrtle Beach is clearly the most
overbuilt market in South
Carolina and one of the most
overbuilt markets in the nation.
 Population growth was robust for
the past four years, although it
slowed in 2008. The recession has
limited the mobility of retirees to
relocate to the area.
3-Month Moving Averages
16%
Myrtle Beach MSA Housing Permits
16%
Thousands of Permits, Seasonally Adjusted Annual Rate
10
10
Single-Family: Aug @ 1,620
12%
12%
8%
8%
4%
4%
0%
0%
-4%
-4%
-8%
-8%
-12%
Single-Family, 12-Month Mov. Avg.: Aug @ 1,285
Multi-Family, 12-Month Mov. Avg.: Aug @ 244
8
8
6
6
4
4
2
2
-12%
-16%
-16%
3-Month Annual Rate: Aug @ 5.3%
Year-over-Year Percent Change: Aug @ -6.7%
-20%
-20%
Household: Year-over-Year Percent Change: Aug @ -6.5%
-24%
-24%
91
93
95
97
99
01
03
05
07
0
09
0
90
92
Myrtle Beach MSA Unemployment Rate
Seasonally Adjusted
13%
12%
96
98
00
02
04
06
08
Myrtle Beach MSA Population Growth
13%
Unemployment Rate: Aug @ 11.1%
94
In Thousands
12
12
12%
12-Month Moving Average: Aug @ 10.8%
11%
11%
10%
10%
10
10
8
8
6
6
4
4
2
2
0
0
-2
-2
9%
9%
8%
8%
7%
7%
6%
5%
6%
4%
5%
3%
4%
2%
3%
1%
2%
0%
90
92
94
96
98
00
02
04
06
08
-4
-4
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
Source: U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities, LLC
| Government Finance Officers Association of South Carolina
19
Appendix
| Government Finance Officers Association of South Carolina
20
Economics Group Publications
A Sampling of Our Recent Special, Regional and Industry Commentary
Distribution Lists
Recent Special Commentary
 Monthly Economic Outlook
Date
 Weekly Economic & Financial
Commentary
 Economic Indicators
 Global Economic Commentary
 Federal Reserve Commentary
 Real Estate & Housing
 Consumer & Retail
 Chief Economist List
distribution lists please visit our
website:
 http://www.wachovia.com/economic
Authors
Bryson
Vitner, Khan & Kamar.
Vitner & Khan
Benchmarking Recovery: Rhyming not Repeating
Will Debt Restrain Euro-zone Consumer Spending?
State & Local Financial Woes Still Building
Wobbly Fundamentals for Business Spending
Housing Chartbook: August 2009
Healthcare Employment Stays out of the Sick Ward
Early Recoveries are Typically “Jobless”
Silvia
Bryson
Vitner & Khan
Silvia & Quinlan
Vitner & York
Silvia, York & Whelan
Silvia & York
July-29
July-21
July-16
July-08
July-01
Recession Probability Drops Again
Decision-Makers’ Guide to Stimulus Part Deux
Is China the Next Bubble?
Macro Clouds, Micro Foundations
Pass-Through Effect of Housing Weakness
Silvia & Iqbal
Silvia
Bryson
Silvia
Vitner & Whelan
June-30
June-30
June-29
June-25
June-19
June-18
June-11
June-11
June-11
June-10
June-04
June-04
June-01
New Jersey Outlook - June 2009
Cash-for-Clunkers Boost Likely Unsustainable
Breakdown, Adjustment & Rebuilding in Finance
Recession Probability Drops Again to 37 Percent
Labor Market Evolution: Realities and Romantics
What Drives Consumer Delinquency Rates?
Florida Economic Outlook - June 2009
Global Chartbook - June 2009
Housing Chartbook - June 2009
Consumers Remain Thrifty Amid Economic Turmoil
Past Recessions Suggest Sluggish Road Ahead
Regional Commentary: Pennsylvania
Employment - Have We Reached a Turning Point?
Vitner, Khan & Kamar.
Vitner & Khan
Silvia
Silvia & Iqbal
Silvia, York & Whelan
Vitner & Iqbal
Vitner & Kamaruddin
Bryson & Quinlan
Vitner & York
Vitner & York
Vitner & Khan
Bryson & Quinlan
Silvia, York & Whelan
August-31
August-26
August-24
August-18
August-14
August-14
August-13
 Special Reports
 To join any of our research
Title
September-24 What's Wrong With the Dollar?
September-03 Commercial Real Estate Chartbook: Second Quarter
September-02 Clunkernomics: Auto Sales Set to Boost Real GDP
semail
| Government Finance Officers Association of South Carolina
21
Wells Fargo Securities, LLC Economics Group
Diane Schumaker-Krieg
Global Head of Research & Economics




[email protected]

Mark Vitner
Jay H. Bryson, Ph.D.
Senior Economist
Global Economist
[email protected]
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
[email protected]
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[email protected]
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Eugenio Aleman, Ph.D.
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
[email protected]
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


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Real Estate
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[email protected]
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Macro Economy
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| Government Finance Officers Association of South Carolina
22