Transcript Source: Federal Reserve Board

Napa Economic Summit:
The Economy 2012: Napa, North Bay and Beyond
Napa, CA
October 28, 2011
Robert Eyler, Ph.D.
Professor, Economics
Frank Howard Allen Economics Research Fellow
Director, Executive MBA Program
Sonoma State University
[email protected]
1
Current State of Affairs
• 2011 was a year of mixed signals
• Global: Europe, geopolitical uncertainty
– May change tourism over time
• National: Recovery underway, slow from jobs
weakness
– May change both wine sales and tourism
• State: Revenue generation and public workers
• Local: Recovery slow and needs a jump start
Policy Issues
• How do we create jobs through Congress?
– Temporary versus permanent job creation
– Cost recovery versus investment
• Credit Supply Issues: reticence to lend
– Riskiness in Europe not helping
• Credit Demand Issues: reticence to borrow
– Interest rates low and stable as a result
• FED declaration on rates only as good as expected
inflation
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-0
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Billions of $
Excess Reserves at U.S. Banks (Loanable Funds Not Lent), 2008$
Jan 2000 - Aug 2008
18
16
14
12
10
8
6
4
2
0
Month
Source: Federal Reserve Board
4
Excess Reserves at U.S. Depository Institutions (Loanable Funds Not Lent)
2008$, Jan 2008 - Present
1800
1600
1400
Billions of $
1200
1000
800
600
400
200
0
Source: Federal Reserve Board
5
Jan-97
May-97
Sep-97
Jan-98
May-98
Sep-98
Jan-99
May-99
Sep-99
Jan-00
May-00
Sep-00
Jan-01
May-01
Sep-01
Jan-02
May-02
Sep-02
Jan-03
May-03
Sep-03
Jan-04
May-04
Sep-04
Jan-05
May-05
Sep-05
Jan-06
May-06
Sep-06
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Billions of 2008$
Excess Reserves at U.S. Depository Institutions (Loanable Funds Not Lent)
2008$, Jan 1997 - Present
1800
1600
1400
1200
1000
800
600
400
200
0
Month
Source: Federal Reserve Board
6
Comparison of GDP Components, US, 2005$, 2007 - Present
140
120
80
60
40
Consumption
Investment
Govt Spending
Exports
20
Quarter
Source: BEA (www.bea.gov)
2011:2
2011:1
2010:4
2010:3
2010:2
2010:1
2009:4
2009:3
2009:2
2009:1
2008:4
2008:3
2008:2
2008:1
2007:4
2007:3
2007:2
-
2007:1
Index (2007 Q1 = 100)
100
6%
Non-Residential Investment, US (% change 2005$, SA)
4%
2%
Percent Change
0%
-2%
-4%
-6%
-8%
-10%
-12%
Source: BEA (www.bea.gov)
8
8%
Residential Investment, US (% change 2005$, SA)
6%
4%
Percent Change
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
Source: BEA (www.bea.gov)
9
California
• 2011-12 likely to be slightly better than 2010-11
• Labor market still the big deal, and will remain in 2012
• CA slowly bifurcating in terms of housing markets
– Interior valleys: Japanese-like recovery
– Wine country: general economic recovery and conversion of
emerging world wealth to local housing/services demand
• California’s recovery hinges on two major factors
– The expansion of the tech industry and it remaining here
– How state government intends to fund itself
10
CA Personal Income Growth, 2003$, 1990-2011Q2
5.0%
4.0%
3.0%
% Growth
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
Quarter
Source: BEA (www.bea.gov)
CA Wage and Salary Growth, 2003$, 1990-2011Q2
5.0%
4.0%
3.0%
% Growth
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
-5.0%
Quarter
Source: BEA (www.bea.gov)
Jan-90
Jul-90
Jan-91
Jul-91
Jan-92
Jul-92
Jan-93
Jul-93
Jan-94
Jul-94
Jan-95
Jul-95
Jan-96
Jul-96
Jan-97
Jul-97
Jan-98
Jul-98
Jan-99
Jul-99
Jan-00
Jul-00
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Index Jan 2007 = 100
TechPulse Index, Index (Jan 2007 = 100), 1990-Oct 2011
140
TechPulse
SP 500
120
100
80
60
40
20
0
Source: FED SF and Federal Reserve
13
Napa County and the Region
• Napa has a place of economic strength in region
– Creating jobs in wake of recession
– Tourism and wine to be the long term niche
• Need to continue to strengthen this niche
– Northern and Southern Napa working in cohesion
– Market to emerging world wealth: go to NVC for
Mandarin!
• Competition is regional and growing
14
Employment, Seasonally Adjusted, 1990 – Aug 2011,
Index 1990 = 100
140
CA
Marin
Sonoma
Napa
130
Index (Jan 1990 = 100)
120
110
100
90
80
70
60
Month
Sources: EDD and CREA at SSU
15
Sources: BLS and CREA at SSU
Aug-11
Mar-11
Oct-10
May-10
Dec-09
Jul-09
Marin
Feb-09
CA
Sep-08
Sonoma
Apr-08
Napa
Nov-07
Jun-07
Jan-07
Aug-06
Mar-06
Oct-05
May-05
300
Dec-04
Jul-04
Feb-04
Sep-03
Apr-03
Nov-02
Jun-02
Jan-02
Index (2002 = 100)
New Unemployment Insurance Claims, Index (2002= 100)
350
250
200
150
100
50
0
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Companies Gained and Lost, Napa County, 2006-11 and 2009-11
40
Companies Gained or Lost 2006-11
Companies Gained or Lost 2009-11
20
0
-20
-40
-60
-80
-100
17
Sources: EDD and CREA at SSU
Jobs Gains and Losses, Napa County, 2006-11 and 2009-11
2,000
Jobs Gained or Lost 2006-11
Jobs Gained or Lost 2009-11
1,000
0
-1,000
-2,000
-3,000
-4,000
18
Sources: EDD and CREA at SSU
Local Housing Market Recovery: Keys
• Job creation in technology industries
• National economic recovery continuing
• Recognition housing needs to follow general
economic recovery, and will not drive it
• International audience for real estate welcomed
and marketed
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Median Price of Existing Detached Homes
Napa County, August 2011: $354,760, Down 10.0% YTY
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
Jan-00
Jan-99
Jan-98
Jan-97
Jan-96
Jan-95
Jan-94
Jan-93
Jan-92
Jan-91
Jan-90
$0
Distressed Sales by County
(Percent of Total Sales)
County
Lake
Marin
Mendocino
Napa
Solano
Sonoma
CALIFORNIA
Aug-10
74%
29%
52%
39%
67%
41%
44%
Jul-11
73%
25%
61%
51%
70%
46%
43%
Aug-11
64%
28%
48%
48%
71%
42%
44%
SOURCE: California Association of REALTORS®
Where are we headed?
• Recession-like activity through mid-2012 in
labor markets
• Napa showing overt signs of recovery
– Maybe best in region
• Recognize regional connections/economies
• No signs of rapid recovery yet
– Economy to grow through 2012
– Napa well poised for the long term
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