Transcript Inflation? - Signature Landscapes

THINGS REALLY ARE IMPROVING:
TRUST THE ECONOMISTS!!!!
Presented by:
Elliot F. Eisenberg, Ph.D.
President: GraphsandLaughs, LLC
January 15, 2015
Reno, Nevada
Inflation?
What Inflation!
Core PCE Price Index: No Inflation Anywhere!!
If it hits 2% that would be good news and does NOT mean the Fed will slam the breaks!
Inflation Expectations? None, Anywhere!
Y-o-Y Percent Change in Hours & Earnings
Federal Reserve Behavior
• Yellen & Fischer are outstanding
• Fewer dissents but tougher discussions
–
(Plosser, Fisher, Kocherlakota are out. Lockhart (ATL), Williams (SF), Evans (CHI) and Lacker (RIC) in.
• Congress may give the Federal Reserve headaches
– On left (Warren, Reed) on right (Shelby, Paul, Hensarling)
• Short-term rates stay @ zero “for a considerable
time” 25% chance of a rise by 6/19/15, 50% by
9/18/15, 80% by end of year.
• As long as:
– inflation is “below 2% longer-run goal and
inflation expectations remain well anchored.”
Federal Reserve Behavior
• Short–term rates rise by 25 BP every 3 months
starting maybe by 6/16/15. By 12/31/15 they
reach 1.00%. By 12/31/16 2.50%
• Except for UK, Central Banks lowering rates
• Rates continue rising S-L-O-W-L-Y till they hit
3.75% by the end of 2017. The Fed will employ
many tools to raise rates.
• The Fed will use them carefully.
– Fed Funds and IOER, and also ON-RRP,
– Balance Sheet shrinking will take till 2020!
Via principal repayment only.
The Economy?
It’s Improving!
GDP = C+I+G+(X-M)
Households Deleveraging is Done!!!!!!
Lack of income growth is hurting, but debt is growing once again.
Households are Repairing their Balance Sheets
Trillions in Net Worth Recovered, at a New Record Level
Households are Repairing their Balance Sheets
More Income to Spend Elsewhere
As Has Industrial Production
In late 2014 manufacturing output surpassed the pre-recession high!
But Not Quite Factory Utilization Rates
GDP Drivers – Fiscal Policy is Not Contractionary
Fewer of Us are Working in State and Local Gov’t!
But, These Losses are Now Reversing at both the state and local levels
Taxes will have to rise going forward to cover healthcare costs
The Dollar is Strengthening Against the euro
It will hurt employment growth but will reduce inflation
Weak
Stronger
Strong
Oil Prices are a Huge Wildcard
The Trade Deficit is Improving
But, only because of oil and outside of oil it is worsening
Annual Y-o-Y Percent Change in PCE
Disappointing growth of late
Annual Y-o-Y Percent Change in GDP
STEADY Labor Market Improvement: Involuntary Separation
Long Term Trends: 1967-2014
Historical Job Growth
Y-o-Y Total Employment Change
Household Income by Race
Cumulative Change in Household Income
Consumer Confidence While Historically Low, is Up!
A post recession high, Above 90!!!!
Same With Small Business Confidence
Due to: Taxes, Regulation, Weak Sales and Economic Uncertainty
Best of All, No Recession is in the Cards!
Yield Curve Inversion Test: 1-Year Treasury Yield – 10-Year Treasury Yield
Housing?
It’s Improving but In
Fits and Starts!
Housing Credit is Hard to Get, Not so for Autos
Lots Auto Credit has totally bounced back. Housing credit has barely budged
Household Formation is Not Happening
And, Median House Size is Growing Again!
HOUSTSFLAM1FQ
New Home Prices Are Recovering Nicely
Single-Family and Multifamily Starts – Beginning a Recovery
Lack of lots, gun shy lenders, high prices, higher rates, MF looks good
Existing Home Sales
Down 1.7% Y-o-Y from Sept. 2013, first time buyers MIA! Also distressed sales way down
Median New Price Vs. Median Existing Price
The median price gap is huge and unsustainable!
Negative Equity is Less and Less of a Problem
8% of households with negative equity down from 32% in 2011
House Price Growth is Slowing…Really... I Mean It!
Delinquencies & Foreclosures Continue Falling
30 and 60 day delinquencies are back to normal!
Existing Inventory is Now Really Rising!!!!!
ANY QUESTIONS?
Elliot F. Eisenberg, Ph.D.
Cell: 202.306.2731
[email protected]
Do you want to get my daily 70 word economics email?
If so, please give me your business card
Thank YOU all very very much!
What About
Things Here?
The Future Looks So Bright, I’ll Need Shades
Let’s Do this Without A Lawyer, Thank You!
Minnesota improved from 11th place to 10th Place!
State Unemployment Rates
Significant differences exist: However, unemployment is below 8% everywhere!
12 Month Change in State Unemployment Rates
Significant differences across states
Unemployment Rates in Nearby States
Utah and Idaho have done best, Nevada is fast approaching its western neighbors
Nearby MSA Unemployment Rates
Reno is about to pass Sacramento. Do not even visit Stockton or Modesto
Nearby MSA Labor Force Growth
Reno’s labor force is growing nicely again! Better than all areas but San Francisco
Reno, NV Housing Starts
Single-Family is weak, but multifamily is doing very well
It’s all About House Prices
Reno is recovering faster than Las Vegas, as fast as all other areas except San Francisco
Overall Business Friendliness Score
Improve your licensing, tax code and regulatory environment
ANY QUESTIONS?
Elliot F. Eisenberg, Ph.D.
Cell: 202.306.2731
[email protected]
Do you want to get my daily 70 word economics email?
If so, please give me your business card
Thank YOU all very very much!