Transcript Economic Forecast on the Commercial Real Estate Industryx

cteconomy.uconn.edu
Top Ten Economic Myths
Myth #10
Recovery? What Recovery?
CONNECTICUT’S RECOVERY IS UNDER WAY
40
Change in Jobs in Thousands
25
19
20
17
17
13
14
5
1
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-12
-20
-16
-18
-21
-40
-60
-73
-80
2011
2012
Myth #9
Yes, but this recovery’s sub-par.
JOB GROWTH HAS BEEN BETTER THAN EXPECTED
CT Job Growth
6%
4%
2011
2%
2012
0%
-4%
-2%
0%
2%
4%
6%
U.S. GDP Growth
-2%
-4%
-6%
1969-2012
8%
Myth #8
The state hasn’t added jobs, on net,
in 20 years.
WITH ALL THE JOBS COUNTED THERE’S A LOT MORE
WORK NOW THAN BEFORE
2300
Total Employment
2200
2100
Thousands
2000
1900
Wage and Salary Employment
1800
1700
1600
1500
1990
1995
2000
2005
2010
NOTE: Adjusted for population, CT was 10th in U.S. in employment growth 1994-2008
Myth #7
High labor costs are holding
Connecticut back.
OUTPUT PER WORKER FAR EXCEEDS COMPENSATION
$170,000
$160,000
CT
Annual Worker Output
$150,000
$140,000
$130,000
In 2011, CT #5 in
Output less
Compensation (After
DE, AK, WY, LA
$120,000
$110,000
$100,000
$90,000
$80,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
Annual Worker Compensation (Salary + Benefits)
$110,000
Myth #6
Housing costs are out of line.
HOME PRICES TRACK WITH INCOME
$800,000
2010 Median Home Price
$700,000
$600,000
$500,000
Stamford
New York
New London
$400,000
New Haven
$300,000
Hartford
$200,000
$100,000
$0
$0
$20,000
$40,000
$60,000
$80,000
$100,000
2010 Median Family Income
Note: Bridgeport-Stamford 21% above predicted; NYC 67% above predicted
$120,000
Myth #5
We’re a high-tax state.
35%
South Dakota
New Hampshire
Tennessee
Arizona
Missouri
Maryland
Connecticut
Texas
Virginia
Georgia
Illinois
Massachusetts
Oklahoma
Idaho
Washington
Pennsylvania
Arkansas
Nevada
Alabama
Kentucky
Florida
North Carolina
District of Columbia
New Jersey
Colorado
Rhode Island
Nebraska
Ohio
Louisiana
Montana
Utah
Minnesota
Oregon
Maine
Wisconsin
Indiana
California
Kansas
New Mexico
Michigan
Mississippi
Iowa
Vermont
Hawaii
West Virginia
South Carolina
North Dakota
Delaware
New York
Wyoming
Alaska
WE’RE 45TH IN OWN-REVENUE* AS A SHARE OF INCOME
40%
Own-revenue as a %
of Income, 2010
30%
25%
Connecticut
20%
15%
10%
5%
0%
* Includes Property, Sales, Individual and Corporate Income Taxes and user-charges for
commodities and services (e.g. tuition, fees, tolls, etc.)
Myth #4
The rich don’t pay their fair share.
MILLIONAIRES’ TAX SHARE EXCEEDS INCOME SHARE
CT AGI
Taxes
40%
35%
30%
25%
20%
15%
10%
5%
0%
2004
2005
2006
2007
2008
2009
2010
2011
NOTE: In 2011, millionaires represented 0.6% of Connecticut filers.
Myth #3
Income inequality is rampant.
STATE’S INCOME INEQUALITY IS SECOND AMONG FIFTY
0.52
0.5
0.48
0.46
0.44
0.42
0.4
2011 Gini Coefficient:
1.0 = perfect inequality
0.0 = perfect equality
CT
FEWER OF US ARE POOR, MORE ARE RICH
25%
23%
Percent of Households, 2011
20%
18%
15%
Avg State
Connecticut
10%
9%
5%
4%
0%
< $25K
> $200K
Myth #2
Connecticut is plagued by a brain
drain.
WE’RE 4th IN COLLEGE-EDUCATED ADULTS
45
40
35
30
25
20
15
10
5
0
Connecticut
Percent of Population 25+ with
bachelor’s or higher, 2011
AND THERE IS NO MASS EXODUS OF YOUNG PEOPLE
(BUT AN AGING POPULATION POSES CHALLENGES)
350,000
1989 Profile
1989 Profile Advanced 20 Years
300,000
250,000
200,000
150,000
2009 Profile
100,000
50,000
85+
80 to 84
75 to 79
70 to 74
65 to 69
60 to 64
55 to 59
50 to 54
45 to 49
40 to 44
35 to 39
30 to 34
25 to 29
20 to 24
15 to 19
10 to 14
5 to 9
0 to 4
0
Myth #1
We owe our success to Fairfield
County.
#1 IN PER CAPITA INCOME WITH FAIRFIELD COUNTY
$60,000
2011 Per Capita Income
$50,000
$40,000
$30,000
$20,000
$10,000
$0
#4 IN PER CAPITA INCOME WITHOUT FAIRFIELD COUNTY
$60,000
2011 Per Capita Income
$50,000
$40,000
$30,000
$20,000
$10,000
$0
Beyond the Myths
(Where to From Here?)
GIVEN THE RANGE OF ECONOMISTS’ FORECASTS
FOR U.S. GDP
Annual Forecasted GDP Growth
3.5
3.2
3
2.8
2.5
2.1
2
Low
1.6
High
1.5
1
0.5
0
2013
2014
Source: The Economist April 20th – 26th 2013
CONNECTICUT COULD GAIN 20K-40K JOBS OVER THE
NEXT TWO YEARS
25
22
20
19
Thousands
17
14
15
14
14
Low
10
High
10
5
0
2011
2012
2013
2014
STILL LEAVING CT’S JOB TOTAL 20-40K BELOW 2008 PEAK
1700
1680
Thousands
1660
1640
Low
High
1620
1600
1580
1560
2008
2009
2010
2011
2012
2013
2014
HOME SALES ARE PICKING UP
7000
6000
5000
4000
3000
2000-2013 Average
2000
1000
0
2000
2002
2004
2006
2008
2010
2012
AS ARE PERMITS; PARTICULARLY MULTIFAMILY
900
800
Single Family Permits
700
600
500
400
Multi-Family Permits 315
300
213
200
100
119
56
0
2004
2006
2008
2010
2012
BUT PRICES ARE STILL STRUGGLING TO RECOVER
Across Tier, Prices are
Down Nearly 30%
$650
$600
$550
Thousands
$500
High Value Tier
$450
$400
$350
Mid Value Tier
$300
$250
Low Value Tier
$200
2006
2008
2010
Source: CREUES UConn School of Business
2012
AND THE SEQUESTER THREATENS TO REVERSE
ANY PROGRESS IN JOBS IN 2013
30,000
20,000
Change in Jobs
10,000
“Best Case”
CT Job Growth
0
-10,000
-20,000
CT-Specfic
Sequester-Related
Job Losses*
1.2% of U.S.
Sequester-Related
Job Losses*
-30,000
-40,000
-50,000
*CRS/Chumera Economics Estimates of direct, indirect and induced job losses
TO RECAP
Conventional Wisdom Doesn’t Always
Stand up to the Evidence
Connecticut Remains an Economic
Leader and it is Recovering, But Slowly
A Housing Resurgence Could Give the
Economy a Much-needed Boost
But Fiscal Austerity Could Still Derail the
Recovery
cteconomy.uconn.edu