Richard Peach, Senior Vice President. Jaison Abel, Research Officer. John Clark, Senior Vice President. Adjourn to NWCR-10F

Transcription

1 Upstate New York Regional Advisory Council Meeting Federal Reserve Bank of New York 33 Liberty Street 10F, Paul Volcker Boardroom Friday, March 20, 2015 AGENDA 10:30am 10:40am-11:10am 11:10am-11:30am 11:30am-12:00pm 12:00pm 12:15pm 12:15pm-1:55pm Introductory Remarks Christine Cumming, First Vice President The National Economy Richard Peach, Senior Vice President Regional Update Jaison Abel, Research Officer International Update John Clark, Senior Vice President Adjourn to NWCR-10F Lunch Round Table Discussion with William Dudley, President Questions for discussion with President Dudley: Your experience and that of your customers and suppliers can give us insight into current economic conditions. 1. Has your firm experienced an increase in demand in recent months? 2. Has demand for your product or service increased sufficiently that you increased or plan to increase employment in 2015? 3. Has demand for your product or service increased sufficiently that you plan to increase investment in plant and equipment in 2015? 4. Has your access to credit changed in 2015? 5. Has unseasonably harsh winter weather reduced demand for your product or services in 2015? 2:00 pm Adjourn

2 Upstate New York Regional Advisory Board Federal Reserve Bank of New York 33 Liberty Street New York, NY Friday, March 20, 2105 ATTENDEE LIST Board Members Aminy Audi CEO & Chairman of the Board L. & J.G. Stickley Bal Dixit Chairman Newtex Industries Lynne Marie Finn President Superior Workforce Solutions Kenneth M. Franasiak Chairman Calamar William Gisel President and CEO Rich Products Corporation Melanie LittleJohn Regional Director National Grid Linda MacFarlane President & CEO Community Loan Fund of the Capital Region Martin Mucci President & CEO PayChex Carlos Unanue President Goya de Puerto Rico, Inc. Federal Reserve Bank of New York William Dudley Christine Cumming Jack Gutt John Clark Richard Peach Anand Marri James Bergin Tony Davis Jaison Abel David Parkinson President First Vice President EVP, Head of Communications Group SVP, Global Economic Analysis SVP, Research & Statistics VP, Head of Outreach & Education VP Executive Chief of Staff, Chief of Staff s Office Director, Community Engagement, Outreach & Education Research Officer, Research & Statistics Counsel, Legal

3 US Macro Overview March 20, 2015

4 Overview Real GDP increased 2.4% (Q4/Q4) in 2014, somewhat faster than the economy s potential growth rate, narrowing the output gap and reducing, though not eliminating, slack in labor markets. While the consensus forecast is for growth of around 3% in 2015, recent expenditure data have been choppy and generally inconsistent with that projection. Inflation running lower than expected, due in part to the appreciation of the dollar and a continued slowing in the rate of increase of medical care prices.

5 GDP Trillions of 2009 US$ Time Period Potential GDP Growth % % % Trillions of 2009 US$ Potential GDP % Q2 to 2014Q4: 2.4% Growth Rate Q1 to 2007Q4: 2.5% Growth Rate Source: Bureau of Economic Analysis, Congressional Budget Office 11 Note: Grey shading shows NBER recessions

6 Labor Market Indicators Source: Bureau of Labor Statistics Percent Percent Labor Force Participation Rate (Right Axis) Employment to Population Ratio (Right Axis) Unemployment Rate (Left Axis)

7 Private Nonfarm Payroll Employment and Hours % Change Year to Year % Change Year to Year Hours* Employment Source: Bureau of Labor Statistics * Note: Production and Non-Supervisory, Employees Only

8 Job-Finding Rate and Employment-to-Population Ratio Ratio Rate Job-Finding Rate (Left Axis) Employment-to-Population 0.58 Ratio (Right Axis) Source: CPS Note: Grey shading shows NBER recessions

9 Nonfarm Business Sector: Compensation Per Hour Percent 10 Percent 10 8 Year-over-year percent quarter percent change (annualized) Source: BLS/Haver Analytics

10 Civilian Employment and Part Time Employment for Economic Reasons Thousands, SA Thousands, SA million Part Time for Economic Reasons (right axis) Civilian Employment (left axis) +2.4 million Source: BLS/Haver Analytics Note: Data are quarterly 8

11 Citigroup US Economic Surprise Index (Rolling three month window with time decay) Index Index Source: Citigroup Note: The index is a weighted historical standard deviation of data surprises (actual releases vs Bloomberg survey median). Indices are assigned weights based upon the spot FX impacts of 1 standard deviation surprises.

12 Disposable Income, Consumption, and Wealth % Change over 20 Quarters, Annual Rate % of Disposable Income Real Personal Consumption (Left Axis) Household Net Worth (Right Axis) Real Disposable Income (Left Axis) Source: Bureau of Economic Analysis, Federal Reserve Board 500

13 Personal Saving Rate and Household Net Worth Personal Saving Rate (Percent) Personal Saving Rate (Percent) Q2 2012Q2 2011Q2 2014Q3 (622.82, 4.7) Q Q Households Net Worth as a Percent of Disposable Income Source: Bureau of Economic Analysis and Federal Reserve Board Note: Fitted line is from 1983Q1 to 2005Q4.

14 Total Light-Weight Vehicle Retail Sales Millions, SAAR 22 Millions, SAAR Source: Autodata/Haver Analytics 8 12

15 Consumer Debt by Credit Score % Change Year to Year % Change Year to Year rd Quintile 4 th Quintile nd Quintile st Quintile -10 (Highest) 5 th Quintile (Lowest) Source: FRBNY Consumer Credit Panel Note: Includes Student Loans

16 Percent Change in Debt 2013Q4-2014Q4 By Credit Score Quintile Mortgage/HELOC Auto Credit Card Inquiries Percent Equifax Risk Score Quintiles* Note: * 2013Q4 Quintiles

17 Transition of Mortgage Accounts from Days Late Percent 60 Percent To Current To 90+ Days Late Source: FRBNY Consumer Credit Panel 0 15

18 Housing Starts Thousands, 3 MMA Thousands, 3 MMA Total Multifamily (Right Axis) 1 Unit (Left Axis) Source: Census Bureau

19 Single Family Housing Market Index, January 2000 = 100 Months Supply CoreLogic House Price Index (Left Axis) Months Supply (Right Axis) Normal Range for Months Supply Source: CoreLogic, National Association of Realtors

20 Credit Score at Mortgage Origination: All First Mortgages Credit Score 800 Credit Score Median th Percentile About 35 to 40 Million People th Percentile Source: FRBNY Consumer Credit Panel.

21 Equipment Investment and Capacity Utilization % Change Year to Year % of Capacity Manufacturing Capacity Utilization Rate (Right Axis) Real Business Investment in New Equipment (Left Axis) Source: Federal Reserve Board, Bureau of Economic Analysis Note: Grey shading shows NBER recessions

22 Real Government Consumption and Gross Investment % Change Year to Year % Change Year to Year Federal State & Local Source: Bureau of Economic Analysis Note: Grey shading shows NBER recessions

23 PCE Deflator % Change Year to Year % Change Year to Year Total PCE FOMC Objective Core PCE Source: Bureau of Economic Analysis Note: Grey shading shows NBER recessions

24 CPI Inflation: Core Goods and Core Services % Change Year to Year % Change - Year to Year Core Services Core Goods Source: Bureau of Labor Statistics Note: Grey shading shows NBER recessions

25 Trade-Weighted Exchange Value of US$ & Nonpetroleum Imports Year-over-year percent Year-over-year percent Trade-Weighted Exchange Value of US$ (left axis) Nonpetroleum Imports (right axis) Source: Federal Reserve Board, BLS/Haver Analytics

26 Rental Vacancy Rate and Rent of Primary Residence Percent Year-over-year percent Rental Vacancy Rate (left axis) Rent of Primary Residence (right axis) Source: Census Bureau, BLS/Haver Analytics -1

27 Personal Consumption Expenditures: Health Care Price Index % Change Year to Year 4.5 % Change Year to Year % of total PCE deflator 19% of core PCE deflator Source: Bureau of Economic Analysis / Haver Analytics

28 Producer Price Index: General Medical and Surgical Hospitals by Patient Type LN(Index) LN(Index) Private Insurance and all other Patients (55.8%) Medicare Patients (26.1%) Medicaid Patients (18.1%) Source: Bureau of Labor Statistics PPI Note: Jan-2005 set to 1

29 Producer Price Index: General Medical and Surgical Hospitals by Patient Type 12 Month % Change 12 Month % Change Medicare Patients (26.1%) Private Insurance and all other Patients (55.8%) Medicaid Patients (18.1%) Source: Bureau of Labor Statistics PPI

30 TIPS Based Inflation Expectations Percent Percent 5-10 Years 3.22 (+2 SD) 2011 Present Average (-2 SD) Mar 18: 1.88 Source: Federal Reserve Board Note: Dashed lines represent 2 Standard Deviations from the mean 28

31 Reference Charts

32 HDD Percentage Deviation from 5-yr MA Percentage Deviation Percentage Deviation February January Source: Author s Calculations of data generated by NOAA

33 NESIS Percentage Deviation from 5-yr MA Percentage Deviation Percentage Deviation February Estimate February January Source: Author s Calculations of data generated by NOAA

34 Economic Conditions in Upstate New York Jaison R. Abel, Research Officer Upstate New York Regional Advisory Board Meeting; New York, NY; March 20, 2015 The views expressed here are those of the presenter and do not necessarily represent those of the Federal Reserve Bank of New York or the Federal Reserve System.

35 Overview of Regional Conditions Though growth remains slow, the upstate economy gained momentum in the second half of last year. Unusually harsh winter weather restrained economic activity in early Looking ahead, businesses in the region expect economic conditions to improve, particularly those in the service sector. FEDERAL RESERVE BANK OF NEW YORK 1

36 Current Economic Conditions FRBNY Regional Business Surveys Diffusion Index Empire State Manufacturing Survey (Current Conditions) Harsh Winter 0 Mar -20 Business Leaders Survey (Current Activity) -40 Shading indicates NBER recession Source: Federal Reserve Bank of New York. 2

37 Harsh Winter Weather FRBNY Supplemental Survey Report, March 2015 How much lower (or higher) do you think your revenues were in early 2015 as a result of the unusually inclement winter weather? Empire State Manufacturing Survey 10% 38% 50% 2% Significant Decrease (10%+) Some Decrease (2%-10%) Little Or No Effect Increase Business Leaders Survey 15% 37% 46% 2% Source: Federal Reserve Bank of New York. 3

38 Current Business Climate FRBNY Business Leaders Survey 25 Diffusion Index 0 Mar Business Leaders Survey (Current Climate) -75 Shading indicates NBER recession Source: Federal Reserve Bank of New York. 4

39 Regional Employment Trends Total Employment, Seasonally Adjusted 110 Index (December 2007 = 100) Dashed Line Indicates U.S. Employment Trough (February 2010) +2.1% 105 Jan YOY % Change 100 Downstate NY +2.3% +1.2% Upstate NY 95 United States Shading indicates NBER recession Source: New York State Department of Labor, Bureau of Labor Statistics, and Moody s Economy.com. 5

40 Upstate Job Creation During the Recovery Annual Net Change in Jobs 25,000 20,000 18,200 19,400 15,000 13,700 10,000 10,300 11,400 5, Source: New York State Department of Labor. 6

41 Upstate Job Growth by Industry Year-Over-Year Change, January ,000 10,000 Education & Health 10,500 8,000 6,000 4,000 2, ,000 Leisure & Hospitality 4,200 Trade 3,700 Professional & Business Services Construction Transport & Utilities 2,800 Financial 2,600 Activities 2,200 Other 1,500 Services Government Manufacturing Information Source: New York State Department of Labor. 7

42 Status of Jobs Recovery Across the Region Percent Change, Total Employment Local Recession Local Recovery (Through Jan15) -6.3% United States 8.9% -1.7% Ithaca 10.8% -3.7% -3.7% Buffalo Rochester 4.1% 4.5% -4.0% Albany 5.9% -4.3% -4.7% -4.9% Syracuse Glens Falls Utica 1.4% 2.0% 2.2% -7.0% Elmira 2.6% -9.7% Binghamton 1.0% Source: New York State Department of Labor, Bureau of Labor Statistics, and Moody s Economy.com. 8

43 Future Economic Conditions FRBNY Regional Business Surveys, Conditions Six Months Ahead 60 Diffusion Index Empire State Manufacturing Survey (Future Conditions) Mar Business Leaders Survey (Future Activity) Shading indicates NBER recession Source: Federal Reserve Bank of New York. 9