U.S. & Colorado Economic Update

Transcription

1 U.S. & Colorado Economic Update Alison Felix Economist & Branch Executive Federal Reserve Bank of Kansas City Denver Branch The views expressed are those of the presenter and do not necessarily reflect the positions of the Federal Reserve Bank of Kansas City or the Federal Reserve System.

2 U.S. economic growth picked up in the second half of REAL U.S. GROSS DOMESTIC PRODUCT Percent Change from Previous Quarter at Seasonally Adjusted Annualized Rates 5% 3% 1% 0% 4.9% 3.7% % 0.1% 1.1% 2.5% 4.1% % % High Low % '11Q4 '12Q1 '12Q2 '12Q3 '12Q4 '13Q1 '13Q2 '13Q3 '13Q FOMC Central Tendency Projections* 5% 3% 1% 0% Source: Bureau of Economic Analysis and Federal Open Market Committee (FOMC)/Haver Analytics *Note: Projections as of December FOMC meeting 2

3 Private consumption and investment were the primary drivers of economic growth in 2013, as the government sector limited overall gains. CONTRIBUTIONS TO REAL GDP Percent Change at Seasonally Adjusted Annualized Rates 8% 0% % Real GDP Personal Consumption Expenditures Gross Private Domestic Investment Govt. Consumption & Investment Net Exports 8% 3. 0% % -10% '08Q4 '09Q4 '10Q4 '11Q4 '12Q4 '13Q4-10% Source: Bureau of Economic Analysis /Haver Analytics 3

4 Unemployment rates have declined in the U.S. and Colorado and are expected to decline further as the economic recovery strengthens. UNEMPLOYMENT RATES Seasonally Adjusted 10% 9% 8% % United States 10% 9% 8% 7% 5% 4. Colorado % 5.8% % 5.8% 5.3% 7% 5% 4.3% 3% 3% Nov Dec Jan FOMC Central Tendency Projections* Source: Bureau of Labor Statistics & Federal Reserve Board *December 2013 Projections. 4

5 Inflation remains below the FOMC s two percent target. PERSONAL CONSUMPTION EXPENDITURE PRICE INDEX (PCEPI) Percent Change Year-over-Year Headline Inflation 0% Core Inflation 0% - - Dec. '03 Dec. '05 Dec. '07 Dec. '09 Dec. '11 Dec. '13 Source: Bureau of Economic Analytics 5

6 The Committee also reaffirmed its expectation that the current exceptionally low target range for the federal funds rate of 0 to 1/4 percent will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longerrun goal, and longer-term inflation expectations continue to be well anchored. The Committee continues to anticipate that it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal. - January 2014 FOMC Statement EFFECTIVE FEDERAL FUNDS RATE 5% 3% 1% 0% Source: Federal Reserve Board 6

7 the Committee will add to its holdings of agency mortgage-backed securities at a pace of $30 billion per month rather than $35 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $35 billion per month rather than $40 billion per month. - January 2014 FOMC Statement FEDERAL RESERVE BALANCE SHEET Trillions $4 $3 $2 Assets Foreign Currency Swaps Short-Term Lending Federal Agency & Mortgage-Backed Securities Trillions $4 $3 $2 $1 $0 -$1 -$2 -$3 Traditional Portfolio Currency in Circulation Liabilities Reserves Other $1 $0 -$1 -$2 -$3 -$4 -$ Source: Federal Reserve Board 7

8 Strong employment growth over the past two years has helped Colorado to surpass its pre-recession level of employment. PAYROLL EMPLOYMENT GROWTH Index 100 = December 2003, Seasonally Adjusted Dec. 07 Percent Past 10 Past to Change Years Year Current U.S % -0. CO % 1.3% Colorado 105 United States Dec. '03 Dec. '05 Dec. '07 Dec. '09 Dec. '11 Dec. '13 Source: Bureau of Labor Statistics 8

9 U.S. and Colorado employment has increased in most industries over the past year. CHANGE IN PAYROLL EMPLOYMENT, DECEMBER 2013 Seasonally Adjusted Percent Change Year-over-Year Construction Professional & Business Services Private Educational Services State Government Health Care & Social Assistance Local Government Natural Resources & Mining Leisure & Hospitality Wholesale Trade Manufacturing Retail Trade Other Services Information Financial Activities Transportation & Utilities Federal Government % -2.9% 1.0% 6.0% 4.7% 3.7% 3.5% 2.7% 2.5% 2.0% 1.5% 1.0% 1.0% 0.9% 0. Colorado United States Worst Performing Industries Top Performing Industries Source: Bureau of Labor Statistics 9

10 Despite recent increases, employment remains below pre-recession levels in about half of Colorado industries. CHANGE IN PAYROLL EMPLOYMENT, DECEMBER 2013 Seasonally Adjusted Percent Change from Dec Private Educational Services Health Care & Social Assistance State Government Natural Resources & Mining Professional & Business Services Leisure & Hospitality Local Government Other Services Federal Government Retail Trade Wholesale Trade Manufacturing Financial Activities Transportation & Utilities Information Construction -26.3% -3.1% -3.1% -8.5% -8.7% -9.7% -12.1% 7.7% % % 16.7% 16.5% Colorado United States Worst Performing Industries Top Performing Industries Source: Bureau of Labor Statistics 10

11 Residential construction activity has picked up over the last few years, but remains well below pre-recession levels. VALUE OF RESIDENTIAL CONSTRUCTION Index 100 = December 2003, Seasonally Adjusted Three-Month Moving Average Percent Change Year-to-Date Past Year United States 26. Colorado 31.7% Colorado United States Dec. '03 Dec. '05 Dec. '07 Dec. '09 Dec. '11 Dec. '13 Source: McGraw Hill/F.W. Dodge 11

12 Residential permitting activity is also increasing, particularly for multi-family housing RESIDENTIAL PERMITS BY COUNTY Number Issued Year-to-Date through December 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Adams Arapahoe Boulder Denver Douglas El Paso Grand Jefferson Larimer La Plata Montrose Mesa Pueblo Weld Percent Change Year-to-Date Single Family Multi-Family Peak* Past Year Peak to Current* United States 20.1% -54.9% Colorado 22.9% -36.5% Source: Census Bureau 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 *Peak year-to-date over the past 10 years. 12

13 Home prices are rising and have surpassed pre-recession levels in Colorado. FHFA PURCHASE-ONLY HOME PRICE INDEX Index 100 = 2003:Q3, Seasonally Adjusted 140 Percent Change Year-Over- Year 2007:Q1 to Current United States % Colorado 10.3% 9.0% Colorado United States '03Q3 '05Q3 '07Q3 '09Q3 '11Q3 '13Q3 Source: Federal Housing Finance Agency 13

14 For additional information on the regional economy: