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U.S. & Alabama Economic Outlook Mark Vitner, Managing Director & Senior Economist November 12, 2013.

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Presentation on theme: "U.S. & Alabama Economic Outlook Mark Vitner, Managing Director & Senior Economist November 12, 2013."— Presentation transcript:

1 U.S. & Alabama Economic Outlook Mark Vitner, Managing Director & Senior Economist November 12, 2013

2 Economic Outlook 2 Key Macroeconomic Trends Uncertainty Unprecedented changes in fiscal and monetary policy have cast a cloud of uncertainty over economic policy. Below Trend Growth Below trend real GDP growth bolsters the case for the new normal. Unconventional Monetary Policy QE has boosted asset prices but not the underlying fundamentals. Global Economy Recent data on the global economy are slightly more positive but remain mixed. Growth is Uneven Energy, technology, higher education & healthcare have been notable bright spots in this otherwise disappointing economic recovery.

3 Economic Outlook 3 U.S. GDP We see economic growth gradually regaining momentum as the housing recovery takes hold and the drag from fiscal belt tightening gradually wanes Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

4 Economic Outlook 44 U.S. GDP The combination of sluggish economic growth and low inflation means that revenue growth is unusually sluggish, which impacts certain parts of the economy differently Source: U.S. Department of Commerce and Wells Fargo Securities, LLC Nominal GDPReal GDP

5 Economic Outlook 5 Output Gap Questions about the output gap are driving the policy debate. The actual trajectory of GDP growth now looks more like a trend then a temporary deviation from long run potential growth. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

6 Economic Outlook 6 Labor Market Dynamics The employment-population rate hasnt improved over the past four years, despite the fall in the unemployment rate, suggesting that many job seekers have simply given up. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

7 Economic Outlook 77 Small Business With revenues growing slowly, small business owners have been reluctant to make significant investments in capital equipment or hire permanent workers. Source: U.S. Department of Labor and Wells Fargo Securities, LLC HiringSmall Business Index

8 Economic Outlook Percent change in real GDP by state ID 0.4 AR 1.3 AL 1.2 ME 0.5 KS 1.4 SD 0.2 OH 2.2 WI 3.5 AZ 2.6 NH 0.5 MT 2.1 MS 2.4 OK 2.1 NV 1.5 IL 1.9 GA 2.1 FL 2.4 CO 2.1 CA 3.5 NE 1.5 MO 2.0 UT 3.4 NM 0.2 WA 3.6 IA 2.4 MI 2.2 LA 1.5 VA 1.1 TX 4.8 PA 1.7 IN 3.3 NC 2.7 MN 3.5 KY 1.4 VT 1.2 TN 3.3 OR 3.9 NY 1.3 WV 3.3 ND 13.4 SC 2.7 WY 3.3 AK 1.1 CT -0.1 DE 0.2 HI 1.6 MA 2.2 MD 2.4 NJ 1.3 RI 1.4 DC 0.7 U.S. = – – – – –1.5

9 Economic Outlook 99 Housing Market Metrics Despite some recent setbacks, we continue to look for a gradual recovery in homebuilding. Apartments are playing a larger role than in previous building cycles. Source: NAR, U.S. Department of Commerce and Wells Fargo Securities, LLC Housing StartsExisting Home Sales

10 Alabama

11 Economic Outlook 11 Alabama Employment Picture Nonfarm employment remains 5.9 percent below its previous peak in Alabama Source: U.S. Department of Labor and Wells Fargo Securities, LLC

12 Economic Outlook 12 Alabama Nonfarm Employment Growth by Industry Source: US Department of Labor and Wells Fargo Securities, LLC

13 Economic Outlook 13 Alabama – Labor Market Employment growth has been modest, however, the unemployment rate continues to fall. Source: U.S. Department of Labor and Wells Fargo Securities, LLC UnemploymentEmployment

14 Economic Outlook Alabama – Labor Market Some of the improvement in the unemployment rate has come from people dropping out of the workforce. Source: U.S. Department of Labor and Wells Fargo Securities, LLC

15 Economic Outlook 15 Alabama– Home Prices & Construction Home prices in Alabama are rising, however it did not experience the rapid rise in prices over the past year seen in many areas of the nation. Source: CoreLogic, U.S. Department of Commerce and Wells Fargo Securities, LLC Housing PermitsHome Prices

16 Economic Outlook 16 Montgomery – Labor Market Montgomerys labor market continues to see improvement, although the metros largest source of employment, the government, continues to shed jobs. Source: U.S. Department of Labor and Wells Fargo Securities, LLC Unemployment Rate Employment

17 Economic Outlook 17 Montgomery – Home Prices & Construction Homebuilding in Montgomery has struggled to gain momentum. Source: CoreLogic, U.S. Department of Commerce and Wells Fargo Securities, LLC Housing PermitsHome Prices

18 Economic Outlook 18 Montgomery – Market Fundamentals Population growth remains tepid, and actually declined over the past year. Source: U.S. Department of Commerce and Wells Fargo Securities, LLC GSPPopulation Growth

19 Economic Outlook 19 China Slowdown Retiree & Tourist Trends Credit Availability & Financial Reform Re-shoring of Manufacturing Deleveraging Monetary/Fiscal Policy Uncertainty Immigration Reform Energy/Commodity Price Swings Issues to Watch

20 Economic Outlook 20 Our Forecast

21 Appendix

22 Economic Outlook 22 Recent Special Commentary Wells Fargo Economics Group Publications To view any of our past research please visit: economics To join any of our research distribution lists please visit: economics A Sampling of Our Recent Special, Regional & Industry Commentary

23 Economic Outlook Wells Fargo Securities, LLC Economics Group 23 John E. Silvia … … Global Head of Research and Economics Diane Schumaker-Krieg ………………… …… Global Head of Research & Economics Chief Economist Mark Vitner, Senior Economist……………....………... Jay H. Bryson, Global Economist …………………....………. Sam Bullard, Senior Nick Bennenbroek, Currency Eugenio J. Alemán, Senior Economist………………. Anika R. Khan, Senior Economist …. Senior Economists Zachary Griffiths, Economic Analyst Sara Silverman, Economic Analyst Mackenzie Miller, Economic Analyst Blaire Zachary, Economic Analyst Economists Azhar Iqbal, Tim Quinlan, Economist Michael A. Brown, Economist ………………… Sarah Watt, Economist ……………………………. Michael T. Wolf, Economist ……………………. Economic Analysts Administrative Assistants Wells Fargo Securities Economics Group publications are produced by Wells Fargo Securities, LLC, a U.S broker-dealer registered with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the Securities Investor Protection Corp. Wells Fargo Securities, LLC, distributes these publications directly and through subsidiaries including, but not limited to, Wells Fargo & Company, Wells Fargo Bank N.A., Wells Fargo Advisors, LLC, Wells Fargo Securities International Limited, Wells Fargo Securities Asia Limited and Wells Fargo Securities (Japan) Co. Limited. Wells Fargo Securities, LLC. (WFS) is registered with the Commodities Futures Trading Commission as a futures commission merchant and is a member in good standing of the National Futures Association. Wells Fargo Bank, N.A. (WFBNA) is registered with the Commodities Futures Trading Commission as a swap dealer and is a member in good standing of the National Futures Association. WFS and WFBNA are generally engaged in the trading of futures and derivative products, any of which may be discussed within this publication. The information and opinions herein are for general information use only. Wells Fargo Securities, LLC does not guarantee their accuracy or completeness, nor does Wells Fargo Securities, LLC assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. Wells Fargo Securities, LLC is a separate legal entity and distinct from affiliated banks and is a wholly owned subsidiary of Wells Fargo & Company © 2013 Wells Fargo Securities, LLC. SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE Important Information for Non-U.S. Recipients For recipients in the EEA, this report is distributed by Wells Fargo Securities International Limited (WFSIL). WFSIL is a U.K. incorporated investment firm authorized and regulated by the Financial Conduct Authority. The content of this report has been approved by WFSIL a regulated person under the Act. WFSIL does not deal with retail clients as defined in the Markets in Financial Instruments Directive The FCA rules made under the Financial Services and Markets Act 2000 for the protection of retail clients will therefore not apply, not will the Financial Services Compensation Scheme be available. This report is not intended for, and should not be relied upon by, retail clients. This document and any other materials accompanying this document (collectively, the Materials) are provided for general informational purposes only. Peg Gavin, Executive Assistant. Cyndi Burris, Senior Administrative Assistant


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