Elliott D. Pollack & Company Schizophrenia and Economists Paramount Pool and Spa Systems October 6th, 2014 Presented By: Jim Rounds Sr. VP, Elliott D.

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Presentation transcript:

Elliott D. Pollack & Company Schizophrenia and Economists Paramount Pool and Spa Systems October 6th, 2014 Presented By: Jim Rounds Sr. VP, Elliott D. Pollack & Company

Elliott D. Pollack & Company Paranoid about the economy?

Elliott D. Pollack & Company Past “Headlines”

Elliott D. Pollack & Company What The I Thought It Was Getting Better? 2010 By: Jim Rounds, Senior Vice President Elliott D. Pollack & Company

“The Not So Attractive Recovery” (But it has a great personality!) 2011 By: Jim Rounds, Senior Vice President Elliott D. Pollack & Company

2012 By: Jim Rounds, Senior Vice President Elliott D. Pollack & Company You Heard It Here First: Less Dreadful Times Ahead!

Elliott D. Pollack & Company 2013 By: Jim Rounds, Senior Vice President Elliott D. Pollack & Company Firming Up The Recovery…

Elliott D. Pollack & Company How to Avoid the…

Elliott D. Pollack & Company Is there a story? Does the data make sense? If not, is there an explanation for why it is off? If not, then worry.

Elliott D. Pollack & Company Let’s start with the U.S.

Elliott D. Pollack & Company United States Real Gross Domestic Product* Annual Growth ** Source: U.S. Bureau of Economic Analysis & Blue Chip Economic Indicators * Based on chained 2009 dollars. ** 2014 and 2015 are a forecast from the Blue Chip Economic Indicators, September Recession Periods 3.8% = 40-year avg during expansion 3.2% = 20-year avg during expansion Underlying = 2.2% Act: -2.0, 4.6, 2.8, 3.3% But, next year hit “average.”

Elliott D. Pollack & Company U.S. Leading Indicators 1971 – 2014* Source: The Conference Board Recession Periods *Data through August 2014

Elliott D. Pollack & Company 10 Components of U.S. Leading Indicators – August 2014 Interest rate spread Manuf. new order index Leading credit index (inverted) Consumer expectations Manuf. new orders – consumer goods Manuf. hours Manuf. new orders – capital goods Stock Prices Claims for unemployment (inverted) Building permits + -

Elliott D. Pollack & Company U.S. Consumer Debt * Source: Federal Reserve Overall, borrowing remains more than $1 trillion below its 2008 peak. (Trillions) Recession Periods Debt down from peaks but level still high with no adjustment…

Elliott D. Pollack & Company Financial Obligation Ratio** 1980 – 2014 * Source: Federal Reserve *Data through first quarter 2014 **Ratio of mortgage and consumer debt (including auto, rent and tax payments) to disposable income. Recession Periods Consumers have less “relative” debt compared to income…

Elliott D. Pollack & Company S&P * Source: Standard & Poor's (S&P); Moody's Analytics (ECCA) Converted * Data through July 31,2014 Recession Periods Risk? Bubble?

Elliott D. Pollack & Company U.S. Household Net Worth (Billions of Dollars, NSA) * Source: Board of Governors of the Federal Reserve System *Data through first quarter 2014 Recession Periods But, people are focusing policy discussions on narrowing the “gap.”

Elliott D. Pollack & Company U.S. Average Household Income by Each Fifth Percentile & Top 5% Source: U.S. Census Bureau Every group has been somewhat flat since downturn and “gap” has been growing for a while.

Elliott D. Pollack & Company U.S. Average Household Income by Each Fifth Percentile & Top 5% Source: U.S. Census Bureau This is being ignored...

Elliott D. Pollack & Company Grass always greener on other side, or did neighbor steal your grass?

Elliott D. Pollack & Company Consumer Confidence is High …and so is Colorado…munchies!

Elliott D. Pollack & Company Consumer Confidence 1978 – 2014* Source: The Conference Board *Data through August Recession Periods Disenfranchised Weary Worried P.O.’d So people will be spending more…

Elliott D. Pollack & Company Capacity Issues?

Elliott D. Pollack & Company Capacity Utilization Rate 1970 – 2014* Source: The Federal Reserve Bank of St. Louis *Data through June Recession Periods Front end of accelerated investment; 10% in Q2

Elliott D. Pollack & Company Demographics Still Matter

Elliott D. Pollack & Company U.S. Birth Index Source: U.S. Census Bureau; Harvard Joint Center for Housing Studies Baby Boomers M

Elliott D. Pollack & Company Consumer Life Cycle Source: U.S. Census Bureau; Dent Research; EDPCo Age

Elliott D. Pollack & Company Starter Homes Cycle year lag Source: U.S. Census Bureau ?

Elliott D. Pollack & Company Trade Up Home Cycle year lag Source: U.S. Census Bureau ?

Elliott D. Pollack & Company Vacation Home Cycle 50 year lag Source: U.S. Census Bureau ?

Elliott D. Pollack & Company Retirement Home Cycle 65 year lag Source: U.S. Census Bureau ?

Elliott D. Pollack & Company Federal Government No, not an accident…

Elliott D. Pollack & Company Federal Government Expenditures Percent Change Year Ago * Source: U.S. Bureau of Economic Analysis *Data through first quarter Recession Periods

Elliott D. Pollack & Company State and Local Government Expenditures Percent Change Year Ago * Source: U.S. Bureau of Economic Analysis *Data through first quarter Recession Periods

Elliott D. Pollack & Company Summary U.S.: Economic conditions improving, hard to tell when things will better slope up (but soon), demographics not fully in our favor but manageable.

Elliott D. Pollack & Company Real GDP2.5%1.6%2.3%2.2%2.1%3.0% Consumer Price Index 1.6%3.2%2.1%1.5%1.9%2.1% Industrial Production 5.7%3.3%3.8%2.9%4.0%3.6% Disposable Personal Income 1.0%2.5%3.0%-0.2%2.6%2.8% Corporate Profits 25.0%4.0%11.3%4.2%0.3%6.4% Unemployment Rate 9.6%9.0%8.1%7.4%6.2%5.7% Housing Starts U.S. Blue Chip Economic Indicators Forecasts as of September 2014 Year-over-year % change Total Units Annual Average Forecasts

Elliott D. Pollack & Company Population

Elliott D. Pollack & Company Population Growth 2013 Source: U.S. Census Bureau Growing Declining Top Alaska Hawaii Part growth, part math related to base size…

Elliott D. Pollack & Company Population Growth Annual State Ranking Source: U.S. Census Bureau Arizona % change3.3% 2.3%1.8%1.0%1.1%0.9%1.3%1.2% California % change0.7%0.5%0.6%1.0% 1.1%0.9% Florida % change2.5%1.8%1.1%0.9%0.7%1.0%1.3%1.2% New York % change-0.2%-0.1%0.1%0.4%0.5%0.4%0.5%0.4% Texas % change1.7%2.6%2.0% 1.8%1.6% 1.5%

Elliott D. Pollack & Company Population Flows Annual Growth Rate Source: U.S. Census Bureau Recession Periods

Elliott D. Pollack & Company Distribution of Movers in U.S. by Type* Source: U.S. Census Bureau *Excludes movers in the same county Movers (in millions)

Elliott D. Pollack & Company Employment

Elliott D. Pollack & Company Alaska 7 10 Job Growth 2006 Source: US BLS Jobs growing Jobs declining Top 10 Hawaii

Elliott D. Pollack & Company Hawaii 1 Alaska Jobs growing Jobs declining Top Job Growth 2010 Source: US BLS

Elliott D. Pollack & Company Alaska Jobs growing Jobs declining Top 10 Hawaii 9 25 Job Growth 2013 Source: US BLS 8

Elliott D. Pollack & Company Alaska Jobs growing Jobs declining Top 10 Hawaii 10 Job Growth 2014 YTD August 2014 vs YTD August 2013 Source: US BLS

Elliott D. Pollack & Company Employment Growth Annual State Ranking * Source: U.S. Bureau of Labor Statistics * Arizona % change5.4%5.0%-2.1%-7.2%-1.9%1.1%2.1% 1.9% California % change1.8%1.7%-1.3%-6.0%0.9%1.0%2.4%3.0%2.3% Florida % change2.6%0.2%-3.5%-6.2%-1.0%1.1%2.0%2.5%3.0% New York % change1.0%1.3%0.7%-2.7%0.0%1.4% 1.3% Texas % change3.3% 2.0%-2.8%0.3%2.2%2.9% 3.2% *YTD August 2014 vs. YTD August 2013

Elliott D. Pollack & Company U.S. Employment Losses – Recent Recessions Duration in Months Source: Bureau of Labor Statistics 2008

Elliott D. Pollack & Company How hard did you get hit?

Elliott D. Pollack & Company Percent of Jobs Lost By Select States Source: Bureau of Labor Statistics

Elliott D. Pollack & Company Employment Losses – Most Recent Recession Duration in Months Source: Bureau of Labor Statistics

Elliott D. Pollack & Company Employment Recovery Duration in Months Source: Bureau of Labor Statistics Pre-Recession Peak Employment = 100 AZ AZ & FL Have Yet to Regain All Lost Jobs

Elliott D. Pollack & Company Housing?

Elliott D. Pollack & Company Long-Term Home Prices in the U.S. Adjusted for Inflation * Source: Figure 2.1 in Robert J. Shiller, Irrational Exuberance, 2nd. Edition, Princeton University Press,2005, 2009, Broadway Books 2006, also Subprime Solution, 2008, as updated by author *Data through first quarter Recession Periods Housing bubbles have to be evaluated by individual market…

Elliott D. Pollack & Company Tougher Qualifications (1) More paperwork, (2) Lower debt to income ratios, (3) Longer lockout period after a foreclosure, (4) Higher down payment requirements, (5) Others…

Elliott D. Pollack & Company Net Percentage of Large U.S. Banks Reporting Eased Standards versus Tougher Standards on Residential Mortgage Prime Loans 2007 Q1 – 2014 Q2 Source: Federal Reserve Recession Periods Still Flat…

Elliott D. Pollack & Company Year U.S. Foreclosures % chg year ago , ,5849.9% ,9308.0% ,8726.2% , % , % , % 20091,009,2843.7% 20101,145, % , % , % , % U.S. Annual Foreclosures 2002–2013 Source: CoreLogic

Elliott D. Pollack & Company U.S. Foreclosure Lag 2002–2021 Source: CoreLogic Recession Periods

Elliott D. Pollack & Company Negative Equity Share 2010–2014 Source: CoreLogic

Elliott D. Pollack & Company Pent-up Demand? Millennials?

Elliott D. Pollack & Company Is it a social shift or just the business cycle?

Elliott D. Pollack & Company Homeownership Rates * Source: U.S. Census Bureau Recession Periods *Data through second quarter 2014 Upward potential: Rates will get back to normal…

Elliott D. Pollack & Company Percent of Year Olds Living With Parents U.S.: 1983 – 2013 Source: US Census Bureau Recession Periods year olds represent 23% of total population. (73.7 million persons) Upward potential: Parents are currently going insane…

Elliott D. Pollack & Company Millennials – Economic or Social? year olds in 2012 had the lowest homeownership rate of any similarly aged group before them. Five years prior, this exact same group (at years old) had the highest homeownership rate than any group before them.

Elliott D. Pollack & Company Total Residential Housing Building Permits Source: U.S. Census Bureau Recession Periods Room to recover…

Elliott D. Pollack & Company Single Family Housing Permits Source: U.S. Census Bureau Recession Periods

Elliott D. Pollack & Company Single Family Housing Permits Annual Growth Rate Source: U.S. Census Bureau Recession Periods 50%/100%

Elliott D. Pollack & Company Income by State

Elliott D. Pollack & Company Per Capita Personal Income Source: Bureau of Economic Analysis Recession Periods

Elliott D. Pollack & Company State Per Capita Personal Income As a Percent of U.S Source: Bureau of Economic Analysis Recession Periods

Elliott D. Pollack & Company Don’t lose the smile just yet… From Pkdata Special report 2014

Elliott D. Pollack & Company Economy is improving. Businesses and consumers will be spending more. Demographics a moderate constraint. Millennials are not the same from state to state. “Getting back to normal” more than offsets demographics.

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