1. Kurt J. Rankin Asset & Liability Management May 21, 2019
Economic Outlook
Economic Outlook
Kurt J. Rankin
Asset & Liability Management
May 21, 2019

2. Surpise Q1 Bodes Well for 2019 Business investment & consumption provide solid economic fundamentals
Real GDP, (Annualized % change)
Source: Bureau of Economic Analysis; The PNC Financial Services Group

3. Full Employment is Pushing New Limits
Unemployment Rate reflects a healthy economic environment
Unemployment Rate, (%, SA)
Source: Bureau of Labor Statistics

4. “Full Employment” Is A Relative Term
Labor force participation reflects mid-70s levels; early-80s trend conditions
Labor Force Participation Rate: Total, (%, SA)
4% (=67% - 63%) of Resident Population 16+ (=257 mil.) = 10 mil.
Assume retirement… = 5 mil.
Assume half have jobs, half not… Unemployment Rate = 5.1%
Source: Bureau of Labor Statistics

5. Demographic Changes Are Afoot
New demand for labor means ‘prime age’ workers will have to stay on track
Labor Force Participation Rate, (%, SA)
Source: Bureau of Labor Statistics

6. Consumer Spending Potential Remains Strong Household debt has room to responsibly rise and spur job creation
% of disposable income, SA
Source: Federal Reserve; Bureau of Economic Analysis

7. Corporate Profits re-Setting the Bar Profit growth refuses to bow to historic norms
% change year-ago
Source: U.S. Federal Reserve; Bureau of Economic Analysis

8. Yield Curve Implications
Highly contrived monetary policy conditions belie this Recession Predictor’s value
Fed Funds Rate, (%, NSA)
Source: U.S. Federal Reserve

9. ‘Trade War’ Implications Consumer prices – and thus recession potential – inextricably tied to import costs
% change year ago
Source: Bureau of Economic Analysis

10. The PNC Financial Services Group, Inc.
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