Global Interdependence Center
Oregon U.S. Economic Outlook January 15, 2013
Mark McMullen Chief Economist State of Oregon
The Near Term Looks Soft‌ (New Orders, % change year ago, 3-month moving avg.) 60% 40% 20% 0% -20%
-40% -60%
Recession Metals Machinery Transportation Equipment (Right Axis)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20% 10% 0% -10% -20% -30% -40%
Recession Computers & Electronics Furniture & Appliances
2000 2001 22002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
75% 60% 45% 30% 15% 0% -15% -30% -45% -60% -75%
…but Businesses Are Profitable… Corporate Profits, % share of GDP 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 1959Q3
1964Q3
1969Q3
1974Q3
1979Q3
1984Q3
1989Q3
1994Q3
1999Q3
2004Q3
2009Q3 3
…and Sitting on Cash Trillions
Nonfinancial Corporate Businesses, Real Liquid Assets $1.8 $1.6 $1.4 $1.2 $1.0 $0.8 $0.6 $0.4 $0.2 $0.0 1960Q1
1970Q1
1980Q1
1990Q1
2000Q1
2010Q1
4
Household’s Gaining Wealth…
5
‌ And Lowering Liabilities
6
The 2013 Policy Drag THE THREAT All figures are calendar year
THE OUTCOME
$ billions
% of GDP
$ billions
% of GDP
Bush tax cut expiry
197
1.2
35
0.2
Payroll tax cut expiry
113
0.7
113
0.7
Sequester spending cuts
72
0.4
postponed two months
Emergency UI benefits expiry
30
0.2
extended one year
Depreciation incentives expiry
66
0.4
extended one year
AMT Fix not extended
114
0.7
extended permanent
Doc Fix not extended
14
0.1
extended one year
606
3.7
148
0.9
Affordable Care Act taxes
24
0.1
24
0.1
Other spending cuts
34
0.2
34
0.2
664
4.1
206
1.3
Total Fiscal Cliff
Total Fiscal Tightening
Source: IHS calculations based on CBO and OMB data 7
Jobless Claims in Check Initial Unemployment Claims per 1,000 Labor Force (SA) Recession
Oregon
Oregon, Current Level
United States
US, Current Level
8
7
6
5
4
3
2
1
0 Jan-87
Jan-90
Jan-93
Jan-96
Jan-99
Jan-02
Jan-05
Jan-08
Jan-11
8
The Handoff: Manufacturing to Housing Economic Drivers Recession
Residential Investment (Y/Y, Left)
ISM Manufacturing (Right)
30%
68
20%
62
10%
56
0%
50
-10%
44
-20%
38
-30%
32 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
9
Impressive New Construction Growth Rates‌ Total Housing Permits (SA, Y/Y) Recession
Oregon Total
U.S. Total
80%
60%
40%
20%
0%
-20%
-40%
-60%
-80% Jan-96
Jan-98
Jan-00
Jan-02
Jan-04
Jan-06
Jan-08
Jan-10
Jan-12
10
‌ But From a Low, Low Base Oregon Housing Permits (Monthly, SA 3 MMA) 3,000 Total Permits Single Family 2,500
2,000
1,500
1,000
500
0 Jan-90
Jan-94
Jan-98
Jan-02
Jan-06
Jan-10
11
Bottom Line: Eventually Some Acceleration
12
Long Run Growth will be Relatively Weak‌ Oregon Nonfarm Employment Growth (Y/Y) Recession
10%
Employment
Expansion Average
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8% Jan-60
Jan-65
Jan-70
Jan-75
Jan-80
Jan-85
Jan-90
Jan-95
Jan-00
Jan-05
Jan-10
Jan-15
Jan-20
13
…as Productive Older Workers Retire… Oregon Working Age Population (25-64) PPT Change (Right)
Share of Population (Left)
55%
0.5%
54% 53%
0.3%
52% 51%
0.1%
50% 49%
-0.1%
48% 47%
-0.3%
46% 45%
-0.5% 1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
…and Households Repair their Balance Sheets Savings Rate (Percent of Disposable Income) 14
12
10
8
6
4
2
0 1960
1970
1980
1990
2000
2010
2020
15
Consumer Spending Will No Longer Drive Growth 50%
Real spending and output, % change by decade 45% Gross Domestic Product Consumer Spending 40%
35%
30%
25% 1950's
1960's
1970's
1980's
1990's
2000's
2010 to 2020 16
For More Information Standard Contact: 155 Cottage Street NE Salem, OR 97301 (503) 378-3405 oea.info@state.or.us www.oregon.gov/das/oea Social Media: oregoneconomicanalysis.wordpress.com @OR_EconAnalysis
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