Economic Highlights: Growth & Profits Don Rissmiller October 10, 2013 Strategas Research Partners 212-‐906-‐0134 drissmiller@strategasrp.com
Where Are We In the Business Cycle? U.S. Real Gross Domestic Product % Change - Year to Year
SAAR, Bil.Chn.2009$
10.0
10.0
7.5
7.5
5.0
5.0
2.5
2.5
0.0
0.0
-2.5
-2.5
-5.0
-5.0 60 65 70 75 80 85 Source: Bureau of Economic Analysis
90
95
00
05
10
Where Are We In the Business Cycle? U.S. Real Gross Domestic Product % Change - Year to Year
SAAR, Bil.Chn.2009$
10.0
10.0
7.5
7.5
5.0
5.0
2.5
2.5
0.0
0.0
-2.5
-2.5
-5.0
-5.0 60 65 70 75 80 85 Source: Bureau of Economic Analysis
90
95
00
05
10
Even in Bad Times, It’s Easy To Get a “Bounce” Real Gross Domestic Product % Change - Year to Year
Bil.Chn.2009$
15
15
1930s 10
10
5
5
0
0
-5
-5
-10
-10
-15
-15 30 31 32 33 34 Source: Bureau of Economic Analysis
35
36
37
38
39
Pent-‐Up Demand Is Powerful 3 U.S. Areas To Watch: 1) Capex 2) Housing 3) State & Local Govt
Pent-‐Up Demand Is Powerful Mfrs' Shipments: Nondefense Capital Goods ex Aircraft % Change - Year to Year
SA, Mil.$
15.0
15.0
7.5
7.5
0.0
0.0
-7.5
-7.5
-15.0
-15.0
-22.5
-22.5 04 05 06 Source: Census Bureau
07
08
09
10
11
12
13
Pent-‐Up Demand Is Powerful Mfrs' Shipments: Nondefense Capital Goods ex Aircraft % Change - Year to Year
SA, Mil.$
All Employees: Total Nonfarm
% Change - Year to Year
SA, Thous
15.0
4
7.5
2
0.0
0
-7.5
-2
-15.0
-4
-22.5
-6 04 05 06 07 08 09 10 Sources: Census Bureau, Bureau of Labor Statistics
11
12
13
Household FormaQon Is Key Total Number of Households, Break-adjusted % Change - Year to Year
Thous
2.4
2.4
2.0
2.0
1.6
1.6
1.2
1.2
0.8
0.8
0.4
0.4
0.0
0.0 90 95 00 Source: Census Bureau/Haver Analytics
05
10
Economic Symmetry
2007-2009 Deep Recession 2013-14 Recovery (We get housing & capex back)
2009-2010 Moderate Recovery (Missing housing)
2011 Muddle Through (Deleveraging)
2012 Muddle Through (Deleveraging)
Late-2012, early 2013 Slowdown (Fiscal Cliff / Sequester Uncertainty)
But U.S. InflaQon Is Not a Problem, With Wage Growth Restrained CPI-U: All Items
% Change - Year to Year
SA, 1982-84=100
Nonfarm Business Sector: Compensation Per Hour % Change - Year to Year
SA, 2009=100
16
16
12
12
CompensaMon
8
8
4
4
0
0
-4
-4 60 65 70 75 80 Source: Bureau of Labor Statistics
85
90
95
00
05
10
So – Even AXer the Sept Punt – Why Is the Fed Talking About Tapering (Ever)? Civilian Unemployment Rate: 16 yr + SA, % 12
12
10
10
8
8
6
6
4
4
2
2 60 65 70 75 80 Source: Bureau of Labor Statistics
85
90
95
00
05
10
Labor Share At a Low U.S. Corporate Compensation % Corporate GDP
66
66
64
64
62
62
60
60
58
58
56
56 50 55 60 65 Source: Haver Analytics
70
75
80
85
90
95
00
05
10
Future ProducQvity Gains Will Be Important Nonfarm Business Sector: Real Output Per Hour of All Persons % Change - Year to Year
SA, 2009=100
6
6
4
4
2
2
0
0
-2
-2 60 65 70 75 80 Source: Bureau of Labor Statistics
85
90
95
00
05
10