The State of the Economy & Economic
Outlook
Kenneth A. Kriz
University Distinguished Professor of Public
Administration
Outline
Geographies
– National
– Regional
– Local
Sectors/Markets
– Manufacturing/Output
– Labor
– Retail
– Household
Overall Indices/Measures
NATIONAL ECONOMY
Bottom Line: National Economy
We have been in a relatively weak expansion since 2008-09
– Slowdowns in 2013-14 and 2016
Growth since 2016 at or near the 20-year trend growth rate
There is some evidence of a slowdown lately, especially in
manufacturing
Labor market, retail sales, and income growth have been
good, but showing signs of weakness
Aggregate measures showing signs of slowing but small
probability of imminent recession
National Output
National Real GDP by Decade
Decade Average Real GDP Growth
1950s 4.2%
1960s 4.5%
1970s 3.2%
1980s 3.1%
1990s 3.2%
2000s 1.9%
2010s (to 2018) 2.3%
Labor Market – Unemployment Rate
Labor Market – Nonfarm Payrolls
Labor Market – Trending Nonfarm
Payrolls
Average Hourly Earnings: Private Sector
Retail Sales
Per Capita Personal Income
Indices/Measures – Chicago Fed National
Activity Index
Indices/Measures – Conference Board
Leading/Coincident Indicators
Hamilton/Chauvret (Econbrowser)
Recession Index
Survey of Professional Forecasters
Quarter or Year/Measure Real GDP Growth Unemployment Rate Nonfarm Payrolls
Q4 2019 2.00% 3.60% 148,100
Q1 2020 1.95% 3.63% 137,600
Q2 2020 1.98% 3.60% 145,800
Q3 2020 1.98% 3.69% 108,300
Annual 2020 1.94% 3.62% 141,200
Annual 2021 2.03% 3.85%
Annual 2022 2.09% 4.00%
Common Concerns in Forecasts
Trade/World Tensions
Manufacturing Sector
Policy Uncertainty
Rising Debt Levels (mainly public)
Monetary Policy Limits
REGIONAL ECONOMY
Bottom Line: Regional Economy
Similar story to national picture, trend output growth with
some concern in near term
Declining unemployment rate, increasing payroll
employment and earnings point to strong labor market
Strong gains in personal income since 2016 but also near-
term concerns
More volatility in the Iowa economy, which is also growing
more slowly
Indices point to moderate growth in the next year or so
Regional Output
Regional Unemployment Rate
Regional Payroll Employment
Regional Average Hourly Earnings
Regional Personal Income
Philadelphia Fed Coincident and Leading
Indices, September 2019
Index/State Illinois Iowa Missouri
Coincident (12 month change) 2.54% 1.71% 1.74%
Leading (Predicted 6-month change in Coincident Index) 1.32% 0.58% 1.14%
LOCAL ECONOMY
Bottom Line: Local Economy
Output recession in 2013-2016 looks to be lessening
Output and employment growth has been centered around
Business and Professional Services, FIRE (output only), and
Construction
Labor markets show similar trends to the regional economy
Personal income growth has been solid, but recent trends in
average hourly earnings are a source of concern
The structure of the local economy is a source of risk in the
medium-to-long-term
Local Output
MSA Output Growth by Sector Since 2010
Construction 1.48%
Manufacturing 0.32%
Wholesale trade -5.37%
Retail trade 0.05%
Transportation and warehousing (since 2013) -0.36%
Information -6.09%
Finance, insurance, real estate, rental, and leasing 1.66%
Professional and business services (to 2016) 2.49%
Educational services, health care, and social assistance (to 2016) 0.98%
Arts, entertainment, recreation, accommodation, and food services 0.66%
Government and government enterprises -1.25%
Local Unemployment Rate
Local Payroll Employment
MSA Payroll Employment Growth by
Industry Since 2010
Mining, Logging, and Construction 3.48%
Manufacturing 0.99%
Trade, Transportation, and Utilities -0.15%
Information -5.25%
Financial Activities -1.30%
Professional and Business Services 1.92%
Education and Health Services 0.17%
Leisure and Hospitality 0.66%
Other Services 0.00%
Government -0.99%
MSA Average Hourly Earnings
MSA Personal Income
Employment & Output Projections through 2028 for
“Export”/”Import” Industries
"Export" Industries
Projected Output Projected
Sub-Sector Location Quotient Growth Employment Growth
NAICS 331 Primary metal manufacturing 7.2 1.6% -1.3%
NAICS 562 Waste management and remediation services 2.82 2.2% 0.5%
NAICS 311 Food manufacturing 2.42 1.8% 0.0%
NAICS 484 Truck transportation 1.75 2.3% 0.4%
NAICS 221 Utilities 1.71 1.2% -0.3%
NAICS 332 Fabricated metal product manufacturing 1.57 1.4% -0.3%
NAICS 423 Merchant wholesalers, durable goods 1.36 2.7% -0.2%
NAICS 811 Repair and maintenance 1.22 1.2% 0.3%
"Import" Industries
Projected Output Projected
Sub-Sector
Location Quotient Growth Employment Growth
NAICS 236 Construction of buildings 0.78 1.0% 1.1%
NAICS 424 Merchant wholesalers, nondurable goods 0.78 2.7% -0.2%
NAICS 624 Social assistance 0.64 2.7% 2.0%
NAICS 486 Pipeline transportation 0.62 1.8% 0.2%
NAICS 321 Wood product manufacturing 0.58 1.2% -0.5%
NAICS 511 Publishing industries, except internet 0.53 3.9% 0.1%
NAICS 531 Real estate 0.44 2.4% 0.5%
NAICS 523 Securities, commodity contracts, investments 0.32 1.7% 0.4%
NAICS 512 Motion picture and sound recording industries 0.31 0.4% 0.5%
NAICS 314 Textile product mills 0.3 1.5% -1.9%
ADDITIONAL SLIDES
Labor Market – Private Payrolls
