Economic Forecast

18 Pages·2013·0.65 MB·English

February 17, 2013
Economic Forecast
OUTPUT AND EMPLOYMENT WHAT THE TABLE SHOWS:
 Pennsylvania’s GDP forecast is derived
from the national forecast by allocating
2007 2008 2009 2010 2011 2012 2013 2014
United States output to each of the 50 states based on
Real GDP
$ billions (fourth quarter) $13,326 $12,884 $12,873 $13,181 $13,441 $13,648 $14,090 $14,654 employment shares. So, forecast misses
% change over the four quarters 2.2% -3.3% -0.1% 2.4% 2.0% 1.5% 3.2% 4.0%
reflect surprises in the aggregate forecast as
Nonfarm employment
Job count (fourth quarter) 137,943,000 135,153,333 129,526,667 130,283,667 132,286,667 134,455,000 136,189,659 138,513,010 well as unexpected shifts in a state’s GDP
% change over the four quarters 0.9% -2.0% -4.2% 0.6% 1.5% 1.6% 1.3% 1.7%
share.
Average monthly change 99,750 -232,472 -468,889 63,083 166,917 180,694 180,694 180,694
 Pennsylvania’s recovery has been matching
Pennsylvania
Real GDP the pace of the national economy.
$ billions (fourth quarter) $498 $491 $485 $497 $503 $510 $523 $542
% change over the four quarters 1.2% -1.3% -1.3% 2.4% 1.2% 1.5% 2.6% 3.6%
Nonfarm employment KEY MESSAGES:
Job count (fourth quarter) 5,812,433 5,760,000 5,580,167 5,654,467 5,707,000 5,752,433 5,811,221 5,889,959
 Pennsylvania’s economy is on the mend and
% change over the four quarters 0.6% -0.9% -3.1% 1.3% 0.9% 0.8% 1.0% 1.4%
Average monthly change 3,033 -4,369 -14,986 6,192 4,378 3,786 4,899 6,562
likely will continue to expand at a moderate
pace in 2013.
Note: GDP figures are based on quarterly values that are
interpolated from annual GDP estimates using quarterly
employment changes. Unbolded figures are reported actual
values and bold figures represent forecasts.
Sources: US Department of Commerce;
US Department of Labor.

Regional Perspectives: Pennsylvania Economic Outlook Commercial Banking 2
February 17, 2013
The Economy’s Structure
PERCENT OF TOTAL GDP DERIVED FROM SELECTED INDUSTRIES WHAT THE CHART SHOWS:
 The figure compares the relative importance
14 of selected industries to the state’s economy
12 US industry mix with the national footprint of each industry
Pennsylvania industry mix (state and national figures reflect the value
10
added of each industry as a percent of
8
aggregate state or US nominal GDP,
6
respectively).
4  Health and the services industries have a
larger footprint in the state, compared with
2
the national economy.
0
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February 17, 2013
Bankruptcies
RATIO OF BANKRUPTCY FILINGS TO THE 2007 Q4 NUMBER WHAT THE CHART SHOWS:
 The ratio of bankruptcy filing by businesses
and persons to filings in 2007 Q4.
5 5
 Bankruptcy filings are back down to normal
levels.
Business bankruptcy filings
4 Nonbusiness bankruptcy filings 4
KEY MESSAGES:
 Indicators of financial stress are a useful
All US bankruptcy filings (shaded area)
3 3 coincident indication of economic distress.
 The damage from the housing recession
seems largely to have passed.
2 2
Source: Administrative Office of the U.S. Courts; Updated
through December 2012.
1 1
0 0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

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February 17, 2013
Oil & Gas Activity
NUMBER OF DRILLING RIGS ON LAND, INLAND WATERS, AND OFFSHORE WHAT THE CHART SHOWS:
 The illustration tracks the Smith rig count,
including activity on land, in inland waters,
150 150
Quarterly and offshore.
Weekly
 Drilling activity has surged in response to
125 125
discoveries of gas shale and this is spurring
the state’s economic recovery.
100 100
KEY MESSAGES:
 Pennsylvania is on the front lines of new
75 75
energy developments and this should help to
move the state’s economic performance to
50 50 the front pages in coming years.
Source: Smith Rig Count. Updated through 2012 Q4
(quarterly) and February 8, 2013 (weekly).
25 25
0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

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February 17, 2013
FRB Philadelphia Survey
REAL GDP (% CHANGE 12 MONTHS EARLIER) DIFFUSION INDEXES (0 = NO CHANGE) WHAT THE CHART SHOWS:
 The Dallas Federal Reserve Bank survey of local
businesses has recovered from last summer’s lull,
8 Pennsylvania real GDP (left scale) 75 and that is a positive omen for the economy’s future.
Philly survey of current conditions (right scale)  The index readings represent the net difference in
Philly survey of future expectations (right scale) the percent expecting improving conditions and
those expecting worsening conditions.
6
 The survey is picking up new strength in recent
50
months. The figure illustrates US real GDP and the
Federal Reserve Bank of Philadelphia’s indexes of
4 business conditions in the Third District.
 The index readings represent the net difference in
25
the percent expecting improving conditions and
those expecting worsening conditions.
2
 The Philly Fed business survey has weakened
recently, like it did last summer amid the US debt
0 ceiling argument and Europe’s financial crisis.
0 The survey seems quite sensitive to business
sentiment shifts and is not necessarily a signal
that activity is contracting.
-25
-2
KEY MESSAGES:
 The survey will call into question optimism about
the recovery if it does not quickly rebound.
-4 -50
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Sources: Federal Reserve Bank of Kansas City; US
Department of Commerce. Updated through December
2012 (surveys) and 2012 Q4 (GDP).

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February 17, 2013
Initial Jobless Claims
RATIO OF INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE TO THE 2007 Q4 LEVEL WHAT THE CHART SHOWS:
 The figure tracks layoffs in Pennsylvania and
the national level of claims.
2.00 2.00
 Weekly layoffs, both the state and national
Pennsylvania
tallies, are illustrated in the figure as a ratio
US (solid area)
1.75 1.75 to the level of layoffs in the fourth quarter of
2007, prior to the recession.
 Layoffs in Pennsylvania have returned to
1.50 1.50 pre-recession levels.

KEY MESSAGES:
1.25 1.25  Weekly jobless claims figures are reported
on a timely basis and so will signal a real-
time shift in economic activity.
1.00 1.00
 The down-drift in jobless claims implies the
underlying economy is continuing to
improve.
0.75 0.75
2007 2008 2009 2010 2011 2012 2013 Source: US Department of Labor. Updated through
February 2, 2013 (state) and February 9, 2013 (US).

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February 17, 2013
Economic Growth
REAL GDP GROWTH (PERCENT CHANGE FROM FOUR QUARTERS EARLIER) WHAT THE CHART SHOWS:
 Real GDP growth in Pennsylvania (the line
in the figure) is superimposed on top of US
9 9
real GDP growth (bars in the figure).
8 8
Pennsylvania
7 7  The state’s economy did not contract as
US
6 6 sharply as the national economy in the
5 5 recession and now is growing at a
4 4 respectable, if slow, pace.
3 3
2 2 KEY MESSAGES:
1 1  The economy is forecast to speed up in
0 0 2013.
-1 -1
Source: US Department of Commerce. Updated through
-2 -2
2012 Q4.
-3 -3
-4 -4
-5 -5
-6 -6
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

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February 17, 2013
Economic Output
REAL GDP LEVEL (RATIO TO 2000 Q4) WHAT THE CHART SHOWS:
 The figure illustrates the evolution of real
GDP of the state and the overall US
1.40 1.40
economy since the fourth quarter of 2000,
1.35 1.35 the peak of the previous business cycle—
that is, at any point in time the lines trace the
1.30 1.30
ratio of real GDP to its level in 2000 Q4.
 The state lagged the nation in the 2000s but
1.25 1.25
its economy did not contract as much in the
1.20 1.20
recession and now is rebounding, like the
US
national economy.
1.15 1.15

1.10 1.10 KEY MESSAGES:
 Pennsylvania’s economy is back on the
1.05 1.05
track it was on before the recession.
Pennsylvania
1.00 1.00
Source: US Department of Commerce. Updated through
2012 Q4.
0.95 0.95
2000200120022003200420052006200720082009201020112012201320142015

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February 17, 2013
Employment Growth
NONFARM PAYROLL EMPLOYMENT (PERCENT CHANGE FROM 12 MONTHS EARLIER) WHAT THE CHART SHOWS:
 Pennsylvania’s employment growth,
4 4 compared with the nation’s.
Pennsylvania  Hiring lost a bit of momentum in the past
3 3
US year but employment is growing.

2 2
KEY MESSAGES:
1 1  Hiring is forecast to strengthen slightly in the
coming year.
0 0
Source: US Department of Labor. Updated through January
2013.
-1 -1
-2 -2
-3 -3
-4 -4
-5 -5
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

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