Brown Sugar: Deriving Satisfaction through Data Analysis By: Anirban Basu Sage Policy Group, Inc. August 16 th, 2018 On Behalf of The Association of Union Constructors Summer Summit Disclaimer: Any resemblance between the presentation s title and the speaker is purely coincidental.
Get off of My Cloud
Source: IPSOS IPSOS Global Confidence Index, June 2018 50.4
OECD Business Confidence Index Select Regions/Countries July 2000 - July 2018 104.0 OECD - Total Euro area (19 countries) United States 102.0 100.0 98.0 96.0 94.0 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 The business confidence index (BCI) is based on enterprises assessment of production, orders and stocks, as well as its current position and expectations for the immediate future. Opinions compared to a normal state are collected and the difference between positive and negative answers provides a qualitative index on economic conditions. Source: OECD Note: Data for China for June and July are not available.
Global Monetary Policy Tightening/Easing As of July 2018 The CFR Global Monetary Policy Tracker covers fifty-four large countries mainly those that target inflation in some manner. Tightening policy is indicated in red, loosening in blue. The more a country has raised (lowered) rates, in percentage points, from the most recent trough (peak) in its policy rate, the darker the shade of red (blue). Generally, the policy rate target is the overnight interbank rate, with exceptions indicated. Source: Council on Foreign Relations (CFR), Global Monetary Policy Tracker
Estimated Growth in Output by Select Global Areas 2018 Projected Advanced Economies Euro Area Spain Germany France United Kingdom Italy Japan Australia Canada United States Emerging Market & Developing Economies Sub-Saharan Africa Emerging & Developing Europe Russia Emerging & Developing Asia China India Middle East, North Africa, Afghanistan, & Pakistan Latin America & the Caribbean Mexico Brazil 2018 Proj. Global Output Growth: +3.9% 2017 Growth (Estimate) World: 3.7% Euro Area: 2.4% United States: 2.3% Japan: 1.7% Source: International Monetary Fund: World Economic Outlook Update, July 2018 2.4% 2.2% 1.8% 1.2% 2.2% 2.8% 1.0% 1.4% 2.1% 3.0% 2.9% 1.7% 3.5% 1.6% 2.3% 1.8% 3.4% 4.9% 4.3% 6.5% 6.6% 7.3% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Annual % Change
Start Me Up
140 120 100 Conference Board Consumer Confidence Index 2005 July 2018 80 60 40 20 July 2018 = 127.4 where 1985 = 100 0 2005 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Source: Conference Board
NFIB Index of Small Business Optimism: Good Time to Expand 1986-2018 % of respondents who think the next 3 months will be a good time to for small business to expand 35.0 30.0 25.0 July 2018: 32% 20.0 15.0 10.0 5.0 0.0 Jul-86 Jul-87 Jul-88 Jul-89 Jul-90 Jul-91 Jul-92 Jul-93 Jul-94 Jul-95 Jul-96 Jul-97 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Source: National Federation of Independent Business (NFIB)
Paint It Black Corporate Profits U.S. Corporate Profits After Tax* $ Billions $2,000 $1,600 2018Q1: $1.92 Trillion $1,200 $800 $400 $0 1950Q1 1952Q1 1954Q1 1956Q1 1958Q1 1960Q1 1962Q1 1964Q1 1966Q1 1968Q1 1970Q1 1972Q1 1974Q1 1976Q1 1978Q1 1980Q1 1982Q1 1984Q1 1986Q1 1988Q1 1990Q1 1992Q1 1994Q1 1996Q1 1998Q1 2000Q1 2002Q1 2004Q1 2006Q1 2008Q1 2010Q1 2012Q1 2014Q1 2016Q1 2018Q1 Source: U.S. Bureau of Economic Analysis *With Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj); Seasonally Adjusted Annual Rate
Job Openings (Millions) U.S. Job Openings June 2001 through June 2018 7.0 6.0 5.0 4.0 3.0 June 2018: 6.66M Openings 2.0 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Source: U.S. Bureau of Labor Statistics
Net Change in U.S. Jobs July 2002 through July 2018 600 400 200 Thousands 0-200 -400-600 -800 July 2018: +157K -1000 Jul-02 Nov-02 Mar-03 Jul-03 Nov-03 Mar-04 Jul-04 Nov-04 Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Source: U.S. Bureau of Labor Statistics
National Nonfarm Employment by Industry Sector, July 2017 v. July 2018 Professional and Business Services 518 Education and Health Services 427 Trade, Transportation, and Utilities Manufacturing Construction 308 331 327 Leisure and Hospitality 254 Financial Activities Other Services 89 106 Mining and Logging Government 8 53 All told 2,400K jobs gained Information -21-50 50 150 250 350 450 550 Thousands, SA Source: U.S. Bureau of Labor Statistics
U.S. Labor Force Participation: Men Ages 25-34 2000 2018 94% 93% 92% 91% 90% 89% 89.2% 88% 2000Q2 2000Q4 2001Q2 2001Q4 2002Q2 2002Q4 2003Q2 2003Q4 2004Q2 2004Q4 2005Q2 2005Q4 2006Q2 2006Q4 2007Q2 2007Q4 2008Q2 2008Q4 2009Q2 2009Q4 2010Q2 2010Q4 2011Q2 2011Q4 2012Q2 2012Q4 2013Q2 2013Q4 2014Q2 2014Q4 2015Q2 2015Q4 2016Q2 2016Q4 2017Q2 2017Q4 2018Q2 Source: U.S. Bureau of Labor Statistics, Current Population Survey
State-by-state Growth in Construction Jobs June 2017 v. June 2018 Source: U.S. Bureau of Labor Statistics *Construction, Mining, and Logging are included in one industry. U.S. Year-over-year Net Change June: +283K July: +308K State YOY Change ( 000) State YOY Change ( 000) State YOY Change ( 000) TEXAS 42.9 OHIO 4.7 RHODE ISLAND 1.2 CALIFORNIA 39.8 INDIANA 4.4 SOUTH DAKOTA* 1.1 FLORIDA 33.1 LOUISIANA 3.5 MONTANA 0.9 GEORGIA 16.1 TENNESSEE* 3.5 KANSAS 0.8 ARIZONA 14.8 PENNSYLVANIA 3.4 DELAWARE* 0.7 NEW YORK 14.8 MINNESOTA 3.0 WYOMING 0.7 MICHIGAN 13.2 NEW MEXICO 2.8 NEBRASKA* 0.5 MASSACHUSETTS 11.0 IDAHO 2.7 DISTRICT OF COLUMBIA* 0.2 NORTH CAROLINA 9.4 MARYLAND* 2.4 VERMONT 0.2 COLORADO 8.4 MISSISSIPPI 2.3 ALASKA 0.1 OREGON 7.3 ALABAMA 2.2 HAWAII* 0.0 ILLINOIS 7.2 WEST VIRGINIA 2.2 NORTH DAKOTA -0.1 WASHINGTON 6.8 CONNECTICUT 2.1 OKLAHOMA -0.3 VIRGINIA 6.3 MAINE 1.8 KENTUCKY -0.4 UTAH 5.9 NEW HAMPSHIRE 1.8 MISSOURI -1.9 WISCONSIN 5.8 ARKANSAS 1.4 SOUTH CAROLINA -4.0 NEVADA 5.4 IOWA 1.3 NEW JERSEY -4.8
Employment Growth, U.S. States (SA) June 2017 v. June 2018 Percent Change RANK STATE % RANK STATE % RANK STATE % 1 IDAHO 3.0 18 CALIFORNIA 1.6 31 VIRGINIA 1.1 1 UTAH 3.0 18 OKLAHOMA 1.6 36 ILLINOIS 1.0 3 TEXAS 2.9 20 HAWAII 1.5 36 IOWA 1.0 4 COLORADO 2.8 20 MISSISSIPPI 1.5 36 WISCONSIN 1.0 4 NEVADA 2.8 20 NEW MEXICO 1.5 39 CONNECTICUT 0.9 6 WASHINGTON 2.7 20 RHODE ISLAND 1.5 39 DELAWARE 0.9 7 ARIZONA 2.4 20 SOUTH DAKOTA 1.5 39 LOUISIANA 0.9 8 NORTH CAROLINA 2.3 25 ALABAMA 1.3 39 WEST VIRGINIA 0.9 9 FLORIDA 2.0 25 NEBRASKA 1.3 43 ARKANSAS 0.6 9 OREGON 2.0 25 OHIO 1.3 43 INDIANA 0.6 9 TENNESSEE 2.0 25 PENNSYLVANIA 1.3 43 MONTANA 0.6 12 KANSAS 1.8 29 MICHIGAN 1.2 46 DISTRICT OF COLUMBIA 0.4 12 NEW HAMPSHIRE 1.8 29 MISSOURI 1.2 47 MARYLAND 0.2 14 GEORGIA 1.7 31 MAINE 1.1 47 KENTUCKY 0.2 14 MASSACHUSETTS 1.7 31 MINNESOTA 1.1 49 VERMONT 0.1 14 SOUTH CAROLINA 1.7 31 NEW JERSEY 1.1 50 NORTH DAKOTA -0.1 14 WYOMING 1.7 31 NEW YORK 1.1 51 ALASKA -1.0 Source: U.S. Bureau of Labor Statistics U.S. Year-over-year Percent Change June: +1.7% July: +1.6%
Employment Growth, 25 Largest Metros (NSA) June 2017 v. June 2018 Percent Change Rank MSA % Rank MSA % 1 Orlando-Kissimmee-Sanford, FL 3.6 14 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 1.7 2 Riverside-San Bernardino-Ontario, CA 3.2 3 Houston-The Woodlands-Sugar Land, TX 3.1 15 Washington-Arlington-Alexandria, DC-VA-MD- WV 3 Phoenix-Mesa-Scottsdale, AZ 3.1 16 Baltimore-Columbia-Towson, MD 1.5 5 Dallas-Fort Worth-Arlington, TX 3.0 16 San Antonio-New Braunfels, TX 1.5 5 Seattle-Tacoma-Bellevue, WA 3.0 16 San Diego-Carlsbad, CA 1.5 7 Denver-Aurora-Lakewood, CO 2.9 19 Los Angeles-Long Beach-Anaheim, CA 1.4 8 Charlotte-Concord-Gastonia, NC-SC 2.6 19 San Francisco-Oakland-Hayward, CA 1.4 9 Portland-Vancouver-Hillsboro, OR-WA 2.2 21 Miami-Fort Lauderdale-West Palm Beach, FL 1.3 9 Tampa-St. Petersburg-Clearwater, FL 2.2 22 New York-Newark-Jersey City, NY-NJ-PA 1.2 11 Minneapolis-St. Paul-Bloomington, MN-WI 2.0 23 Chicago-Naperville-Elgin, IL-IN-WI 1.0 12 Boston-Cambridge-Nashua, MA-NH 1.9 23 St. Louis, MO-IL 1.0 13 Atlanta-Sandy Springs-Roswell, GA 1.8 25 Detroit-Warren-Dearborn, MI 0.8 1.6 Source: U.S. Bureau of Labor Statistics, Current Employment Statistics (CES) Survey
Unemployment Rates, 25 Largest Metros (NSA) June 2018 Rank MSA UR Rank MSA UR 1 Minneapolis-St. Paul-Bloomington, MN-WI 2.8 13 Charlotte-Concord-Gastonia, NC-SC 3.9 2 Denver-Aurora-Lakewood, CO 2.9 13 Miami-Fort Lauderdale-West Palm Beach, FL 3.9 3 San Francisco-Oakland-Hayward, CA 3.0 15 Atlanta-Sandy Springs-Roswell, GA 4.0 4 Orlando-Kissimmee-Sanford, FL 3.5 16 New York-Newark-Jersey City, NY-NJ-PA 4.1 5 Boston-Cambridge-Nashua, MA-NH 3.6 16 Seattle-Tacoma-Bellevue, WA 4.1 5 San Antonio-New Braunfels, TX 3.6 18 Phoenix-Mesa-Scottsdale, AZ 4.2 7 Washington-Arlington-Alexandria, DC-VA-MD-WV 3.7 19 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 4.3 20 Chicago-Naperville-Elgin, IL-IN-WI 4.4 7 San Diego-Carlsbad, CA 3.7 20 Detroit-Warren-Dearborn, MI 4.4 7 St. Louis, MO-IL (1) 3.7 22 Los Angeles-Long Beach-Anaheim, CA 4.5 10 Dallas-Fort Worth-Arlington, TX 3.8 23 Baltimore-Columbia-Towson, MD 4.6 10 Portland-Vancouver-Hillsboro, OR-WA 3.8 23 Houston-The Woodlands-Sugar Land, TX 4.6 10 Tampa-St. Petersburg-Clearwater, FL 3.8 25 Riverside-San Bernardino-Ontario, CA 4.7 Source: U.S. Bureau of Labor Statistics, Current Employment Statistics (CES) Survey. Note: 1. Area boundaries do not reflect official OMB definitions. U.S. Unemployment Rate June: 4.0% July: 3.9%
Gimme Shelter
Architecture Billings Index June 2008 through June 2018 60.0 55.0 50.0 45.0 40.0 35.0 June 2018: 51.3 30.0 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Source: The American Institute of Architects
Architecture Billings Index by U.S. Region June 2017 v. June 2018 60.0 Jun-17 Jun-18 57.4 55.0 54.2 54.0 50.0 51.3 51.4 50.2 51.8 49.8 51.7 45.0 U.S. Northeast Midwest South West 46.9 Source: The American Institute of Architects
National Nonresidential Construction Spending by Subsector June 2015 v. June 2018 Commercial Lodging Amusement and Recreation Office Communication Transportation Public Safety Conservation and Development Health Care Highway and Street Water Supply Educational Power Sewage and Waste Disposal Religious Manufacturing -28.8% -7.3% -11.7% -15.7% -0.1% -0.6% -0.6% 9.1% 4.5% 4.4% 14.9% 14.3% 21.7% 21.5% 33.8% Total Nonresidential Construction: +$27.8B; +3.9% 41.6% -35% -25% -15% -5% 5% 15% 25% 35% 45% 3-year % Change Source: U.S. Census Bureau
Commercial/Multifamily Offshore Investment Sales Volumes Reach New Heights in 2015/16 $60 Foreign investment increases 85.1% in 2015 $50 Billions of $US $40 $30 $20 $10 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Cross-border investment remained elevated in 2016: Although down relative to a record 2015, offshore investment levels still exceeded the pre-2015 high in 2007. Source: Jones Lang LaSalle; Real Capital Analytics Note: Among transactions larger than $5.0 million
Foreign Investment in U.S. Commercial Real Estate Top Destination Markets, 2017 New York City 2017 Deals ($Billions) $9.0 Washington, D.C. $5.0 San Francisco $4.5 Los Angeles Houston $3.2 $3.5 Boston Chicago Dallas Atlanta Seattle $2.7 $2.4 $2.0 $1.7 $1.5 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 Source: Real Capital Analytics; Colliers International
Inputs to Construction PPI (NSA) July 2001 July 2018 15% 10% July 2017 v. July 2018: +9.5% 12-month % Change 5% 0% -5% -10% Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Source: U.S. Bureau of Labor Statistics
Construction Materials PPI (NSA) 12-month % Change as of July 2018 Crude Petroleum Crude Energy Materials Softwood Lumber Iron and Steel Steel Mill Products Fabricated Structural Metal Products Nonferrous Wire and Cable Prepared Asphalt & Tar Roofing/Siding Products Concrete Products Plumbing Fixtures and Fittings Natural Gas -6.7% 26.3% 19.5% 13.4% 12.4% 8.8% 8.5% 6.9% 3.7% 2.4% 69.1% -15% -5% 5% 15% 25% 35% 45% 55% 65% 75% 12-month % Change Source: U.S. Bureau of Labor Statistics
19 th Nervous Breakdown
Gross Domestic Product 1990Q2 through 2018Q2* % Change from Preceding Period (SAAR) 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% 2018Q2: +4.1% 1990Q2 1991Q2 1992Q2 1993Q2 1994Q2 1995Q2 1996Q2 1997Q2 1998Q2 1999Q2 2000Q2 2001Q2 2002Q2 2003Q2 2004Q2 2005Q2 2006Q2 2007Q2 2008Q2 2009Q2 2010Q2 2011Q2 2012Q2 2013Q2 2014Q2 2015Q2 2016Q2 2017Q2 2018Q2 Source: U.S. Bureau of Economic Analysis *1 st (Advance) Estimate
Conference Board Leading Economic Indicators Index August 2007 through June 2018 1.5% One-month Percent Change 1.0% 0.5% 0.0% -0.5% -1.0% June 2018: 109.8 where 2016: 100-1.5% Aug-07 Jan-08 Jun-08 Nov-08 Apr-09 Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13 Nov-13 Apr-14 Sep-14 Feb-15 Jul-15 Dec-15 May-16 Oct-16 Mar-17 Aug-17 Jan-18 Jun-18 Source: Conference Board
Total U.S. Debt Volume by Select Loan Types, Index 1991Q1=100 400 350 300 Auto Mortgage 250 200 Credit Card 150 100 50 0 1999Q2 1999Q4 2000Q2 2000Q4 2001Q2 2001Q4 2002Q2 2002Q4 2003Q2 2003Q4 2004Q2 2004Q4 2005Q2 2005Q4 2006Q2 2006Q4 2007Q2 2007Q4 2008Q2 2008Q4 2009Q2 2009Q4 2010Q2 2010Q4 2011Q2 2011Q4 2012Q2 2012Q4 2013Q2 2013Q4 2014Q2 2014Q4 2015Q2 2015Q4 2016Q2 2016Q4 2017Q2 2017Q4 2018Q2 Source: New York Fed Consumer Credit Panel/Equifax
Global Debt Reaches All Time Highs (IIF) According to the International Institute of Finance (IIF), global debt has reached an all-time high in 2016; At $247 trillion as of 2018Q1, global debt including household, government, and corporate now represents 318% of global GDP; Last year the IMF warned of risks to the global economy: sheer size of debt could set the stage for an unprecedented private deleveraging process that could thwart the fragile economic recovery Sources: 1. Institute of International Finance (IFF), Global Debt Monitor. 2. Business Insider. 3. The Telegraph. 4. Reuters.
Source: Robert J. Shiller Data used in his book, "Irrational Exuberance" Princeton University Press. 50 Shiller Price-Earnings Ratio, 1980-2018 40 30 July 2018: 32.17 20 10 0 Jul-80 Jul-81 Jul-82 Jul-83 Jul-84 Jul-85 Jul-86 Jul-87 Jul-88 Jul-89 Jul-90 Jul-91 Jul-92 Jul-93 Jul-94 Jul-95 Jul-96 Jul-97 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18
Shattered! --- Bitcoin Price, 2014-2018 $20,000 $16,000 8/13/2018: $6.3K $12,000 $8,000 $4,000 $0 8/1/14 10/1/14 12/1/14 2/1/15 4/1/15 6/1/15 8/1/15 10/1/15 12/1/15 2/1/16 4/1/16 6/1/16 8/1/16 10/1/16 12/1/16 2/1/17 4/1/17 6/1/17 8/1/17 10/1/17 12/1/17 2/1/18 4/1/18 6/1/18 8/1/18 Source: CoinMarketCap.com
Time is on My Side, at least in the Near-Term U.S. setting up for best year since 05...; Global economy better than it was - - still; Job opportunities are abundant; Corporate profitability elevated; Consumer and business confidence has been surging...; And now tax cuts, including major reductions in corporate taxes... What could go wrong?; A lot can go wrong that s always true first there are the Black Swan threats: I m forever blowing bubbles, pretty bubbles in the air, they fly so high, nearly reach the sky, and like my dreams, they fade and die ; Where are all the pretty bubbles? Equity markets? U.S. bond market? Commercial real estate? Bitcoin? 2018 will be fine better than fine 2019 might be, too, but beyond that, potential deleveraging cycle prompted by a repricing of assets Bad!!!!
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