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Economic Conditions and Outlook

Economic Conditions and Outlook. Eric Robbins, Regional Manager FDIC Division of Insurance and Research Chicago Region.

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Economic Conditions and Outlook

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  1. Economic Conditions and Outlook Eric Robbins, Regional Manager FDIC Division of Insurance and Research Chicago Region The views expressed are those of the presenter and do not necessarily reflect official positions of the Federal Deposit Insurance Corporation. Some of the information used in the preparation of this presentation was obtained from publicly available sources that are considered reliable. However, the use of this information does not constitute an endorsement of its accuracy by the Federal Deposit Insurance Corporation.

  2. Outline • National Economic Outlook • Regional Economic Outlook • Labor Markets • Manufacturing • Real Estate Markets • Residential and Commercial

  3. GDP growth continues along its moderate path: Real GDP increased 2.8 percent in 2012 and is projected to be 1.6 percent in 2013. Source: Bureau of Economic Analysis , Blue Chip Consensus Forecast October 2013.

  4. Consumer spending and a rebound in inventory accumulation led third quarter growth. Source: Bureau of Economic Analysis, advance estimate.

  5. Residential investment has been a positive contributor to growth since mid-2011...

  6. …but has yet to contribute to job growth. Source: Census Bureau/Haver Analytics. Chicago Region totals.

  7. Regional Economic Outlook Wisconsin labor Markets

  8. Wisconsin state employment levels remain below national employment levels. Source: Bureau of Labor Statistics.

  9. But Wisconsin is third among Midwestern states in regained jobs.

  10. Unemployment rates remain elevated and much higher than the seven-year low.

  11. The size of the labor force has declined in most metros, contributing to improving unemployment rates. Note: The labor force in Eau Claire, Green Bay, and LaCrosse has exceeded the prior peak at 1.2%, 0.57% and 0.13%, respectively. Source: Bureau of Labor Statistics.

  12. Unemployment rates have fallen considerably but remain high. Source: Bureau of Labor Statistics.

  13. Year-over-year job growth varies by metro… Year-over-year percent change Source: Bureau of Labor Statistics, August 2013.

  14. …And by industry sector, with strong gains in the professional/business services and leisure/hospitality sectors. Year-over-year percent change in jobs, by sector Source: Bureau of Labor Statistics, August 2013. Sector jobs as a share of total metro jobs is listed after each sector (Milwaukee, Madison)

  15. manufacturing

  16. Manufacturing growth has slowed, after being a driver of job growth early in the recovery. Source: ISM Manufacturing Index, Index values above 50 indicate expansion.

  17. Despite a slowdown, manufacturing production and employment is still in expansionary territory. Source: ISM Manufacturing Index, Index values above 50 indicate expansion

  18. Automotive sales are approaching pre-recession levels. Source: Bureau of Economic Analysis and Bureau of Labor Statistics. Notes: Data through September 2013. Data are seasonally adjusted.

  19. Residential real estate markets

  20. Nationally, foreclosure inventory peaked in early 2012.

  21. Housing markets are likely stabilizing, with home values finally rising in most markets. Home price index value Source: Moody’s Analytics Case-Shiller Home Price Index SA; 2000Q1=100.

  22. On a statewide basis, prices are increasing, according to multiple indexes. Sources: Federal Housing Finance Agency, Moody's Analytics 2nd quarter 2013.

  23. Many Wisconsin metros remain well below peak levels. 8 year high-low house price index value Source: Federal Housing Finance Agency all transactions index Q2-2005 through Q2 2013, Q1 2000=100.

  24. Commercial real estate markets

  25. CMBS delinquency rates indicate CRE stress in many states.

  26. Commercial Property Sales ($ millions) Madison and Milwaukee CRE sales have rebounded. Note: Sales totals are 4 quarter moving sums from Costar/PPR.

  27. National Banking Conditions

  28. The three-year trend in year-over-year earnings improvement continues.

  29. Failures have fallen to the lowest level since 2008.

  30. The number of institutions on the FDIC’s “Problem List” fell for the ninth consecutive quarter in 2Q 2013.

  31. The Deposit Insurance Fund increased by $2.1 billion during the second quarter to $37.9 billion

  32. Earnings are nearing pre-recession levels for some Midwest banks. Pre-Tax Return on Assets (%) Note: Median annual ratios among insured institutions by state. H-1 figures are 6-month annualized values. Source: FDIC Call Report Data.

  33. Past-due ratios have declined among Midwest banks. Loan Past-Due Ratio (%) Note: Aggregate quarterly data among insured institutions with under $10 Billion in assets by state. Source: FDIC Call Report Data.

  34. Distressed assets remain elevated among Midwest banks… Noncurrent Loans and ORE to Assets (%) Note: Aggregate quarterly data among insured institutions with under $10 Billion in assets by state. Source: FDIC Call Report Data.

  35. Summary: Economic Outlook Factors to consider…

  36. Consensus forecasts call for continued growth below trend in 2014.

  37. Contacts Eric Robbins, Regional Manager, DIR Chicago 312-382-7545 erobbins@fdic.gov Stefan Spong, Economic Analyst 312-382-7582 sspong@fdic.gov Miguel Hasty, Senior Financial Analyst (IL,KY,WI) 312-382-7581 fhasty@fdic.gov Rob Vilim, Senior Financial Analyst (IN,MI,OH) 312-382-6547 rvilim@fdic.gov

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