1. Two Steps Forward
One Step Back
Daraius Irani, PhD
November 9, 2011

2. National Economy

3. Two Steps Forward?
Real Gross Domestic Product, Seasonally Adjusted 1981Q1 through 2011Q3
15%
10%
Annual Rate of Expansion
2.5 %
5%
0%
-5%
-10%
© Towson University, Division of Economic and Community Outreach Bureau of Economic Analysis

4. Two Steps Forward?
Personal Consumption, Seasonally Adjusted, Jan 2005 through Sept 2011
$9,600 0.6% 0.5 %
$9,400 0.4%
Personal Consumption Expenditures
Billions of Chained 2005 Dollars
$9,200
Annual Percent Change
0.2%
$9,000
0.0%
$8,800
-0.2%
$8,600
$8,400 -0.4%
$8,200 -0.6%
Consumption Exp. Percent change
© Towson University, Division of Economic and Community Outreach Bureau of Economic Analysis

5. Consumers are Spending but…..
Percent Change from Previous Month
US May June July August September
Personal 0.3% 0.2% 0.1% -0.1% 0.1%
Income
Disposable 0.2% 0.1% 0.0% -0.4% -0.1%
Personal
Income
Personal 0.0% -0.1% 0.5% 0.0% 0.5%
Consumption
© Towson University, Division of Economic and Community Outreach Bureau of Economic Analysis

6. The Employment Situation

7. Post – Recession Employment Picture
Maryland Total Nonfarm Employees, in Thousands
133,000 2,510
US Total Nonfarm Employees, in Thousands
132,500
2,500
132,000
131,500 2,490
131,000
2001 Recession 2,480
130,500
130,000 2,470
129,500 2,460
129,000
2,450
128,500
128,000 2,440
US Maryland
Maryland Total Nonfarm Employees, in Thousands
140,000 2,650
US Total Nonfarm Employees, in Thousands
138,000
2,600
136,000
134,000 2,550
2007 Recession
132,000
130,000 2,500
128,000
2,450
126,000
124,000 2,400
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics
US Maryland

8. U.S. Stalled Job Creation and Wages ?
Hours, Production and Nonsupervisory Employees, Jan 2006 through Aug 2011
6.0 4.5
4.0 4.0
3.5
Year-Over-Year Percent Change
Year-Over-Year Percent Change
2.0
Average Hourly Wages
Aggregate Weekly Hours
3.0
0.0
2.5
-2.0
2.0
-4.0
1.5
-6.0
1.0
-8.0 0.5
-10.0 0.0
Aggregate Weekly Hours Average Hourly Earnings
© Towson University, Division of Economic and Community Outreach Federal Reserve Bank

9. Manpower Hiring Survey
Hiring Plans, All Industries, Not Seasonally Adjusted, 2007Q1 through 2011Q4
35.0
30.0
25.0
20.0
Index
15.0
10.0
5.0
0.0
-5.0
Expect increase Expect decrease Net Change
© Towson University, Division of Economic and Community Outreach Moody’s Analytics

10. Job Hires vs. Job Separations
Job hires vs. Job Separations, Seasonally Adjusted Jan 2008 through Aug 2011
4.3%
4.1%
3.9%
3.7%
3.5%
Rate
3.3%
3.1%
2.9%
2.7%
2.5%
Hires Separations
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics

11. Return to Peak Employment?
© Towson University, Division of Economic and Community Outreach IHS Global Insight

12. Checking Consumer and Business
Temperature

13. Consumer Sentiment Index
Consumer Sentiment Monthly Index, Jan 2007 through Oct 2011
120.0
110.0
100.0
First Quarter 1966=100
90.0
80.0
Index
70.0
60.0
50.0
40.0
© Towson University, Division of Economic and Community Outreach University of Michigan

14. Pulse of Commerce
PCI Monthly Index, GDP, Seasonally Adjusted Jan 2002 through Sept 2011
105.00
100.00
95.00
90.00
Index
85.00
80.00
75.00
70.00
PCI CERIDIAN INDEX GDP
© Towson University, Division of Economic and Community Outreach Ceridian-UCLA Pulse of Commerce Index

15. Regional PCI Growth
© Towson University, Division of Economic and Community Outreach Ceridian-UCLA Pulse of Commerce Index

16. ISM: Purchasing Managers Index
ISM Monthly Index, Jan 2005 through Oct 2011
65%
60%
55% Oct: 50.8
50%
Diffusion Index
45%
40%
35%
30%
25%
20%
© Towson University, Division of Economic and Community Outreach Institute for Supply Management

17. Checking the Housing Picture

18. Shadow Inventory Concerns
Shadow Inventory Detail, Monthly, Jan 2006 through Jul 2011
2.5
2
Millions of Units
1.5
1
0.5
0
Pending Serious Delinquency Inventory Pending FC Inventory Pending REO Inventory
© Towson University, Division of Economic and Community Outreach CoreLogic

19. Months’ Supply Shadow Inventory
Months’ Supply Detail, Monthly, Jan 2006 through Jul 2011
9
8
7
6
Number of Months
5
4
3
2
1
0
Pending Serious Delinquency Inventory Pending FC Inventory Pending REO Inventory
© Towson University, Division of Economic and Community Outreach CoreLogic

20. Foreclosure Heat Map
September 2011
© Towson University, Division of Economic and Community Outreach RealtyTrac

21. New Houses For Sale in the United States
Months Since Completion
Not Seasonally Adjusted, Monthly, Jan 2006 through Jul 2011
16
14
12
Number of Months
10
8
6
4
2
0
© Towson University, Division of Economic and Community Outreach Census Bureau

22. New Houses For Sale in the United States
Number of Months to Clear Out Inventories
Seasonally Adjusted, Months at Current Sales Rate, Jan 2006 through Jul 2011
14
12
10
Number of Months
8
6
4
2
0
© Towson University, Division of Economic and Community Outreach Census Bureau

23. Distressed Sales as A Percentage of Total Sales
Monthly, Jan 2006 through July 2011
45%
40%
35%
Percent of Total Sales
30%
25%
20%
15%
10%
5%
0%
Short Sales REO Sales
© Towson University, Division of Economic and Community Outreach CoreLogic

24. Story Behind the Numbers
• Incomes have remained stagnant for prime home
buyers
• Negative housing price trends have a negative
wealth effect
© Towson University, Division of Economic and Community Outreach

25. Maryland Outlook

26. Slow Down in Maryland’s Economy?
Annual Rate of Change, Index, Monthly Jan 1997 through Sept 2011
8.0%
6.0%
4.0%
Coincident Index
2.0%
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
MD US
© Towson University, Division of Economic and Community Outreach Federal Reserve Bank

27. Maryland Performance
• Maryland added 10,000 private sector jobs in September
• Employment growth is at 0.5 percent – a faster clip than the
0.1 percent for the nation
o Federal Government added 2,100 jobs
o State Government added 100 jobs
o Local Government shed 5,400 jobs
• Since January, 95 percent of new jobs have been created by
the private sector
© Towson University, Division of Economic and Community Outreach Department of Labor, Licensing and Regulation

28. Personal Income Percent Change
© Towson University, Division of Economic and Community Outreach Bureau of Economic Activity

29. Mid-Atlantic Region
Unemployment Rankings
September Unemployment Rates
Seasonally Adjusted
State 2009 2010 2011
Maryland 7.4 7.4 7.4
Pennsylvania 8.5 8.5 8.3
Virginia 7.1 6.7 6.5
Delaware 8.3 8.3 8.1
DC 10.2 9.7 11.1
U.S. Unemployment Rate: 9.1 in September
9.0 in October
© Towson University, Division of Economic and Community Outreach
Bureau of Labor Statistics

30. Measures of Labor Underutilization
Labor Underutilization, Averages, 2010Q3 through 2011Q2
18
16.2
16 15.4
14
12.7
12
12
10.7
10.2
10 9.2
Percent
8.8
8 7.3
6
4
2
0
Maryland District of Columbia United States
U-3 U-5 U-6
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics

31. Maryland Mass Layoffs
Total Initial Unemployment Claimants and Layoff Events, Monthly, Jan 2010 through Sep 2011
3,000 35
30
2,500
Layoff Events, Total all Industries
25
Total Initial Claimants,
2,000
Total all Industries
20
1,500
15
1,000
10
500
5
0 0
Total Initial Claimants Layoff Events
© Towson University, Division of Economic and Community Outreach Bureau of Labor Statistics

32. Housing

33. MD Homes Sales vs. Inventories
MD Home Sales vs. Inventories, Seasonally Adjusted Jan 2000 through Aug 2011
10,000 60,000
9,000
50,000
8,000
7,000
40,000
6,000
Home Sales
Inventory
5,000 30,000
4,000
20,000
3,000
2,000
10,000
1,000
0 0
Home Sales Inventories
© Towson University, Division of Economic and Community Outreach Maryland Association of Realtors

34. MD Homes Prices vs. Inventories
MD Home Sales vs. Inventories, Seasonally Adjusted Jan 2000 through Aug 2011
$400,000 60,000
$350,000
50,000
$300,000
Average Home Price
40,000
$250,000
Inventory
$200,000 30,000
$150,000
20,000
$100,000
10,000
$50,000
$0 0
Inventories Home Prices
© Towson University, Division of Economic and Community Outreach Maryland Association of Realtors

35. MD Distressed Properties
Aug-10 Aug-11
6%
8%
12% 9%
82% 83%
Total Sales REO Sales Short Sales
© Towson University, Division of Economic and Community Outreach CoreLogic

36. Baltimore – Towson Distressed Properties
Aug-10 Aug-11
5% 6%
7%
12%
83%
87%
Total Sales REO Sales Short Sales
© Towson University, Division of Economic and Community Outreach CoreLogic

37. Housing and Foreclosures
• Maryland - September 2011
o 10,662 Foreclosure Homes for Sale
o $180,906 Average Foreclosure Sales Price
• US – September 2011
o 1,485,418 Foreclosure Homes for Sale
o $173,344 Average Foreclosure Sales Price
© Towson University, Division of Economic and Community Outreach RealtyTrac

38. What’s Looming Ahead?

39. Maryland Federal Government
and Private Sector Employment
Seasonally Adjusted, Jan 2000 through Sept 2011
150 2,200
Federal Government Employment, thousands
Private Sector Employment, thousands
145 2,150
140 2,100
135 2,050
130 2,000
125 1,950
120 1,900
115 1,850
110 1,800
Federal Total Private
© Towson University, Division of Economic and Community Outreach Bureau Of Labor Statistics

40. Challenges Ahead
• Maryland fiscal leaders cut the State’s
economic outlook
• The State’s Board of Revenue Estimates
expects growth of 2.8 percent –
downgraded from 4.7 percent.
• Increased Taxes (?)
• Federal Budget Cuts
© Towson University, Division of Economic and Community Outreach

41. Maryland’s Forecast

42. RESI Employment Outlook
Maryland Historical & Projected TNA Employment Growth, 2007Q1 through 2013Q4
1.5% 2,600,000
1.0%
0.5% 2,550,000
0.0%
TNA Employment Level
Percent change from same
-0.5% 2,500,000
quarter one year ago
-1.0%
-1.5% 2,450,000
-2.0%
-2.5% 2,400,000
-3.0%
-3.5% 2,350,000
Growth TNA
© Towson University, Division of Economic and Community Outreach RESI, Bureau of Labor Statistics

43. RESI Employment Outlook
Maryland Projected Employment Growth, Percent, 2011 to 2012
Admin/Waste 2.8%
Arts/Entertainment 2.6%
Professional/Sci. 2.5%
Healthcare Svcs. 1.8%
Accomm/Food Svcs 1.6%
Government 1.4%
Transp./Warehousing 1.1%
Trade 0.9%
Educational Svcs. 0.7%
Mgmt of Companies 0.5%
Financial Svcs 0.2%
Real Estate 0.1%
Manufacturing -1.1%
Utilities -1.8%
Information -2.3%
-3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0%
© Towson University, Division of Economic and Community Outreach RESI, Bureau of Labor Statistics

44. RESI Outlook - Summary
Maryland Indicators - Historical & Projected Annual Figures
2009 2010 2011 2012 2013
Total Non- -3.0% -0.3% 0.7% 1.1% 1.4%
Agricultural
Employment
(annual growth)
Total Personal 0.3% 2.8% 4.5% 3.2% 3.7%
Income
(annual growth)
© Towson University, Division of Economic and Community Outreach RESI, Bureau of Labor Statistics, Bureau of Economic Analysis