Economic and Tax Revenue Outlook

1
Economic and Tax Revenue Outlook

• Mark Zandi
• Economy.com, Inc.

2
Jobs, Millions Source BLS
3
Prolonged Suffering
Previous Cycles
Sources BLS, Economy.com
Early 90s Cycle
Current Cycle
4
States In Recession

Recession
Flat
Expanding
5
State and Local Government Deficit Source BEA
Share of GDP (R)
Billions (L)
6
Businesses Confidence Rebounds
Business Confidence Survey January 2003 100 4
week Moving Average Source Economy.com
7
State Government Tax Revenues Billions , 4-
Quarter Moving Sum Source Census
8
Tax Payments Billions (L)
Effective Tax Rate (R)
Source BEA
9
Real GDP Growth Change Year Ago Sources BEA,
Economy.com
Actual
Without Housing
10
Nonfinancial Productivity Growth Change Year
Ago, 4-Quarter Moving Average Source BLS
11
Real Wage Growth Change Year Ago, 4-Quarter
Moving Average Sources BLS, BEA
12
Profit Margins of Nonfinancial Businesses 4-Quarte
r Moving Average Source BEA
13
Near-Term Outlook Real GDP Year over Year Growth
Potential Growth
14
Road to RecoveryStable Economies
Philadelphia
Baltimore
Las Vegas
Washington, D.C.
Raleigh
Riverside
Orange County
Albuquerque
San Diego
West Palm Beach
Tampa
San Antonio
Ft. Lauderdale
Miami
15
Road to Recovery2003 H2Computer Hardware,
Distribution
Philadelphia
Central NJ
Sacramento
Oakland
Baltimore
Las Vegas
Washington, D.C.
Norfolk
Raleigh
Los Angeles
Riverside
Memphis
Orange County
Albuquerque
Atlanta
San Diego
Phoenix
Jacksonville
Austin
Orlando
West Palm Beach
Tampa
San Antonio
Ft. Lauderdale
Miami
16
Road to Recovery2004 H1Software, Travel
Portland
Minneapolis
Salt Lake City
Philadelphia
Chicago
Central NJ
Sacramento
Oakland
Baltimore
Indianapolis
Las Vegas
San Jose
Washington, D.C.
Norfolk
Raleigh
Los Angeles
Riverside
Memphis
Charlotte
Orange County
Albuquerque
Atlanta
San Diego
Phoenix
Jacksonville
Austin
Orlando
New Orleans
West Palm Beach
Tampa
San Antonio
Houston
Ft. Lauderdale
Miami
17
Road to Recovery2004 H2Telecom, Money Management
Portland
Minneapolis
Boston
Pittsburgh
Salt Lake City
Philadelphia
Chicago
Central NJ
Sacramento
Oakland
Baltimore
San Francisco
Indianapolis
Las Vegas
Denver
San Jose
Washington, D.C.
Norfolk
Kansas CIty
Raleigh
Los Angeles
Riverside
Memphis
Charlotte
Orange County
Albuquerque
Atlanta
San Diego
Phoenix
Dallas
Jacksonville
Austin
Orlando
New Orleans
West Palm Beach
Tampa
San Antonio
Houston
Ft. Lauderdale
Miami
18
Road to Recovery2005 H1Traditional Manufacturing
Portland
Minneapolis
Boston
Milwaukee
Detroit
Pittsburgh
Salt Lake City
Philadelphia
Chicago
Central NJ
Sacramento
Oakland
Baltimore
San Francisco
Indianapolis
OH MSAs
Las Vegas
Denver
San Jose
Washington, D.C.
Norfolk
Kansas CIty
Raleigh
Los Angeles
Riverside
Memphis
Charlotte
Orange County
Albuquerque
Atlanta
San Diego
Phoenix
Dallas
Jacksonville
Austin
Orlando
New Orleans
West Palm Beach
Tampa
San Antonio
Houston
Ft. Lauderdale
Miami
19
Road to Recovery2006 H1Investment Banking,
Commercial Aircraft
Seattle
Portland
Minneapolis
Boston
Milwaukee
Detroit
Pittsburgh
Salt Lake City
Broad NYC Region
Philadelphia
Chicago
Central NJ
Sacramento
Oakland
Baltimore
San Francisco
Indianapolis
OH MSAs
Las Vegas
Denver
San Jose
Washington, D.C.
Norfolk
Kansas CIty
Raleigh
Los Angeles
Riverside
Memphis
Charlotte
Orange County
Albuquerque
Atlanta
San Diego
Phoenix
Dallas
Jacksonville
Austin
Orlando
New Orleans
West Palm Beach
Tampa
San Antonio
Houston
Ft. Lauderdale
Miami
20
State Tax Revenue Growth Outlook Change
Long-Run Growth
21
Tax Revenues Billions Source Economy.com
22
Ballooning Trade Deficit
Trade Deficit Billions Source Census
Total x OPEC (L)
China (R)
23
Erosion in Sales Tax Efficacy
Sales Taxes as a Share of Consumer
Spending Sources BEA, Economy.com