Is the Economic Recovery Sustainable A Second Term Assessment

1
Is the Economic Recovery Sustainable? A Second
Term Assessment

• Presented to
• KPMG Private Equity Luncheon
• Bernard L. Weinstein, Ph.D.
• University of North Texas
• Center for Economic Development and Research
• http//www.unt.edu/cedr
• April 19, 2005

2
U. S. Real GDP Growth
Annual Percentage Change
Source Bureau of Economic Analysis
3
Real Economic Growth
4Q 2004 3.8
Gross domestic product
00 2001 2002
2003 2004
Source Commerce Department
4
Nonfarm Payrolls
Mar. 110,000
Monthly change, in thousands
2003
2004
2005
Source Labor Department
5
Human Sacrifice
Number of layoff announcements in the U. S. (in
thousands)
2003
2004
2005
Source Challenger, Gray and Christmas
6
U. S. Jobless Rate
In percent, seasonally adjusted
2004

2005
Source U.S. Department of Labor
7
Personal Income
Feb. 2005 9.99 trillion
Total personal income in trillions of dollars,
before taxes, at seasonally adjusted annual rates

2004
2005
Excludes special dividend paid by Microsoft
Corporation. Source U.S. Department of
Commerce Bureau of Economic Analysis
8
Retail Sales
Mar. 2005 339.3 billion
Total retail sales in billions of dollars,
seasonally adjusted.
2004
2005
Source U.S. Commerce Department
9
Industrial Production
Mar. 2005 118.5
Index, 1997100, seasonally adjusted
Source Federal Reserve Board
10
Construction Spending
Feb. 2005 1,047.3 billion
In billions of dollars, seasonally adjusted
2004
2005
Source Commerce Department
11
Housing Starts
Mar. Starts 1.184
New private housing starts during the month, in
millions, at seasonally adjusted annual rates.
2004

2005
Source Dept. of Commerce Dept. of H.U.D.
Census Bureau
12
Productivity
Nonfarm business productivity, percent change
from previous quarter at annual rate, seasonally
adjusted
00 2001
2002 2003
2004
Source U.S. Department of Labor
13
Producer Prices
Percentage change from previous month, seasonally
adjusted.
2003
2004
2005
Source Labor Department
14
Consumer Prices
Percentage change, month to month (seasonally
adjusted)
0
2004

2005
Source Bureau of Labor Statistics
15
Consumer Confidence Index
Mar. 2005 102.4
From a monthly survey of 5,000 U. S. households,
1987 100

2004
2005
Source The Conference Board
16
Leading Indicators
Feb. 2005 115.6
Index of 10 indicators designed to lead, or
predict overall economic activity 1996 100.
2003
2004
2005
Source The Conference Board
17
Ten Things to Worry About

• High and rising energy costs
• Bursting of the residential real estate bubble
• Falling dollar
• Paucity of venture capital
• Iraq
• New terrorist attacks--higher security costs
• Rising levels of corporate and consumer debt
• Large and growing budget and trade deficits
• Social Security and Medicare shortfalls
• Higher interest rates

18
Debts and Deficits
19
From Deficit to Surplus to Deficit
In billions of dollars
2005 -427
Source Office of Management and Budget, White
House projections
20
Deficit in International Goods and Services Trade
Feb. 2005 61.04 billion
Billions of dollars, seasonally adjusted.
Import figures exclude shipping and insurance.

2004
2005
Source U.S. Department of Commerce
21
(No Transcript)
22
(No Transcript)
23
(No Transcript)
24
(No Transcript)
25
Auto suppliers that have filed for bankruptcy
protection and expect to hand pension plans to
the government
Sources Wall Street Journal Pension Benefit
Guaranty Corp. company reports
26
Pension-fund status of major auto-industry
companies, 2004 data (figures in billions)
2003 figures World-wide figures Sources
Wall Street Journal Pension Benefit Guaranty
Corp. company reports
27
(No Transcript)
28
Savings Rate
Feb. 2005 0.6
Personal Savings as a Percentage of Disposable
Personal Income
2003
2004
2005
Source Commerce Department, Bureau of Economic
Analysis
29
Household Net Worth
In trillions
2002 2003
2004
Sources Federal Reserve Board
30
Personal Bankruptcy Filings
In millions
Fiscal years ending Sept. 30. Sources
Administrative Office of the United States
Courts Federal Reserve