Passages Through a Sea of Uncertainty Robert A Dye Chief Economist Comerica Bank January 2013 Mare IncognitumThe Sea of Uncertainty 2 EPUI Explains Persistent Weak Business Confidence 3 ID: 487707
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U.S. and Michigan Economic OutlookPassages Through a Sea of Uncertainty
Robert A. Dye
Chief Economist, Comerica
Bank
January, 2013Slide2
Mare Incognitum…The Sea of Uncertainty2Slide3
EPUI Explains Persistent Weak Business Confidence3
Economic Policy Uncertainty index
(L)
NFIB Business Optimism,
(R)
Components of NFIB Survey
Employment plans
Current job openings
Capital outlay plans
Inventory plans
Current inventory
Expectations about economy
Expectations about sales
Expected credit conditions
Good time to expand
EarningsSlide4
The Fiscal Cliff, Happy New Year!Obama era payroll tax cut has expired for everyone
Increased income, capital gains, dividend taxes for the wealthy 1%
Will add up to about $160 billion in additional revenue in 2013
RDPI set to fall 3.5-4.0 percent annualized 2013Q1
Debt ceiling debate still to come
$110 budget sequester still unresolved
Long-term entitlement spending still unresolved
4Slide5
Recent U.S. Data Is Mixed2012Q3 real GDP 3.1%, Q4 weaker
Dec. payroll employment +155,000
Unemployment rate stable at 7.8%
House sales
Home prices
Home construction
Dec. auto sales 15.4 million unit rate
Dec. ISM MF Survey 50.7 percent
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Home Sales Trending Up
Existing, ths (L)
New, ths (R)Slide6
2012Q4 Helped by Household Sector, Hurt by UncertaintyConsumer confidence improving
Vehicle sales, Sandy
Housing sector strengthening
Other credit fueled purchases
Labor markets
Asia
U.S.
p
olicy uncertainty
Europe continues to melt
6
Auto Sales and Consumer Confidence
Auto Sales, millions SAAR (L)
Confidence Index (R)Slide7
Consumer Deleveraging...And Releveraging7
Non-revolving cons. credit, pchya (L)
Financial Obligations Ratio, (R)Slide8
Job Creation Is Key to Sustaining the Economy8
Monthly
Job Creation,
ths Unemployment Rate, percentSlide9
Forecast for 2013, Fiscal Tightening Trumps Monetary Easing9
History
ForecastSlide10
Interest Rates Face Upward Pressure As Flight to Quality and Financial Repression Eventually Unwind10
Fed Funds
10-Year TreasurySlide11
Forecast RisksDownside RisksConsumer spending Job growth
B
iz investment
Federal Spending
Eurozone
and Asia
More
“transitory”
factors/oil prices
Housing market languishesHealthcare costsUpside RisksQE3 gains tractionEquity markets rallyJobs! ConstructionHouseholds unleash pent-up demand
Low interest rates/investment boomEnergy/manufacturing renaissanceTechnology11Slide12
Most Michigan Labor Markets Cooled 2012H2
Payroll Employment,
pchyaSlide13
Robert A. DyeSubscribewww.comerica.com/economicsFollow on Twitter@Comerica_Econ
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