The School of Business and Economics at Lynchburg College, in conjunction with the Lynchburg Regional Chamber of Commerce, hosted the spring Economic Outlook Conference on February 1, 2012. Roy Webb, Senior Economist and Research Advisor with the Richmond Federal Reserve Bank, spoke to an audience of approximately 100 people about national economic conditions.
6. Homeowner Vacancy Rate
Percent
7.0 7.0
6.5 6.5
6.0 6.0
Q3
5.5 5.8% 5.5
5.0 5.0
4.5 4.5
4.0 4.0
3.5 3.5
3.0 3.0
1995 1997 1999 2001 2003 2005 2007 2009 2011
Notes: Homeowner Vacancy Rate is (Vacant Year-Round Housing Units for Sale Only + Other Held Off Market Units)
divided by (Owner-Occupied Housing Units + Vacant Year-Round Housing Units For Sale Only+ Vacant Year-Round
Housing Units Held off Market) multiplied by 100.
Source: Census Bureau/Haver Analytics 6
7. House Prices
Index, Jan. 00 = 100
280 280
Case Schiller
260 Composite 10 260
Index
240 240
220 220
200 200
180 180
160 160
140 140
120 120
FHFA
Purchase Only
100 100
Index
80 80
60 60
1995 1997 1999 2001 2003 2005 2007 2009 2011
Source: Standard & Poor’s, Federal Housing Finance Agency/Haver Analytics 7
8. Real Personal Consumption Expenditure
Index, Peak = 100
120 120
2007:Q4 - 20011:Q4
1973:Q4 - 1977:Q4
115 1980:Q1 - 1984:Q1 115
110 110
105 105
100 100
95 95
90 90
t t+1 t+2 t+3 t+4 t+5 t+6 t+7 t+8 t+9 t+10 t+11 t+12 t+13 t+14 t+15 t+16
Note: Quarters after Business Cycle Peak. Recession starts at t.
Source: Bureau of Economic Analysis/Haver Analytics 8
9. Household Net Worth
Percent of disposable personal income
800 800
700 700
600 600
500 500
Q3
496%
400 400
300 300
1995 1997 1999 2001 2003 2005 2007 2009 2011
Source: Federal Reserve Board/Haver Analytics 9
10. Sales of Automobiles & Light Trucks
Millions of Vehicles
22 22
20 20
18 Autos and Light Trucks 18
16 16
Dec.
14 13.5 mil. 14
12 12
10 Light Trucks 10
8 8
Autos
6 6
4 4
2 2
2006 2007 2008 2009 2010 2011 2012 2013
Source: Bureau of Economic Analysis/Haver Analytics 10
11. Personal Income & Expenditures
12 Month % Change
6 6
4 Real Personal 4
Income
2 2
Real Personal Dec.
Consumption Expenditure
0 0
-2 -2
Month over Month % Change
-4 Oct. Nov. Dec. -4
Income 0.4 0.1 0.4
Expenditures 0.1 0.1 -0.1
-6 -6
2006 2007 2008 2009 2010 2011 2012 2013
Source: Bureau of Economic Analysis/Haver Analytics 11
20. Federal Reserve System Assets AIG & Bear
$, Billions Total: $2,965 Stearns: $34
3000 Term ABS Lending
Facility: $8
2800
Miscellaneous: $219 Foreign Currency
2600
Swaps: $103
2400 Total: $2,270
Miscellaneous: $156
2200 Commercial Paper
Agency MBS: $846
Facility (CPFF): $332
2000
PDCF: $38
1800
Term Auction Facility: Agency Debt: $101
1600 $450
1400 AIG & Bear Stearns: $114
1200
Foreign Currency
1000 Total: $899 Swaps: $553 AMLF: $24
Miscellaneous: $110
800 Treasury Securities:
Discount Window: $87 $1,654
600 Miscellaneous: $176 Agency
Debt: $20
400 Treasury Securities:
$790 Treasury Securities:
200 $476
0
6/27/2007 12/31/2008 1/4/2012
Notes: PDCF is the Primary Dealer Credit Facility. AMLF is the Money Market Liquidity Facility. Discount Window Lending is than $1
billion as of 6/2/2010.
Source: Board of Governors/Haver Analytics 20
21. Federal Reserve Board press release – January 25, 2012
Following careful deliberations at its recent meetings, the Federal Open Market Committee (FOMC) has reached broad agreement on the following
principles regarding its longer-run goals and monetary policy strategy. The Committee intends to reaffirm these principles and to make adjustments as
appropriate at its annual organizational meeting each January.
The FOMC is firmly committed to fulfilling its statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate
long-term interest rates. The Committee seeks to explain its monetary policy decisions to the public as clearly as possible. Such clarity facilitates well-
informed decisionmaking by households and businesses, reduces economic and financial uncertainty, increases the effectiveness of monetary policy,
and enhances transparency and accountability, which are essential in a democratic society.
Inflation, employment, and long-term interest rates fluctuate over time in response to economic and financial disturbances. Moreover, monetary policy
actions tend to influence economic activity and prices with a lag. Therefore, the Committee's policy decisions reflect its longer-run goals, its medium-term
outlook, and its assessments of the balance of risks, including risks to the financial system that could impede the attainment of the Committee's goals.
The inflation rate over the longer run is primarily determined by monetary policy, and hence the Committee has the ability to specify a longer-run goal for
inflation. The Committee judges that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal
consumption expenditures, is most consistent over the longer run with the Federal Reserve's statutory mandate. Communicating this inflation
goal clearly to the public helps keep longer-term inflation expectations firmly anchored, thereby fostering price stability and moderate long-term interest
rates and enhancing the Committee's ability to promote maximum employment in the face of significant economic disturbances.
The maximum level of employment is largely determined by nonmonetary factors that affect the structure and dynamics of the labor market. These
factors may change over time and may not be directly measurable. Consequently, it would not be appropriate to specify a fixed goal for employment;
rather, the Committee's policy decisions must be informed by assessments of the maximum level of employment, recognizing that such assessments are
necessarily uncertain and subject to revision. The Committee considers a wide range of indicators in making these assessments. Information about
Committee participants' estimates of the longer-run normal rates of output growth and unemployment is published four times per year in the FOMC's
Summary of Economic Projections. For example, in the most recent projections, FOMC participants' estimates of the longer-run normal rate of
unemployment had a central tendency of 5.2 percent to 6.0 percent, roughly unchanged from last January but substantially higher than the
corresponding interval several years earlier.
In setting monetary policy, the Committee seeks to mitigate deviations of inflation from its longer-run goal and deviations of employment from the
Committee's assessments of its maximum level. These objectives are generally complementary. However, under circumstances in which the Committee
judges that the objectives are not complementary, it follows a balanced approach in promoting them, taking into account the magnitude of the deviations
and the potentially different time horizons over which employment and inflation are projected to return to levels judged consistent with its mandate.
Source: Board of Governors 21
22. Federal Revenues
Percent of GDP
40 40
Actual Projected
35 35
30 30
25 25
20 20
15 15
10 10
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Notes: Projections are CBOs “Alternative Fiscal Scenario,” which incorporates several changes to the current law that are
widely expected to occur or would modify some provisions that might be difficult to sustain for a long period. Horizontal
dashed line indicates 1960-2008 average annual federal revenues.
Source: CBO’s Long-Term Budget Outlook (revised in June, 2011)/Haver Analytics 22
23. Federal Outlays
Percent of GDP
40 40
Actual Projected
35 35
30 30
25 25
20 20
15 15
10 10
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Notes: Projections are CBOs “Alternative Fiscal Scenario,” which incorporates several changes to the current law that are
widely expected to occur or would modify some provisions that might be difficult to sustain for a long period. Horizontal
dashed line indicates 1960-2008 average annual federal outlays.
Source: CBO’s Long-Term Budget Outlook (revised in June, 2011)/Haver Analytics 23
24. Federal Deficit
Percent of GDP
5 5
Actual Projected
0 0
-5 -5
-10 -10
-15 -15
-20 -20
-25 -25
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Notes: Projections are CBOs “Alternative Fiscal Scenario,” which incorporates several changes to the current law that are
widely expected to occur or would modify some provisions that might be difficult to sustain for a long period. Horizontal
dashed line indicates 1960-2008 average federal deficit.
Source: CBO’s Long-Term Budget Outlook (revised in June, 2011)/Haver Analytics 24
25. Federal Debt Held by Public
Percent of GDP
200 200
Actual Projected
180 180
160 160
140 140
120 120
100 100
80 80
60 60
40 40
20 20
0 0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Notes: Projections are CBOs “Alternative Fiscal Scenario,” which incorporates several changes to the current law that are
widely expected to occur or would modify some provisions that might be difficult to sustain for a long period. Horizontal
dashed line indicates 1960-2008 average annual debt held by public. Projections are expected to be greater than 200% in
2037 and later.
Source: CBO’s Long-Term Budget Outlook (revised in June, 2011)/Haver Analytics 25
