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Regional Economic Press Briefing August 12, 2011 The views expressed here are those of the presenters and do not necessarily represent the views of the Federal Reserve Bank of New York or the Federal Reserve System. Regional Economic Update Jaison R. Abel, Senior Economist Overview for the Region I. Overall Economic Activity • During Q2-2011, activity expanded in New York State and New York City, held steady in New Jersey, and declined slightly in Puerto Rico II. Employment • Job growth was generally stronger than in the nation, although unemployment rates edged up III. Housing and Household Finances • • Housing markets remain weak, but have started to firm Pockets of household financial stress clearly remain 3 Regional Economic Activity Index of Coincident Economic Indicators (CEI) 104 Index (December 2007 = 100) Nov05 102 Last Briefing Apr08 Apr08 100 Jan08 Jun 98 Mar 96 Mar-Jun Percent Change New York City Oct09 94 +0.8% New Jersey +0.1% +0.9% 92 New York State 90 Puerto Rico Nov09 88 86 Jan07 -0.5% May Shading indicates NBER recession Jul07 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Source: Federal Reserve Bank of New York; Puerto Rico Government Development Bank Note: The Puerto Rico composite index is based on a different methodology than the indexes produced by the FRBNY. Jan11 Jul11 4 Regional Employment Trends Seasonally Adjusted 102 Index (December 2007 = 100) Last Briefing 100 New York City -0.2% Jun 98 New York State +0.4% Mar-Jun Percent Change United States +0.2% 96 Jul +0.4% 94 New Jersey 92 Puerto Rico +0.6% 90 88 Jan07 Shading indicates NBER recession Jul07 Jan08 Jul08 Source: Bureau of Labor Statistics and Moody’s Economy.com Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 5 Private and Public-Sector Employment Seasonally Adjusted, Percent Change, March to June 2011 3.0% 2.5% Private-Sector Employment Public-Sector Employment 2.6% 2.0% 1.5% 1.0% 0.5% United States New York State 0.7% 0.4% New York City 0.7% 0.1% 0.0% -0.5% New Jersey -0.3% -0.5% -0.7% -0.8% Puerto Rico -1.0% -1.5% -2.0% -2.0% Source: Bureau of Labor Statistics and Moody’s Economy.com 6 Employment Change Within the Region Seasonally Adjusted, Percent Change, March to June 2011 Glens Falls Utica Rochester Syracuse Albany Buffalo Ithaca Elmira Binghamton Kingston Putnam U.S. = 0.2% -1.0% to 0.0% Fairfield Newark 0.0% to 0.2% 0.2% to 3.0% Source: Bureau of Labor Statistics and Moody’s Economy.com Note: Putnam and Bergen are the Putnam-Rockland-Westchester and Bergen-Hudson-Passaic Special BLS Areas. Edison NYC Puerto Rico 7 Regional Unemployment Rates Seasonally Adjusted Rates 18% 16% Puerto Rico 14.9% 14% 12% New York United City States 10% New Jersey 9.5% 9.1% Jul 8.7% 8.0% Jun New York State 8% 6% 4% 2% 0% Jan07 Last Briefing Shading indicates NBER recession Jul07 Jan08 Jul08 Source: Bureau of Labor Statistics and Moody’s Economy.com Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 8 Regional Home Price Trends CoreLogic Home Price Index, Seasonally Adjusted 110 Index (U.S. Peak of March 2006 = 100) 105 100 Mar-Jun Percent Change 95 New York State 90 85 +2.0% +1.6% NYC Metro 80 +1.5% New Jersey 75 70 Jun U.S. -1.1% 65 60 Mar06 Shading indicates NBER recession Sep06 Mar07 Sep07 Feb09 Mar08 Sep08 Mar09 Jun10 Sep09 Mar10 Source: CoreLogic Home Price Index (including distressed sales); Seasonally adjusted by FRBNY staff. Note: ‘NYC Metro’ refers to the ‘New York-White Plains-Wayne NY-NJ Metro Division.’ Sep10 Mar11 Mar11 9 Regional Delinquency Rates Percent of Total Debt Balance 90+ Days Late 12% New York State 10% Puerto Rico U.S. Average 8% Q2 New Jersey 6% 4% 2% 0% Mar06 Shading indicates NBER recession Sep06 Mar07 Sep07 Source: FRBNY Consumer Credit Panel/Equifax Mar08 Sep08 Mar09 Sep09 Mar10 Sep10 Mar11 Sep11 10 Delinquency Rates Within the Region Percent of Total Debt Balance 90+ Days Late in Q2-2011 U.S. = 7.3% 2.9% to 4.5% Glens Falls 4.5% to 7.3% Utica Rochester 7.3% to 10.0% Syracuse 10.0% to 16.3% Albany Buffalo Ithaca Elmira Binghamton Kingston New York City Putnam Fairfield Newark Edison Source: FRBNY Consumer Credit Panel/Equifax 11 Summary of Regional Conditions The recovery continued at a slow pace during Q2-2011: • Economic activity expanded or held steady • Employment growth, while sluggish, generally outpaced the nation, although the public sector remains weak and unemployment rates remain high • Regional housing markets appear to be firming, but remain fragile • Pockets of household financial stress clearly remain, with especially high delinquency rates in and around New York City 12 Job Creation in the Region Erica L. Groshen, Vice President Agenda • Churning • Despite slow overall growth, some industries expand while others contract • Jobs created • Mix of old jobs and new jobs, by industry • Old jobs • Hiring that restores firms, puts people back to work more easily • New jobs • Hiring that transforms our region, changing the industrial mix • May entail skill upgrading 14 Bottom Line on Job Creation in the Region • Recent job creation is closely balanced between • Industries restoring jobs lost during the recession • Industries creating new jobs that transform the economy • Due to the depth of the recession, both types of job churning are more pronounced than in recent downturns • Metro areas’ experience varies • New jobs tend to be in highly educated sectors 15 Regional Employment Trends Seasonally Adjusted 102 Index (December 2007 = 100) 100 Jun 98 New York State 96 United States Jul 94 New Jersey 92 Puerto Rico 90 Shading indicates NBER recession 88 Jan07 Jul07 Recession Jan08 Jul08 Source: Bureau of Labor Statistics and Moody’s Economy.com Jan09 Recovery Jul09 Jan10 Jul10 Jan11 Jul11 16 Certain Jobs Are Growing: United States Employment Change (Thousands), June 2009-June 2011 Health Care & Social Assistance Administrative Support Professional & Technical Services Accommodation & Food Services Mining Durable Goods Manufacturing Educational Services Other Services Transportation & Warehousing Management of Companies & Enterprises Federal Government Arts, Entertainment & Recreation Services Retail Trade Gains in growing industries: 1.9 m (+1.5%) Net change in jobs: +0.5 m (+0.4%) Utilities Wholesale Trade Real Estate, Rental & Leasing Finance & Insurance Services Information Services Nondurable Goods Manufacturing Construction State & Local Govt Losses in shrinking industries: 1.4 m (-1.1%) -750 -500 -250 0 Source: Bureau of Labor Statistics, Haver Analytics, and Moody’s Economy.com 250 500 750 17 New Jobs and Old Jobs Autoworker Laid off New Job Old Job Medical Technician Autoworker Retraining Needed No Retraining Needed 18 Why Distinguish Between Old and New Jobs • “Old job” churning reflects activity paused and restored • “New job” churning transforms an area’s economy • Compared with restoring old jobs, new job creation offers • Challenges – – – Effort to establish positions and hire workers Retraining may be needed Risk and stress for workers, firms, and communities • Opportunities – – Make region more competitive, set stage for more growth Adjust to changing technology, trade and consumption patterns 19 Churning Among Industries: New York State Change During Recession and Recovery to Date 20 New Job Growth Percent Employment Change During Recovery Old Jobs Rebounding 15 10 Admin Support 5 Health Care & Social 0 Local Gov Total Growth During Recovery -5 Construction -10 Total Decline During Recession -15 Disappearing Jobs Against the Tide -20 -20 -15 -10 -5 0 5 10 Percent Employment Change During Recession Source: Bureau of Labor Statistics, Haver Analytics, and author’s calculations 15 20 20 Churning Among Industries: New York State Change During Recession and Recovery to Date 20 New Job Growth Percent Employment Change During Recovery Old Jobs Rebounding 15 10 Admin Support Education Accommodation & Food Professional & Scientific Management Health Care Wholesale Retail Other & Social Trade Srvcs Trade Real Estate Arts & Entertainment Natural Finance Transport Resources Local Gov Nondurable Information Durable State Manufacturing Manufacturing Gov 5 0 -5 Construction Total Growth During Recovery Federal Gov -10 Total Decline During Recession -15 Disappearing Jobs Against the Tide -20 -20 -15 -10 -5 0 5 10 Percent Employment Change During Recession Source: Bureau of Labor Statistics, Haver Analytics, and author’s calculations 15 20 21 Churning Among Industries: New Jersey Change During Recession and Recovery to Date 20 New Job Growth Percent Employment Change During Recovery Old Jobs Rebounding 15 10 Professional & Scientific Admin Support Retail Trade 5 0 -5 Construction Durable Manufacturing Finance Transport Wholesale Trade Real Estate Information Nondurable Manufacturing Accommodation & Food Health Care & Social Education Management Other Arts & Entertainment Srvcs Federal Local Gov Gov Total Growth During Recovery State Gov -10 Total Decline During Recession -15 Disappearing Jobs Against the Tide -20 -20 -15 -10 -5 0 5 10 Percent Employment Change During Recession Source: Bureau of Labor Statistics, Haver Analytics, and author’s calculations 15 20 22 Churning Index Summarizes the Pattern • Adds up all industry employment changes during recession and recovery • Old Job churning index: losses → rebounds • New Job churning index: shrinking → growing industries • Total churning index: Old Job churning + New Job churning • Scale = share of total employment affected • Rises with depth of recession and/or amount of transformation • 0% = no change • 20% = turmoil, many jobs move 23 Old and New Job Churning in the Region During Recession and Recovery 14 Percent of Employment (Churning Index) New Jobs 12 Old Jobs Note: 2007 & 1990 refer to year recession started. 47% 10 8 55% 6 49% 47% 22% 4 45% 53% 32% 38% 2 51% 62% 45% 78% 55% 68% 53% 0 1990 2007 United States 1990 2007 New York State 1990 2007 New Jersey Source: Bureau of Labor Statistics, Haver Analytics, and author’s calculations Note: Puerto Rico data taken from June 2005 to June 2010 (recession) and June 2010 to June 2011 (recovery). 1990 2005 Puerto Rico 24 Old Versus New Job Churning Relative Shares Glens Falls Utica Rochester Syracuse Albany Buffalo Ithaca Elmira Binghamton Kingston Churning Index Putnam Fairfield Mostly Old Jobs Balanced Old and New Jobs Mostly New Jobs Source: Bureau of Labor Statistics and Moody’s Economy.com Note: Putnam and Bergen are the Putnam-Rockland-Westchester and Bergen-Hudson-Passaic Special BLS Areas. Newark Edison NYC 25 Which Types of Jobs Are Being Created and Destroyed? National Long-Term Trends • New jobs • Use creativity, innovativeness, complex thought, education • Require personal contact, ability to communicate • Disappearing jobs • Routine, easily automated • Tradable, easily defined and moved 26 New or Disappearing Jobs New York and New Jersey New Job Industries Percent College Graduates Health Care & Social Services High Education High Accommodation & Food Services Low Disappearing Jobs Percent College Graduates Construction Low Manufacturing - Durables Low Manufacturing - Nondurable Low 27 Evidence of Upskilling from New Jobs Percent of Workers With College Degree 42% 0.3% Percent of Workers with College Degree in 2007 40% Impact of New Job Churning 38% 0.3% 36% 34% 0.5% 32% 30% United States Source: U.S. Census Bureau and author’s calculations New York State New Jersey 28 Summary • Recovery is far from complete • To date, job creation has been closely balanced between old and new jobs in the nation and the region • Compared to recent downturns, most additional churning from • this deep recession is old job (not transformational) churning Regional metro areas vary considerably in experience • Old jobs put people back to work more easily • New jobs help transform the region and make it more competitive • Some workers may require retraining • Recent churning implies upskilling for the region as new jobs tend to be in high-skill sectors 29 Question & Answer 30 Appendix Employment Growth by Sector Seasonally Adjusted, Percent Change, March to June 2011 U.S. New York New York City New Jersey Puerto Rico Transportation & Utilities 0.7% 1.3% 0.7% 1.3% 5.8% Professional & Business Services 0.5% 1.3% 1.6% 0.3% -2.7% Retail Trade 0.5% 0.5% -1.2% 1.0% 1.5% Construction & Mining 0.5% 3.2% -0.5% 1.5% -0.7% Manufacturing 0.4% 0.9% -2.5% -1.3% -2.9% Wholesale Trade 0.4% 1.6% 1.8% 1.1% 0.1% Education & Health Services 0.4% 0.3% 0.6% 0.9% 2.7% Leisure & Hospitality 0.3% 0.0% 0.9% 2.6% -1.0% Other Services 0.2% 1.1% -2.0% 0.6% -0.1% Information 0.0% -0.7% -2.3% -1.0% 2.1% Financial Activities -0.1% 0.2% -0.6% -0.7% -0.2% State & Local Government -0.4% -0.8% -1.4% -0.7% 1.9% Federal Government -0.8% -1.2% -7.2% -1.4% -4.0% Source: Bureau of Labor Statistics and Moody’s Economy.com 32 Unemployment Rates Within the Region Seasonally Adjusted, June 2011 12% 10% U.S. 9.2 9.1 Jul 8% Bergen Hudson Passaic New York Newark City Binghamton Edison 9.3 9.7 Fairfield Buffalo Long 8.8 Syracuse Island 8.4 8.7 Rochester Lower 8.1 Albany 7.8 7.8 Hudson 7.1 6% 7.4 7.0 7.1 Ithaca 5.7 4% 2% 0% Source: Bureau of Labor Statistics and Moody’s Economy.com 33 Labor Force Seasonally Adjusted, Percent Change, March to June 2011 0.7% Puerto Rico 0.6% 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% New Jersey United States 0.1% 0.0% 0.0% -0.1% -0.2% -0.2% -0.3% -0.3% New York State New York City -0.4% Source: Bureau of Labor Statistics and Moody’s Economy.com 34 Home Prices Within the Region CoreLogic Home Price Index, Seasonally Adjusted, March to June 2011 3.5% Bergen County 3.0% 3.2 2.5% Syracuse 2.3 2.0% NYC Metro Ithaca 1.5% 1.6 1.4 Buffalo 1.0% 0.9 Fairfield 0.5% 0.5 0.6 0.0 0.0% Binghamton -0.6 Rochester -0.5% -1.0% Newark Metro -1.1 U.S. -0.3 -0.3 Poughkeepsie Long Island -1.1 Albany -1.5% Source: CoreLogic Home Price Index (including distressed sales); Seasonally adjusted by FRBNY staff. Note: ‘NYC Metro’ refers to the ‘New York-White Plains-Wayne NY-NJ Metro Division,’ ‘Newark Metro’ refers to the ‘Newark-Union NJ-PA Metro Division, and ‘Edison Metro’ refers to the Edison-New Brunswick NJ Metro Division.’ -0.7 Edison Metro 35 Certain Jobs Are Growing: New York Employment Change (Thousands), June 2009-June 2011 Health Care & Social Assistance Accommodation & Food Svcs Educational Services Administrative Support Prof, Scientific & Tech Svces Retail Trade Other Services Wholesale Trade Mgmt of Companies/Enterprises Finance & Insurance Gains in growing industries: +182,000 (+2.1%) Net change in jobs: +96,000 (+1.1%) Mining & Logging Arts, Entertainment/Recreation Real Estate/Rental & Leasing Transport/Warehousing/Utilities Information Federal Government Mfg Nondurable Goods Mfg Durable Goods Construction State & Local Gov't Losses in shrinking industries: -86,000 (-1.0%) -40 -30 -20 -10 0 Source: Bureau of Labor Statistics, Haver Analytics, and Moody’s Economy.com 10 20 30 40 36 Certain Jobs Are Growing: New Jersey Employment Change (Thousands), June 2009-June 2011 Health Care & Social Assistance Accommodation & Food Svcs Retail Trade Administrative Support Prof, Scientific & Tech Svces Finance & Insurance Educational Services Gains in growing industries: 45,000 (+1.2%) Mining & Logging Transport/Warehousing/Utilities Arts, Entertainment/Recreation Mgmt of Companies/Enterprises Real Estate/Rental & Leasing Other Services Federal Government Wholesale Trade Information, New Jersey Mfg Durable Goods Construction Mfg Nondurable Goods State & Local Govt Net change in jobs: -33,000 (-0.8%) Losses in shrinking industries: 79,000 (-2.0%) -40 -30 -20 -10 0 Source: Bureau of Labor Statistics, Haver Analytics, and Moody’s Economy.com 10 20 30 40 37 Certain Jobs Are Growing: Puerto Rico Employment Change (Thousands), June 2010-June 2011 Information Health Care & Social Assistance State and Local Government Administrative Support Information Gains in growing industries: +12,100 (+1.2%) Transport/Warehousing/Utilities Other Services Net change in jobs: -8,100 (-0.8%) Real Estate/Rental & Leasing Educational Services Finance & Insurance Losses in shrinking industries: -20,200 (-2.1%) Retail Trade Prof, Scientific & Tech Svces Wholesale Trade Mfg Durable Goods Leisure & Hospitality Mfg Nondurable Goods Federal Government Logging,Mining & Construction -6 -5 -4 -3 -2 -1 0 Source: Bureau of Labor Statistics, Haver Analytics, and Moody’s Economy.com 1 2 3 4 5 6 38 Churning Among Industries: Puerto Rico June 2005 to June 2009 (Recession) and 24-Month Recovery 40 New Job Growth Percent Employment Change During Recovery Old Jobs Rebounding 30 20 Admin Support 10 Retail Trade 0 Other Srvcs -10 Durable Manufacturing Transport Information Real Estate Nondurable Manufacturing Education Federal Health Care Gov & Social Wholesale Trade Professional & Scientific Finance Leisure Local Gov Total Growth During Recovery State Gov -20 Total Decline During Recession Natural Resources -30 Disappearing Jobs Against the Tide -40 -40 -30 -20 -10 0 10 20 Percent Employment Change During Recession Source: Bureau of Labor Statistics, Haver Analytics, and author’s calculations 30 40 39 “New Job” Churning From Shrinking Industries to Growing Industries Glens Falls Utica Rochester Syracuse Albany Buffalo Ithaca Elmira Binghamton Kingston Churning Index U.S. = 3.6 NY 2.6 to 3.2 NJ 3.2 to 3.7 PR 3.7 to 7.5 Source: Bureau of Labor Statistics and Moody’s Economy.com Note: Putnam and Bergen are the Putnam-Rockland-Westchester and Bergen-Hudson-Passaic Special BLS Areas. Putnam Fairfield Newark Edison NYC Puerto Rico 40 “Old Job” Churning Lost During Recession, Then Regained During Recovery or Vice Versa Glens Falls Utica Rochester Syracuse Albany Buffalo Ithaca Elmira Binghamton Kingston Churning Index U.S. = 3.4 NY 2.1 to 2.5 Putnam Fairfield Newark 2.5 to 3.0 NJ & PR 3.0 to 7.0 Source: Bureau of Labor Statistics and Moody’s Economy.com Note: Putnam and Bergen are the Putnam-Rockland-Westchester and Bergen-Hudson-Passaic Special BLS Areas. Edison NYC Puerto Rico 41 Old and New Job Churning in Regional Metros During Recession and Recovery 9 Percent of Employment (Churning Index) 8 New Jobs Buffalo Syracuse Poughkeepsie NYC Long Island 47% 54% 57% 54% 38% 38% 53% 46% 45% 38% 46% 43% 3 50% 43% 5 4 Edison 60% 46% Bergen Hudson Passaic Newark Putnam Rockland Westchester Binghamton Ithaca Rochester Albany 7 6 Fairfield Elmira Old Jobs 62% 62% 50% 40% 39% 61% 55% 62% 50% 44% 57% 54% 56% 50% 2 1 0 Source: Bureau of Labor Statistics, Moody’s Economy.com, and author’s calculations 42