Dr. William Emmons of the Federal Reserve presentation to SCCAR University

June 6, 2012

William R. EmmonsFederal Reserve Bank of St. Louis

[email protected]

These comments do not necessarily represent the views of the Federal Reserve Bank of St. Louis or

the Federal Reserve System.

The Economic and Housing Outlook for St.

Charles

1

St. Charles County Association of

Realtors

mailto:[email protected]

The Economic and Housing Outlook For St. Charles County

Despite weak national and regional recoveries, the St. Charles County economy remains one of the strongest in the state. Unemployment rate at 6.3 percent, vs. 8.1 nationally

(April). Employment growth has resumed.

The St. Charles housing market faces significant challenges to recover its pre-recession vigor. Homebuilding, house prices, home sales still weak. Mortgage performance good, not great. The key questions:

Will employment and income growth pick up again? How will the aging population affect the market?

2

U6 Unemployment Measure: Unemployed+Marginally Attached+Part TimePercent of labor force plus marginally attached

U3 Offical Unemployment RatePercent of labor force

15100500Sources: Bureau of Labor Statistics /Haver Analytics

18

16

14

12

10

8

6

4

2

18

16

14

12

10

8

6

4

2

U.S. Unemployment Remains Stubbornly High—Especially Broader Measures

3

Percent

Source: Bureau of Labor Statistics Monthly data through May 2012

Broad measure: 14.8%

Gray shading indicates periods of national economic recession as defined by the National Bureau of Economic Research.

Official measure: 8.2%

4

Weakest Regions Are the Far West, Southeast, and Upper Midwest

Darker shading represents a higher level of unemployment. US unemployment rate in April 2012: 8.1%Highest unemployment rate after 2.75 years of

economic recovery since 1940

Source: GeoFred (http://geofred.stlouisfed.org) Monthly data for April 2012

http://geofred.stlouisfed.org/

U.S. Nonfarm Payroll Employment

Millions of employed persons

20151005009590Source: Haver Analytics

150

145

140

135

130

125

120

115

110

105

100

150

145

140

135

130

125

120

115

110

105

100

We’re Making Slow Progress Closing A Huge Employment Gap

5

Millions of employed persons


Source: Bureau of Labor Statistics Monthly data through May 2012

Trend implied by 1990s

expansion

Trend implied by 2000s

expansion

2009-12 trend: On track to hit previous

trend line in 2018

6

St. Charles County Unemployment Rate Is Lowest In the Region: 6.3% in April

Source: GeoFred (http://geofred.stlouisfed.org) Monthly data for April 2012

Darker shading represents a higher level of unemployment.

St. Charles County has the lowest unemployment rate within a 50-mile radius—6.3% in April 2012.

http://geofred.stlouisfed.org/

Number of Employed Persons in St. Charles County MO

Thousands, seasonally adjusted

15100500Source: Bureau of Labor Statistics /Haver Analytics

190

185

180

175

170

165

160

190

185

180

175

170

165

160

Employment in St. Charles County Exceeds Its Pre-Recession Peak

7

Thousands of employed

persons

Source: Bureau of Labor Statistics Quarterly data through Q1.2012

St. Charles County


St. Charles County EmploymentSt. Louis County Employment

St. Louis City EmploymentJefferson County Employment

15100500Sources: BLS /Haver

120

115

110

105

100

95

90

85

80

120

115

110

105

100

95

90

85

80

Rest of the St. Louis Metro Area Remains Below Pre-Recession Peaks

8

Indexes equal 100 in

2000

Source: Bureau of Labor Statistics Quarterly data through Q1.2012

St. Charles County

St. Louis County

St. Louis City

Jefferson County


Chicago-Naperville-Joliet IL-IN-WI Private Building Permits Issued (seas'ly adj)St. Louis MO-IL Private Building Permits Issued (seasonally adjusted)

Kansas City MO-KS Private Building Permits Issued (seasonally adjusted)Springfield MO Private Building Permits Issued (seasonally adjusted)

15100500Sources: CEN/H /Haver

15000

10000

5000

2000

1000

500

200

100

15000

10000

5000

2000

1000

500

200

100

Homebuilding Activity Remains Depressed Throughout the Midwest

9

Number of housing

units

Source: Census Bureau Quarterly data through Q1.2012


Chicago

St. Louis

Kansas City

Springfield MO

Chicago-Naperville-Joliet IL-IN-WI Private Building Permits Issued (seas'ly adj)St. Louis MO-IL Private Building Permits Issued (seasonally adjusted)

Kansas City MO-KS Private Building Permits Issued (seasonally adjusted)Springfield MO Private Building Permits Issued (seasonally adjusted)


110100

90807060

50

40

30

20

10

11010090807060

50

40

30

20

10

St. Louis-Area Homebuilding Declined Less Than Elsewhere

10

Indexes: Average

level in 2005 equals 100



Chicago

St. Louis

Kansas CitySpringfield MO

St Charles County Private Building Permits Issued (= 100 in 2004)Jackson County Private Building Permits Issued (= 100 in 2005)St Louis County Private Building Permits Issued (= 100 in 2004)Greene County Private Building Permits Issued (= 100 in 2005)


100908070

60

50

40

30

20

10

100908070

60

50

40

30

20

10

St. Charles CO Peak-to-Trough Decline Relatively Mild Thru 2010; Weak 2011

11Source: Census Bureau Quarterly data through Q1.2012


Indexes: Average level in 2004 equals

100 in St. Charles and St. Louis Counties; average level

in 2005 equals 100 in Jackson

and Greene Counties

St. Charles County

St. Louis County

Jackson County (Kansas City)

Greene County (Springfield)

St Charles County Private Building Permits Issued (seasonally adjusted)Jackson County Private Building Permits Issued (seasonally adjusted)St Louis County Private Building Permits Issued (seasonally adjusted)Greene County Private Building Permits Issued (seasonally adjusted)


5000

4000

3000

2000

1000

500

200

5000

4000

3000

2000

1000

500

200

St. Charles County Remains #1 or #2 Homebuilding County in Missouri

12

Number of housing

units



St. Charles County

St. Louis County

Jackson County (Kansas City)

Greene County (Springfield)

St. Charles Home Prices Have Tracked Regional and National Trends—Still Weak

13

Dollars

Sources: Zillow; St. Charles County Association of Realtors Annual data through 2011

St. Charles Home Sales Also Tracked National Sales

14

Number of homes

Sources: National Association of Realtors; St. Charles County Association of Realtors Annual data through 2011

15

March 2006: At the Peak of the Housing Boom, Mortgage Conditions Were Pristine

Percent of Mortgages 30+ Days Past Due or in Foreclosure, By CountyMarch 2006

Source: Lender Processing Services

16

March 2007: Falling House Prices, Slowing Economy Begin to Show



17

March 2008: Financial Crisis Is Underway, Economy Has Entered Recession



18

March 2009: At Its Worst, Mortgage Distress Was Concentrated in SW, SE, and MW



19

March 2010: At Its Worst, Mortgage Distress Was Concentrated in SW, SE, and

MW



20

March 2011: Mortgage Distress Remains Elevated Despite Economic Stabilization



21

March 2012: Mortgage Distress Remains Elevated Despite Economic Stabilization



22

Share of Missouri Mortgages 30+ Days Delinquent or in Foreclosure By ZIP Code

March 2005

Source:Lender Processing Services

23


March 2006


24


March 2007


25


March 2008


26


March 2009


27


March 2010


28


March 2011


29


March 2012


30

Judicial Foreclosure States Generally Have Bigger Foreclosure Inventories



JJ

JJ

JJ

JJ JJ

JJ

JJJJ

JJ

JJ

JJ JJ

JJ

JJ

JJ

JJ

JJ

JJ

JJ

JJ

JJ

JJ

JJ

31

Share of Mortgages 30+ Days Delinquent or in

Foreclosure By ZIP Code

April 2012


St. Charles County EmploymentSt. Louis County Employment

St. Louis City EmploymentJefferson County Employment

201510050095908580Sources: BLS /Haver

600

500

400

300

200

150

100

50

600

500

400

300

200

150

100

50

St. Charles County Employment Doubled Between 1985 and 2005

32

Employed persons in thousands

Source: Bureau of Labor Statistics Monthly data through April 2012

St. Charles County

St. Louis County

St. Louis City

Jefferson County


St. Charles County Five-Year Annualized Employment Growth RatePercent change from 60 months ago, annualized

St. Louis MSA Minus St. Charles CO Five-Year Annualized Employment Growth RatePercent change from 60 months ago, annualized

20151005009590Source: Haver Analytics

6

5

4

3

2

1

0

-1

-2

6

5

4

3

2

1

0

-1

-2

Is the St. Charles County Job-Creation Miracle Finished?

33

Percent change from five years

ago, annualized

Source: Bureau of Labor Statistics Monthly data through April 2012

St. Charles County

St. Louis metropolitan area excluding St.

Charles County


St. Charles County Resident PopulationSt. Louis County Resident Population

St. Louis City Resident PopulationJefferson County Resident Population


11000001000000

900000800000700000600000

500000

400000

300000

200000

100000

11000001000000900000800000700000600000

500000

400000

300000

200000

100000

Population Growth Has Slowed

34

Residents

Sources: Census Bureau Quarterly data through Q1.2012

St. Charles County

St. Louis County

St. Louis City

Jefferson County

Aging of the Population Will Affect St. Charles County, Too

35

Percent

Source: Census Bureau Annual data through 2010; projections through 2030

St. Charles County

St. Louis County

State of Missouri

Data Projections

Has St. Charles Housing Market Reached A Turning Point—Or Another False Recovery?

36

Units

Source: St. Charles County Association of Realtors Monthly data through April 2012

Despite weak national and regional recoveries, the St. Charles County economy remains one of the strongest in the state. Unemployment rate at 6.3 percent, vs. 8.1 nationally

(April). Employment growth has resumed.

The St. Charles housing market faces significant challenges to recover its pre-recession vigor. Homebuilding, house prices, home sales still weak. Mortgage performance good, not great. The key questions:

Will employment and income growth pick up again? How will the aging population affect the market?

37

In Sum: St. Charles County Economy and Housing Market Face Challenges

Dr. William Emmons of the Federal Reserve presentation to SCCAR University

Economy & Finance

Transcript of Dr. William Emmons of the Federal Reserve presentation to SCCAR University