Daytime Drama

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Daytime Drama
By Anirban Basu, Chief Economist, Associated
Builders and Contractors February 27, 2009
2
As the World Turns (more slowly)
3
Historic and Projected World Output Growth, 2005
through 2010
Source International Monetary Fund
2009-2010 data are projections
4
Estimated Growth in Output by Select Global
Areas, 2009
Source International Monetary Fund
5
Top 12 Stock Exchanges 2008 Growth
Source Yahoo! Finance
6
Days of Our Lives
7
Recession Watchas of late January, 2009
Source Moodys Economy
8
Dow Jones Industrial AverageNovember
1998-February 17, 2009
Source Google Finance
9
Dow Components as of 2/10/09 (2 yr high)
-59.2
-62.4
-72.7
-92.9
-87.4
Source Yahoo! Finance
10
Dow Components as of 2/10/09 (2 yr high)
-54.5
-69.7
-44.7
-93.4
-46.1
Source Yahoo! Finance
11
Dow Components as of 2/10/09 (2 yr high)
-26.1
-19.6
-48.7
-29.6
-46.7
Source Yahoo! Finance
12
Dow Components as of 2/10/09 (2 yr high)
-43.6
-11.9
-49.6
-47.5
-46.9
Source Yahoo! Finance
13
Dow Components as of 2/10/09 (2 yr high)
-17.3
-39.5
-22.8
-31.9
-39.6
Source Yahoo! Finance
14
Conference Board Consumer Expectations
IndexOctober 2001 through January 2009
Source Conference Board
15
Retail Food Services SalesJanuary 2001 through
January 2009
Source Dismal.com
16
15-Year 30-Year Fixed Mortgage Rates January
1995 through December 2008
Source Freddie Mac
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U.S. New Home SalesJanuary 1999 through December
2008
Source U.S. Census Bureau
18
U.S. New Residential Construction January 1999
through December 2008
Source Economy.com
19
Current Hot Metro Housing Markets (150) Annual
Existing Single-Family Home Price Appreciation
2007Q4 vs. 2008Q4
Boston -11.8 New York -14.6 Philly
-6.3 Baltimore -5.5 Washington -26.2
Source National Association of Realtors
U.S. -12.4 in 2008Q4
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Worst Performing Metro Housing Markets (150)
Annual Existing Single-Family Home Price
Appreciation 2007Q4 vs. 2008Q4
Source National Association of Realtors
U.S. -12.4 in 2008Q4
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Mortgage Bankers Association Delinquency Rates,
Prime Mortgage Loans, 2005Q1 through 2008Q3

• The delinquency rate does not include loans in
  the process of foreclosure.  The percentage of
  loans in the foreclosure process was 1.42 percent
  of all prime loans outstanding at the end of the
  second quarter, an increase of 22 basis points
  from the first quarter of 2007.

Source Economy.com
22
Mortgage Bankers Association Delinquency Rates,
Subprime Mortgage Loans, 2005Q1 through 2008Q3
The delinquency rate does not include loans in
the process of foreclosure.  The percentage of
subprime loans in the foreclosure process was
18.67 percent of all loans outstanding at the end
of the fsecond quarter, decrease of 12 basis
points from the first quarter of 2008.
Source Economy.com
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Commercial Real Estate LoansJanuary 2001-January
2009, SA
Source Federal Reserve Board
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Architecture Billings IndexJanuary 2008-January
2009
Source The American Institute of Architectures
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CPIJanuary 2001-January 2009
Core CPI All items less food and energy
CPI -0.2 Core CPI 1.7
Source Bureau of Labor Statistics
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Inputs to Construction Producer PricesJanuary
2007-January 2009
Source Bureau of Labor Statistics
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U.S. Federal Budget Deficit, 1995-2010
2007-2010 data are projections
Source Congressional Budget Office
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Guiding Light
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U.S. Trade Deficit, January 2001 through December
2008
Source Dismal.com
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U.S. Trade Deficit Jun. 08-Dec. 08 Net Change by
Component
Source Dismal.com
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Value of the Dollar (Broad Dollar Index) January
1999 through February 2009
Broad Dollar Index a weighted average of the
foreign exchange value of the U.S. dollar against
the currencies of a broad group of major U.S.
trading partners.
Source Federal Reserve Board
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Gross Domestic Product1990Q1 through 2008Q4
2008Q4 -3.8
Source Bureau of Economic Analysis
33
Net Change in U.S. JobsJanuary 2001 through
January 2009
Over the last 12 months (Jan. to Jan) the U.S.
lost 3,500k jobs
Source Bureau of Labor Statistics
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National Nonfarm Employmentby Industry Sector
GroupsJanuary 2008 v. January 2009Absolute
Change
-3,500k All Told
Source Bureau of Labor Statistics
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Unemployment Rates, U.S. States (SA) December
2008

• U.S. Unemployment Rate December 087.2

Source Bureau of Labor Statistics
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Overview of where the 787 billion is going
Source Recovery.gov
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The American Recovery and Reinvestment Act of
2009( billions)
Source Congressional Budget Office
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Nonresidential Construction-related Stimulus
Spending
Source Wall Street Journal
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Select Infrastructure Tax Cuts in Stimulus Package
Source Wall Street Journal
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Search for Tomorrow

• Stimulus, stimulus, stimulus
• This is the worst of it from a broader economic
  perspective
• Recovery for office, retail and other
  construction components being stimulated
  indirectly is probably at least two years away

• Unemployment will likely peak above 9 percent,
  perhaps much higher than that
• Ben Bernanke as hero
• Washington, D.C. is still the new financial
  capital of North America.