e-EDGE is now available as an RSS feed. [Click here to subscribe to it.]The LAEDC proudly announces its new blog for the L.A. County Strategic Plan for Economic Development! The LAEDC is devoted to implementing a comprehensive, consensus, collaborative strategic plan to create more and better jobs, and ensure L.A. County's continued economic growth and success. Through this blog, the LAEDC's Strategic Initiatives team will share our thoughts, shed light on important issues, and start a conversation on how we, as a community, can ensure a strong, diverse and sustainable economy for L.A. County's residents and communities.
The Federal Reserve Board last week published new information about the financial position of U.S. households on March 31, 2010. Looking at households' balance sheet in some detail, total assets grew by +1.4% (or $965.2 billion) in first quarter 2010, the fourth consecutive quarter-to-quarter increase. Last quarter's improvement was driven largely by a gain of $893 billion in the combined value of households' retirement funds, mutual funds and equities. As of March 31, 2010, the value of total household assets had risen by +9.8% from the first quarter 2009 trough but still remained -14.2% below the previous peak (reached in third quarter 2007).
Total liabilities of U.S. households edged down by -0.7% in the first quarter, the sixth consecutive quarter-to-quarter decline. Consumer credit debt fell by -2.3% in the first quarter, while home mortgage debt was reduced by -0.9%. As of March 31, 2010, total liabilities of U.S. households had fallen by -1.2% from the third quarter 2008 peak.
The aggregate net worth (assets minus liabilities) of U.S. households grew by +2.0%, or by $1.06 billion, between December 2009 and March 2010. This was the fourth consecutive quarterly increase since net worth hit bottom in March 2009. Net worth has grown by +13.0% over the past year but still remains -17.2% below the peak reached in June 2007, just before the recession and financial crisis broke out.
This report also provides some interesting information about U.S. homeowners' equity in their homes. As of March 31, 2010, the market value of residential real estate owned by U.S. households was estimated by the Federal Reserve at $16.51 trillion, up by +5.2% from the year-earlier trough. Against this valuation, homeowners owed $10.24 trillion of home mortgage debt (including home equity loans), down from $10.5 trillion a year earlier. Thus, U.S. homeowners held $6.27 trillion in equity on March 31st. The value of homeowners' equity has risen by +20.8% over the past year, a distinct improvement. However, much of the recent multi-year decline in home prices came straight out of U.S. homeowners' equity; so the March 31, 2010 value was still a whopping -53.3% below the peak value (reached way back in the first quarter 2006).
Clearly, these figures are improved from last year. However there's still a long way to go before U.S. households' financial condition can be considered healthy. (Nancy D. Sidhu)
Source: http://www.federalreserve.gov/releases/z1/
In April, consumer credit edged up, increasing by +0.5% after falling by -2.7% (revised) in March. By dollar volume, total consumer credit rose by +1.0 billion over the month (seasonally adjusted) after falling by -$5.4 billion in March.
Revolving debt, including balances owed on store charge accounts and bank credit cards, plunged by -$8.5 billion in April (-12.0%). April was the fifteenth consecutive month to post a decline in revolving consumer debt. Over the past year, revolving debt has declined by -9.5%.
Non-revolving debt, including auto loans, rose by +7.1% or +$9.5 billion in April. Over the past 12 months, non-revolving debt increased by +0.6%. April was the first month to record an increase in non-revolving debt since March 2009 when non-revolving debt grew by +0.5%.
Consumers have been shedding debt since August 2008. Total consumer credit has contracted by -$78.0 billion or -3.1% over the year, and since peaking in July 2008, total consumer credit has dropped by -$142.6 billion. The question now is how much further consumer credit will fall. According to the Federal Reserve’s Flow of Funds report (released 6/10/10), consumer debt, was 21.8% of household after tax income during the first quarter of 2010. In the early-1990s, the ratio of debt to disposable income was 17%, with a recent peak of 24.5% in the fourth quarter of 2005. Part of the decline in consumer debt is the result of some households shedding debt by defaulting on it, but the uncertain outlook for employment growth has many more working to shore up household balance sheets and to rebuild depleted savings accounts. (Kimberly Ritter)
Source: http://www.federalreserve.gov/releases/g19/Current/
One month away from the fiscal year-end, California’s budget position in May was just beginning to reflect the general rebound in the economy that we have been seeing elsewhere. Total receipts were up compared to the same period last year, but still fell short of disbursements by -$6.7 billion. The State’s cash balance stood at -$18.6 billion (somewhat less horrible than the -$20.2 billion reported last month). The latest financial results released by the State Controller for the General Fund show that during the first eleven months of FY 2009-2010, total receipts increased by +2.6% to $77.2 billion (up by +$2.0 billion compared with the same period last year). Total disbursements fell by -$9.7 billion to $83.8 billion (or by -10.3% on a year-over-year basis).
Based on the Governor’s January revised budget estimates, May total General Fund revenues were +9.8% higher than anticipated. This primarily reflected an increase in tax revenues. Looking at the “big three” revenue sources for the eleven months, corporate tax receipts declined by -3.5% to $7.5 billion (compared with May 2009 fiscal year-to-date) while personal income taxes dipped by -0.9% to $38.8 billion compared to the same period last year. Still, revenues from retail sales and use taxes (up by +13.8% to $24.1 billion), were sufficient to pull total revenues generated by the “big three” up by +3.4%.
On the expenditure side, Local K-12 Education received $27.7 billion during July 2009 – May 2010, a decrease of -$3.2 billion (-10.3%) from the same period last year. Community Colleges received $3.6 billion, a decrease of -$163.1 million (-4.3%) over the prior year. Contributions to CALSTRS (the K-12 teachers’ pension fund) were up for the year – rising by +10.1% to $1.2 billion (although no contributions were made in May).
Spending for the Department of Corrections continued to decline last month, falling by -$717.4 million (-8.4%) to $7.8 billion compared with $8.5 billion during the previous year. Spending on Health and Human Services dropped by -10.8% to $1.7 billion. Payments to Legislative/Judicial/Executive declined by -2.7% to $1.3 billion compared with last year, while spending on General Government was down by -2.0% to $1.5 billion.
As of the end of May, the State had $26.3 billion in borrowable resources against $18.6 billion in outstanding loans, which left just $7.7 billion in unused borrowable resources. The outstanding loan balance is comprised of $12.6 billion of internal borrowing and $6.0 billion of external borrowing (short-term revenue anticipation notes). Of the total, $11.9 billion was carried forward from the previous fiscal year, with the remaining $6.7 billion debt accumulated in the current fiscal year. (Kimberly Ritter)
PR: http://www.sco.ca.gov/eo_pressrel.html
California maintained its position as the second largest exporting state in April (Texas #1, New York #3, Florida #4 and Illinois #5), with total exports valued at $11.3 billion. Merchandise exports in April were up by +21.8% over the year, the sixth consecutive year-to-year increase.
The top California export markets in April were Mexico, China, Canada, Japan, and South Korea. All of California’s top export markets experienced gains. Exports to Mexico, California’s largest market, increased by +19.0% over the year. California’s fifth largest market, South Korea, witnessed the highest annual increase for the third consecutive month, with a surge of +70.9% over the year to April. The state’s second largest market, China (including Hong Kong and Macau), experienced the second largest year-to-year increase, with a +25.5% rise in April. Exports to Canada and Japan strengthened by +12.8% and +6.1%, respectively. From an industry standpoint, the top three product exports (ranked by dollar value) were computers & electronic products, machinery and transportation equipment (tied for #2) and chemicals (including pharmaceuticals).
On the import side, California remained the top importing state in April, with total imports valued at $25.9 billion. Texas, New York, New Jersey and Illinois were the other top importers. Imports increased by $1 billion in California from March to April. Imports in April were up by +16.6% over the year. (Ferdinando Guerra)
The U.S. Commerce Department reported that the U.S. trade deficit expanded to $40.3 billion in the month of April, up from a revised $40.0 billion in March. The deficit increased by just +0.6% over the month. The April trade deficit was at its highest level in over a year. Overall, the U.S. trade deficit has surged by +48% since reaching its low in June 2009.
U.S. imports dropped by -0.4% in April to $189.1 billion. The $0.8 billion monthly decline in imports reflected a drop in demand for consumer goods (televisions & VCRs), other goods and autos & auto parts. Some imports did rise, including capital goods (like computers, semiconductors and telecom equipment) and industrial supplies & materials. Food & beverages remained unchanged in April.
U.S. exports fell by -0.7% to $148.8 billion in April due to a dip in foreign demand for U.S. made consumer goods (especially pharmaceutical preparations) and food & beverages (soybeans). Some major categories of exports actually experienced increases, including industrial supplies & materials and autos & auto parts. Meanwhile, exports of capital goods remained unchanged.
The U.S bilateral trade deficit with China expanded by +14.2% in April to $19.3 billion from $16.9 billion in March and continued to be the largest trade deficit with any country. Year-to-date imports from China have grown by +13.8% relative to last year, while exports to China have jumped by +41.8%. Despite April’s increase, the monthly trade deficit with China remained well below its record level of $28 billion in October 2008. Imports from China were $25.9 billion in April, while exports were $6.6 billion. U.S. trade deficits with Mexico, Japan and the European Union all declined in April, while the deficit with Canada widened. (Ferdinando Guerra)
PR: http://www.bea.gov/newsreleases/international/trade/2010/pdf/trad0410.pdf
China and Japan: Chinese exports rose by nearly +50% in May compared to a year earlier. This meant that China registered a trade surplus of almost $20 billion relative to just $1.7 billion in April and a small deficit in March. Eventually, the debt crisis and resulting austerity measures in Europe (China’s biggest export market) will negatively impact European demand. This will ultimately reduce Chinese exports to China’s largest export market in the coming months. In Japan, the first quarter GDP growth rate was revised upward moving from +4.9% to 5.0% on an annualized quarter-to-quarter basis. (Ferdinando Guerra)
Wednesday, June 16, 2010: LA NABE: 4th annual Robert T. Parry Award Luncheon: Banking Conditions, Risks and Supervisory Responses
11:00 a.m. to 11:30 a.m. – Registration and Networking. 11:30 a.m. – 1:30 p.m. – Lunch, Session Talk, Award & Scholarship Presentations. Due to security restrictions, you must register by June 8th to be able to attend this event. Los Angeles Branch of the Federal Reserve Bank of San Francisco (950 South Grand Avenue), Los Angeles.
With Featured Speaker Teresa M. Curran, Group Vice President, Federal Reserve Bank of San Francisco. Presentations of Robert T. Parry Award to a local economist for his or her contribution to their community and the Los Angeles Chapter of the National Association for Business Economics, and LA NABE Scholarship Award to a local high school student who has shown academic excellence in Economics.
Tuesday, June 22, 2010: Future Ports: Clearing the Air: Building our future begins now
7:30am registration. 8:00am - 2:00pm program. Doubletree Hotel San Pedro. FuturePorts Members $99. Non-Members $120 ($140 after June 7). Govt/Non-Profit $70 ($85 after June 7).
The Southern California region depends on the Ports of Long Beach and Los Angeles as their economic engine, and the benefits of that activity can be felt in every job sector. Direct and indirect jobs created by goods movement and the supply chain industry have been negatively affected by the Great Recession of 2008-09. This conference will explore what is in store for jobs in our industry, and what we can do to continue making progress on cleaning the air while building the infrastructure that will support the jobs of our future. Morning Keynote Speaker: Senator Roderick D. Wright, California State Senate, District 25.
REGISTER NOW!
Wednesday, July 21, 2010: LAEDC 2010 Mid-year Economic Forecast
7:00 a.m. Breakfast & Networking. 8:00 a.m. - 10:30 a.m. Program. Los Angeles Marriott Downtown.
L.A. County residents and government organizations have committed more than $50 billion in public dollars to upgrade our region’s infrastructure, but will that be enough money to meet our needs? World-class infrastructure underpinned the rise of the Los Angeles County economy to the 19th largest economy in the world, but to maintain our competitive edge in today’s global economy, the region must fix the infrastructure development process and invest in upgrading its critical infrastructure. The LAEDC Mid-Year Economic Forecast is the premier source for in-depth economic information and analysis on Los Angeles County and the surrounding areas. Our first panel will discuss critical infrastructure improvement programs. The second panel will update the economic outlook for the housing industry, and the 5-County Southern California region, California, and the nation.
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