We're live blogging Commodity EDGE today and tomorrow. If you can't join us at the event, join us virtually on Spend Matters and MetalMiner.
After a rousing kick-off by MetalMiner Editor Lisa Reisman, Commodity EDGE was off to a content-rich start on Tuesday with a keynote from William Strauss. Strauss, who originally joined the Federal Reserve Bank of Chicago in 1982 and currently serves as Senior Economist and Economic Advisor in the Economic Research Department, focused his presentation on the state of the US economy and manufacturing, including its impact on private sector organizations buying from and selling into different markets. At the start of his talk, he also touched on the fundamentals of productivity improvements, population impact, immigration and other related areas impacting the economy.
Historically speaking, Strauss noted that the last recession, which some organizations have not fully recovered from, actually ended in June of 2009. He said that the recent recession was the longest and deepest drop in activity since the 1930s. One of the lingering challenges coming out of this large recession has been unemployment. Here, Strauss observes, any time we have unemployment rates over 8% "we're in a lousy economy," but it's not a recession.
We're getting past the down times, however, at least from a GDP growth standpoint. Now the economy is expanding slowly, with a real GDP increase of only 1.6% in the past year. At the same time, however, the economic backdrop and support fundamentals of the economy aren't exactly looking up. Strauss observed that the personal savings rate has inched lower and existing home prices have fallen by over 30% in recent years. Personal savings rates as a percentage of income have fallen almost 50%, dropping from approximately 8% in 2008 to just over 4% in 2012. And after reaching a high of $230,000, the average single-family home price in the US fell from over $170K in 2010 to less than $170,000 in early 2012.
Despite these challenges, Strauss observed that consensus economic GDP growth estimates for the US have picked up. 2.25-2.5% growth is the goal for sustainable economic growth (at least). For 2012, Strauss observed we're looking at 2.3% consensus growth. This number is forecast to rise to 2.8% for 2013. Thus far, the growth out of the recession has come primarily from the consumer and business sectors (residential investment, government, business fixed income and net exports have contributed less).
Stay tuned as our live coverage of Bill's talk (and Commodity EDGE) continues throughout the day.