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On Economic, Business &Political ClimateRoger Tutterow, Ph.D.Coles College of BusinessKennesaw State Universityrtuttero@kennesaw.eduIowa Mortgage AssociationApril 5, 2022Coralville, IA
4/5/2022Three Questions that Dominate the EconomicsWhat are the dynamics of the infection? Another surge? Can we getre-infected? Will COVID-19 mutate?How do we separate the effects of voluntary behaviors fromgovernment mandated behaviors?How do we respond when government supports end? What aboutthe expiration of forbearance agreements?IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Tale of 4 1Q2Q3Q4Q5Q6(Source: Bureau of Economic Analysis )IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 20221
4/5/2022Contributions to GDP GrowthGDP .65%-1.56%-0.18%-1.26%0.00%2020: Q12020: Q22020: Q32020: Q42021: Q12021: Q22021: Q32021: : Q12020: Q22020: Q32020: Q42021: Q12021: Q22021: Q32021: Q4Gross Investment Nonresidential : Bureau of Economic Analysis)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Industrial Production: From 20Jun-20May-20Apr-20Mar-20Feb-20-30%(source: Federal Reserve Board of Governors)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 20222
044/5/2022Freight Shipments1.41.31.21.11.00.90.8(Source: Cass Freight Index)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Consumer Sentiment(source: University of Michigan, Survey Research Center)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 20223
0Sep-18Leading Economic IndicatorsJul-19IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Feb-18(Source: Department of Commerce, in 6Jan-06Jul-052Jan-054/5/2022Auto & Light Truck Sales16AutosLight Trucks10864(source: Conference Board, % change in last 6 months)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 20224
4/5/2022Inventory/Sales aleRetail1.20(Source: Department of Commerce, in months)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Change in Payroll e: Bureau of Labor Statistics, in thousands)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 20225
4/5/2022Change in Payroll 5Jan-04Jan-03Jan-02Jan-01Jan-00-25000(Source: Bureau of Labor Statistics)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Employment Below 6%(Source: Bureau of Labor Statistics)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 20226
1Jan-22IdahoUtah85%HawaiiDistrict of ColVermontNew YorkLouisianaAlaskaMinnesotaRhode IslandNorth OhioDelawareWest VirginiaMarylandIllinoisKansasWisconsinNew MexicoOklahomaCaliforniaOregonVirginiaNew HampshireIowaNew ebraskaMissouriIndianaSouth DakotaSouth aArizonaNorth CarolinaFloridaTexasMontana4/5/2022Recovery from Bottom110%105%100%95%90%(Source: Bureau of Labor Statistics)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202215%Employment: Iowa & Neighbors10%5%0%ILIAMNMONESDWI-15%IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 20227
4/5/2022Employment: Iowa & OIAILMNNet-20%IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Employment: Iowa20%RecessRecoverNet15%10%5%0%-5%Waterloo-Cedar FallsQuad CitiesSioux CityOmaha-Council BluffIowa CityDubuqueDes MoinesCedar RapidsAmes-15%IOWA-10%IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 20228
4/5/2022Labor Force 9Sep-19May-20Jan-21Sep-2161(Source: Bureau of Labor Statistics)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Inflation: Transitory or Persistent? CPI was up 0.8% in February – after being up 0.6% and0.6% in January and December. Core CPI up 0.5% in February – after being up by 0.6%and 0.6% in January and December. Overall CPI up 7.9% over last 12 months. Core up 6.4%over same period. Supply chain disruptions, hoarder behavior was at play infood prices in early 2020, easing in recent months. Energy component up by 25.6% over the last 12 months.(source: Bureau of Labor Statistics)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 20229
4/5/2022Crude Oil: West Texas -07Apr-06Jul-05Oct-04Jan-0420(Source: US Energy Information Administration)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Construction Cost w/o EnergyM/MPrepared AsphaltConcrete ProductsSoftwood LumberNonferrous Wire and CableSteel Mills ProductsIron and SteelFabric Struct Metal ProdPlumb Fixtures and FitInputs to Nonres ConstY/YInputs to 0%10%0%-10%(Source: Bureau of Labor Statistics (PPI) & Associated Builders & Contractors)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202210
4/5/2022Federal Funds Rate9 Up, 3 Down, back to ZLB – Now head back ul-18Apr-20Jan-220%(Source: Board of Governors of Federal Reserve System)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Market’s FFR Outlook100%50-75 bps75-100 bps90%100-125 bps125-150 bps80%150-175 bps175-200 bps70%200-225 bps225-250 bps60%250-275 bps275-300 bps50%300-325 bps325-350 2211/2/202212/14/20222/1/2023(Source: CME Group)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202211
4/5/2022Market’s “Expected 2212/14/20222/1/2023(Source: CME Group)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202210-Year Treasury %(Source: Board of Governors of Federal Reserve System)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202212
02021 - Q42021 - Q12020 - Q22019 - Q3Refinance2018 - Q47002018 - Q1Purchase2017 - Q28002016 - Q32015 - Q42015 - Q12014 - Q22013 - Q32012 - Q42012 - Q12011 - Q22010 - Q32009 - Q42009 - Q12008 - Q22007 - Q32006 - Q42006 - Q12005 - Q22004 - Q32003 - Q42003 - Q12002 - Q22001 - Q32000 - Q42000 - Q11999 - Q21998 - Q31997 - 05Jan-05 01997 - Q14/5/2022Fed: Securities Held Outright 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000(source: Board of Governors of the Federal Reserve System; in billions)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Mortgage Activity: Purchase & Refinance900600500400300200100(Source: Mortgage Bankers Association)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202213
4/5/2022Charge Off Rates at %(source: Board of Governors of the Federal Reserve System)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022CRE Loan Standards: Net Tightening2022 Q12021 Q42021 Q32021 Q22021 Q12020 Q42020 Q32020 Q22020 Q12019 Q42019 Q32019 Q22019 Q12018 Q42018 Q32018 Q22018 Q12017 Q42017 Q32017 Q22017 Q12016 Q42016 Q32016 Q22016 Q12015 Q42015 Q32015 Q2A&DNon-ResMultifam2015 Q180706050403020100-10-20(Source: Federal Reserve System, Senior Officers Lending Survey)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202214
4/5/2022Construction rce: U.S. Bureau of Census)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Non-Residential Construction2017201820192020ManufactHiway and streetPowerEducationalHealth %-15%-20%-25%-30%(Source: U.S. Bureau of Census)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202215
4/5/2022US Housing Permits: SF and ep-99Jan-98Nov-98TotalSF(source: U.S. Census Bureau; Seasonally Adjusted Annual Rate in thousands)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022US Housing Permits: 8Jan-19Oct-19Jul-20Apr-21100(Source: U.S. Census Bureau; Seasonally Adjusted Annual Rate in thousands)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202216
Jan-19Jan-20Jan-21Jan-224/5/2022Iowa Housing Permits: SF and Total(source: U.S. Bureau of 02000IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Iowa Housing Permits: Multi-family(Source: U.S. Bureau of Census)6000500040003000200010000IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202217
120%100%80%60%40%20%0%-20%-40%-60%-80%ChicagoLas VegasWashingtonBustNew oenixTampaLos Angeles20-CompositeSan %-10%-15%-20%BostonSan 022Case Shiller: National Index6M12M(source: Standard & Poor’s Case-Shiller)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022CS/S&P Home Price IndexNet(Source: Standard & Poor’s Case-Shiller)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202218
4/5/2022Home Prices: Iowa18%16%1 YR14%3 YR12%5 YR10%8%6%4%Waterloo-CedarFallsSioux CityOmaha-CouncilBluffsIowa CityDubuqueDes MoinesQuad CitiesCedar Rapids0%Ames2%IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Currents Issues in Fiscal Affairs Federal:Fiscal Outlook fundamentally shifted back by COVIDNext in Play: Infrastructure, Tax Changes: Rates & SALTAlways in Play: SCOTUS, “GREEN” ISSUESOngoing Play: Revising Trade – Little focus since 2020States:Income and Sales Tax revenue plunge, then rebound.Some State Revenues in SurplusDeferred Income Tax collection shifts state revenuesTax Reform Initiatives in other States slow, but SALT consideration weigh inSE states domination biz location ranking, but not exclusive.Local:RE valuation rising tax revenues, fiscal distress moderatingFederal bailout of Municipals with over 1MM in populationThe ZOOM Economy – implication for location!!IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202219
4/5/2022Iowa Electronic Markets: Congress(source: University of Iowa)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 2022Crystal Ball: Senate(Source: Larry Sabato’s Crystal Ball)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202220
4/5/2022The Demographics: Boom & Bust(Source: CDC, US Bureau of Census)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 20222021 Migration(source: NAMS Report)IOWA MORTGAGE ASSOCIATIONCoralville, IA – April 5, 202221
4/5/2022 4 IOWA MORTGAGE ASSOCIATION Coralville, IA - April 5, 2022 Auto & Light Truck Sales 2 4 6 8 10 12 14 16 Jan-00 Aug-00 Mar-01 Oct-01 May-02 Dec-02 Jul-03 Feb-04 Sep-04 Apr-05 Nov-05 Jun-06 Jan-07 Aug-07 Mar-08 Oct-08 May-09 Dec-09 Jul-10 Feb-11 Sep-11 Apr-12 Nov-12 Jun-13 Jan-14 Aug-14 Mar-15 Oct-15 May-16 Dec-16 Jul-17 Feb-18 Sep-18 Apr-19 Nov-19 Jun-20 Jan-21 Aug-21
