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Economic Outlook
Charlie Dougherty, Vice President & EconomistSeptember 11, 2019
Economic Outlook 2
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Post WW-IIAvg
2001-2007 1982-1990 1961-1969 1991-2001 2009-2019
Duration of Economic ExpansionTrough-to-Peak, Months through August 2019
Economic Expansion Longest on Record
In July the economic expansion turned 10 years old and is now
the longest on record dating back to 1854.
Source: NBER and Wells Fargo Securities
Economic Outlook 3
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00 02 04 06 08 10 12 14 16 18 20
U.S. Real GDP Bars = CAGR Line = Yr/Yr Percent Change
GDP - CAGR: Q2 @ 2.0%GDP - Yr/Yr Percent Change: Q2 @ 2.3%
Forecast
Economic Growth Will Remain Solid in 2019
Real GDP growth will remain solid, yet likely moderate
somewhat over the next few years.
Source: U.S. Department of Commerce and Wells Fargo Securities
Economic Outlook 4
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0%
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4%
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8%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Global Growth PerformanceReal GDP Growth Year-over-Year Percent Chage
United StatesG2-G7 economiesG8-G20 economies
Global Growth Peaking?
Global economic growth has been generally strong, but is slowing more dramatically
outside of the U.S., particularly in China and Germany.
Source: OECD and Wells Fargo Securities
Economic Outlook 5
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Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19
The Rising Cost of the Trade WarAnnualized Cost Based on Value of Goods x Tariff Rate
2018 Import Levels, Billions of USD
U.S. implements 25% Tariff on ~$56B
from China
U.S. implements 10% tariffon ~$207B from China
Tariff raised to 25% on ~$207B
from China
U.S. implements 15% tariff on ~$111B from China
U.S. implements 15% tariff on ~$156B from China
Tariff raised to 30% on ~$263B
from China
Trade War Escalates
Roughly 60% of new goods subject to tariffs will be delayed
until December. The delay reduces the risk that trade
tensions will take a meaningful toll on consumer confidence and weaken household spending, at
least in the near term.
Source: OECD and Wells Fargo Securities
Economic Outlook 6
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900
85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19
U.S. Trade Policy Uncertainty IndexLong Term Average = 100
Trade Policy Uncertainty Index, 3-MMA: Aug @ 520.6Trade Policy Uncertainty Index: Aug @ 747.5
NAFTA wentinto effect in
1994
Trade Uncertainty Slowing Investment
Trade uncertainty is having a slowing impact on the economy,
as businesses reassess supply chains, build contingency plans and delay capital investments.
On a brighter note, the USMCA looks to be on its way to
becoming law.
Source: OECD and Wells Fargo Securities
Economic Outlook 7
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
25
30
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65
92 94 96 98 00 02 04 06 08 10 12 14 16 18
ISM Manufacturing Index & Real GDPIndex, 3-Month Moving Average, Year-over-Year Percent Change
ISM Manufacturing Index: Aug @ 50.7 (Left Axis)Real GDP, Year-over-Year Percent Change: Jun @ 2.2% (Right Axis)
Manufacturing
Languishing global growth, a strong dollar, and the ongoing trade war are clearly having an
impact on the factory sector.
Source: Conference Board, S&P Indices and Wells Fargo Securities
Economic Outlook 8
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82 84 86 88 91 93 95 98 00 02 04 07 09 11 14 16 18
Trouble with the Curve
2-Year: Sep-06 @ 1.54
10-Year: Sep-06 @ 1.56
Fed Funds Rate: Sep-06 @ 2.25
What Can the Yield Curve Tell Us?
The spread between 2 and 10 year yields inverted recently,
sending financial markets into a tailspin. While an inverted yield
curve has preceded each of downturns going back 50 years,
the lingering impacts of monetary easing and negative yields abroad may be causing
distortions.
Source:,S&P Indices and Wells Fargo Securities
Economic Outlook 9
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
00 02 04 06 08 10 12 14 16 18 20 22
Federal Funds Target RateUpper Bound, Percent
Federal Funds: Q2 @ 2.50%
Forecast
Monetary Policy
After trimming rates in July, we expect the Fed to lower the federal funds rate again in September in an effort to
inoculate the economy from these headwinds.
Source: Federal Reserve Board and Wells Fargo Securities
Economic Outlook 10
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U.S. Nonfarm Employment ChangeChange in Employment, In Thousands
Monthly Change: Aug @ 130K12-Month Average Change: Aug @ 173K
Employment Situation: Employment Growth Resilient
Hiring remains strong but is downshifting as employers
struggle to find workers amid near record low unemployment.
Employers have added to payrolls for over 100 consecutive months.
Source: U.S. Department of Labor and Wells Fargo Securities
Economic Outlook 11
77%
78%
79%
80%
81%
82%
83%
84%
85%
60%
61%
62%
63%
64%
65%
66%
67%
68%
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
Labor Force Participation RatePrime vs. Total, Seasonally Adjusted 3-MMA
Labor Force Participation: Aug @ 63.0% (Left Axis)
Prime Participation (Ages 25-54): Jul @ 82.1% (Right Axis)
Employment Situation: Tightening Labor Market
Strong employment growth has also helped counter the
downward pressure on labor force participation from an
aging population.
Source: U.S. Department of Labor and Wells Fargo Securities
Economic Outlook 12
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16 26 36 46 56 66 76 86 96
U.S. Adult Population DistributionMillions of Persons in Age Group, 2017
Millennials: 28% Boomers: 28%Gen X: 25% Silent & Greatest: 11%
Gen Z: 8%
Demography is Destiny
Demographic shifts will continue to have a profound
impact on our economy.
Source: U.S. Department of Commerce and Wells Fargo Securities
Economic Outlook 13
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-2%
-1%
0%
1%
2%
3%
4%
5%
6%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
91 93 96 98 01 03 06 08 11 13 16 18
Productivity - Total NonfarmYear-over-Year Percent Change, 3-Year Moving Average
Yr/Yr: Q1 @ 2.4%3-Yr Moving Average: Q1 @ 1.1%
Productivity Growth
Productivity, which is an important building block for sustainably higher economic growth, has started to show
signs of trending up.
Source: U.S. Department of Labor and Wells Fargo Securities
Economic Outlook 14
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2%
3%
4%
5%
6%
1%
2%
3%
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6%
97 99 01 03 05 07 09 11 13 15 17
Atlanta Fed Wage Growth TrackerYoY % Change of Median Wage Growth, 3-MMA
Atlanta Fed Wage Growth Tracker: Jul @ 3.9%
Workers’ Earnings Drift Upward
Wage growth has picked up modestly but remains a missing
piece to the recovery thus far due to slow productivity growth.
Source: U.S. Department of Labor, Federal Reserve Bank of Atlanta and Wells Fargo Securities
Economic Outlook 15
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04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Personal Consumption Price DeflatorYear-over-Year Percent Change
PCE Deflator: Q2 @ 1.4%Core PCE Deflator: Q2 @ 1.5%FOMC's 2.0% Inflation Target
Consumer Price Inflation
Despite rising rents and gasoline prices, inflationary pressures
have lost steam recently.
Source: U.S. Department of Commerce and Wells Fargo Securities
Economic Outlook 16
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94 96 98 00 02 04 06 08 10 12 14 16 18
Consumer Confidence Index and S&P 500Conference Board
Confidence: Aug @ 135.1 (Left Axis)S&P 500: Jul @ 2,980.4 (Right Axis)
Consumer Confidence
Stock market volatility may lead to waning consumer confidence
due to the “wealth effect”.
Source: Conference Board, S&P Indices and Wells Fargo Securities
Economic Outlook 17
Food Away from Home
New Car & Trucks
Health Care
Food at Home
Apparel and Services
Used Car & Trucks
0%
3%
6%
9%
12%
15%
18%
0% 3% 6% 9% 12% 15% 18% 21% 24% 27%
Year
-ove
r-Ye
ar P
erce
nt C
hang
e
Percent Change from Three Years Ago
Consumer Expenditure Growth
Share of Average Total Expenditures
< 5.0%
5.0 - 10.0%
> 10%
Entertainment
Housing (Rented)
Housing (Owned)
Year-over-Year Percent Change & Change from 2014 to 2017
The Consumer: Housing, Healthcare and Food Away for Home
The spending habits of consumers have undergone a
considerable shift since the early 2000’s. Housing, healthcare and
food away from home now account for a majority of
consumer spending.
Source: U.S. Department of Commerce and Wells Fargo Securities
Economic Outlook 18
80%
85%
90%
95%
100%
105%
110%
115%
120%
80%
85%
90%
95%
100%
105%
110%
115%
120%
2003 2005 2007 2009 2011 2013 2015 2017 2019
U.S. Household DebtPercent of Disposable Income
Household Debt: Q2 @ 84.6%
Household Balance Sheet
Relative to income gains, the household balance sheet
appears to be in good health.
Source: FRBNY and Wells Fargo Securities
Economic Outlook 19
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
2003 2005 2007 2009 2011 2013 2015 2017 2019
U.S. Household DebtPercent of Disposable Income
Mortgage: Q2 @ 57.4% (Left Axis)
Student Loans: Q2 @ 9.0% (Right Axis)
Auto Loans: Q2 @ 7.9% (Right Axis)
Credit Cards: Q2 @ 5.3% (Right Axis)
Student Loans: A Growing Share of Household Debt
Student loans represent a relatively small share of
household debt, but are growing and likely having an impact mortgage and auto lending.
Source: FRBNY and Wells Fargo Securities
Economic Outlook 20
Federal Spending: Short Term Stimulus, but Adding to Debt
Over the long term, a growing deficit could potentially push up interest rates, crowd out private
investment and slow overall economic growth .
-$1,800
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00 02 04 06 08 10 12 14 16 18 20 22 24 26 28
U.S. Federal Budget BalanceBillions of Dollars
Federal Budget Balance: FY 2018 @ -$779.0BCBO Forecast: FY 2028 @ -$1,526.1B
Source: National Association of Realtors, U.S. Department of Commerce and Wells Fargo Securities
Economic Outlook 21
$0
$50
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$300
$350
$0
$50
$100
$150
$200
$250
$300
$350
FY 2014/2015 FY 2016/2017 FY 2018/2019
Increase in BCA Budget Caps Billions of USD
Defense SpendingNondefense Spending
Federal Fiscal Policy Outlook
The budget deal reached last year provides additional fiscal
stimulus to the U.S. economy
Source: Congressional Budget Office and Wells Fargo Securities
Economic Outlook 22
Home Sales
Lower mortgage rates will help home sales recover from last
year’s slide, but we don’t expect a meaningful reacceleration.
2
3
4
5
6
7
2%
4%
6%
8%
10%
12%
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
Mortgage Rate vs. Existing Single-Family Home SalesPercent, SAAR In Millions
30-Yr. Conventional Mortg. Rate: Jul @ 3.77% (Left Axis)SF Existing Home Sales: Jul @ 4.8M (Right Axis)
Source: National Association of Realtors, U.S. Department of Commerce and Wells Fargo Securities
Economic Outlook 23
0.0
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2.4
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20
Housing StartsMillions of Units
Multifamily StartsMultifamily ForecastSingle-Family StartsSingle-Family Forecast
Forecast
Residential Construction
Residential construction remains subdued. New
apartment construction will remain elevated and new single
family starts will gradually trend higher.
Source: U.S. Department of Commerce and Wells Fargo Securities
Economic Outlook 24
Apartments
Robust new apartment construction so far in 2019 has been met with hefty demand.
With lower mortgage rates, the second wind behind the
apartment market may begin to dissipate.
Source: CoStar and Wells Fargo Securities
0
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5.5%
6.0%
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7.5%
8.0%
8.5%
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Apartment Supply & DemandPercent, Thousands of Units
Apartment Net Completions: Q2 @ 81.5K (Right Axis)Apartment Net Absorption: Q2 @ 112.5K (Right Axis)Apartment Vacancy Rate: Q2 @ 5.7% (Left Axis)
Economic Outlook 25
2007 to Present
1960
1969
1973
1980 1981
1990
2001
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80%
100%
-40%
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100%
0 1 2 3 4 5 6 7 8 9 10 11
Nonresidential Structures InvestmentPercent Change Since Start of Each Recession
Years Since Each Recession Began
Nonresidential Construction
Builders and developers have been relatively restrained for
much of the expansion.
Source: U.S. Department of Commerce and Wells Fargo Securities
Economic Outlook 26
The West and Southeast Posting Strongest Payroll Growth
Source: U.S. Department of Labor, U.S. Department of Commerce and Wells Fargo Securities
Year-to-Year Employment Growth: July 2019
Economic Outlook 27
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10%
06 07 08 09 10 11 12 13 14 15 16 17 18 19-6%
-4%
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0%
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4%
6%
8%
10%
Texas Real GDP Growth vs. U.S. Year-over-Year Percent Change
Texas: Q1 @ 4.9%United States: Q1 @ 3.2%
Texas GDP
The Texas economy has kicked it up a notch and is growing at a
pace well ahead of the rest of the country.
Source: U.S. Department of Commerce and Wells Fargo Securities
Economic Outlook 2828
Texas Employment
The Texas job boom continues with nearly 320,000 new jobs added over the past year. Gains have been incredibly broad based across nearly every industry.
Source: U.S. Department of Labor and Wells Fargo Securities
Employment by IndustryEmployment
-6%
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90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
Texas Nonfarm Employment3-Month Moving Averages
QCEW: Yr/Yr Pct. Change: Dec @ 2.5%Nonfarm: Yr/Yr Pct. Change: Jul @ 2.5%United States: Jul @ 1.5%
July 2019
-2% -1% 0% 1% 2% 3% 4% 5% 6%
Information
Nat. Res. and Mining
Other Services
Construction
Financial Activities
Manufacturing
Leisure & Hospitality
Prof. & Bus. Svcs.
Educ. & Health Services
Government
Trade, Trans. & Utilities
Total Nonfarm
Texas Employment Growth By IndustryYear-over-Year Percent Change, 3-MMA
Number of Employees
Less
More
Economic Outlook 29
3%
6%
9%
12%
3%
6%
9%
12%
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
Texas vs. U.S. Unemployment RateSeasonally Adjusted
Texas Unemployment Rate: Jul @ 3.4%United States: Jul @ 3.7%
Unemployment Rate
Labor market conditions appear to be somewhat tighter than the
rest of the country. The Texas jobless rate now sits at a record
low of 3.4%.
Source: Baker Hughes, Inc., Bloomberg LP and Wells Fargo Securities
Economic Outlook 30
Texas Employment by Metropolitan Area
Corpus Christi
College Station
Beaumont
Houston
San Antonio
Dallas
Longview
Austin
BrownsvilleWaco
El Paso
Fort Worth
LubbockKilleen
Laredo
-1%
1%
3%
5%
-1% 1% 3% 5%
3-M
onth
Ann
ualiz
ed P
erce
nt C
hang
e (3
MM
A)
Year-over-Year Percent Change
Texas Employment Growth by Metro3-Month Moving Averages, July 2019
Total Nonfarm Employment
More Than 2.5 Million
1 - 2 Million
150 - 320 Thousand
Less than 150 Thousand
Recovering Expanding
Contracting Decelerating
Midland
McAllen
Source: U.S. Department of Labor, U.S. Dept. of Commerce and Wells Fargo Securities
Economic Outlook 31
0% 1% 2% 3% 4% 5% 6% 7% 8% 9%
Fort Myers, FloridaDoral, Florida
Cedar Park, TexasBend, Oregon
Flower Mound, TexasMeridian, Idaho
McKinney, TexasFranklin, Tennessee
Castle Rock, ColoradoGeorgetown, Texas
Buckeye, ArizonaAnkeny, Iowa
Pflugerville, TexasNew Braunfels, Texas
Frisco, Texas
15 Fastest Growing Cities in 2017Year-over-Year Percent Change, Populations>50,000
Net Migration
Strong population growth is the undercurrent behind Texas’
outperformance in recent years. The state gained nearly 380,000
new residents in 2018. It also not surprising to find many
Texas is home to the nation’s top three fastest growing cities.
Source: Department of Commerce and Wells Fargo Securities
Economic Outlook 3232
Tech and Financial Activities
Hiring in the up-and-coming tech sector is strong even outside of Austin. Financial firms continue to expand and relocate to the state, with Charles Schwab being the latest example in
Fort Worth.
Source: U.S. Department of Labor and Wells Fargo Securities
Financial ActivitiesTech Sector
-12%
-8%
-4%
0%
4%
8%
12%
16%
20%
-12%
-8%
-4%
0%
4%
8%
12%
16%
20%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Professional, Scientific and Tech EmploymentYear-over-Year Percent Change, NSA
Austin: Jul @ 4.0%Rest of Texas: Jul @ 5.9%
-6%
-4%
-2%
0%
2%
4%
6%
-6%
-4%
-2%
0%
2%
4%
6%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Financial Activities Employment GrowthYear-over-Year Percent Change, 3-Month Moving Average
United States: Jul @ 1.1%Texas: Jul @ 3.2%
Economic Outlook 33
265.1
237.1
96.188.2 84.9 84.7 84.6 84.4 80.3 79.2
0
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100
150
200
250
300
0
50
100
150
200
250
300
Agriculture Employment by StateAs of 2017, In Thousands
Number of Employed
Texas Agriculture
Underlining the importance of agriculture to the state
economy: Texas has more ag workers than any other. The
state leads the nation in cotton, livestock and poultry products,
which tend to be more labor intensive.
Source: Department of Commerce and Wells Fargo Securities
Economic Outlook 34
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700
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900
1,000
40
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100
110
120
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Active Rigs & Extraction Employment in TexasThous, 3-MMA, Baker Hughes Rotary Rig Count
Active Rotary Rigs: Jul @ 457.0 (Right Axis)Oil & Gas Extraction Employment: Jul @ 78.8K (Left Axis)
Energy Sector
The oil and gas sector is likely beginning to feel the
reverberations from pared back capital spending and a falling rig count. However, operators have
been mostly restrained and extraction-related employment
never returned to prior peak levels.
Source: Baker Hughes, Inc., Bloomberg LP and Wells Fargo Securities
Economic Outlook 35
-60
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20
40
60
-60
-40
-20
0
20
40
60
04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Dallas Fed Manufacturing ActivityDiffusion Index
Dallas Fed Outlook of General Business Activity: Jul @ -6.3
Manufacturing
Texas manufacturers are not immune to trade and global headwinds. Pullback in the energy sector is also likely
having an impact.
Source: U.S Department of Commerce and Wells Fargo Securities
Economic Outlook 36
$0$5$10$15$20$25$30$35$40$45$50$55$60$65$70$75$80$85
$0$5
$10$15$20$25$30$35$40$45$50$55$60$65$70$75$80$85
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Manufacturing ExportsChemical vs. Petroleum & Coal Manufacturing
Billions of Dollars
Manufacturing Exports: Q2 @ $61,168.0
Exports of Chemical Mfg.: Q2 @ $11.6 B
Exports of Fossil Fuels Mfg.: Q2 @ $12.4 B
Exports
Trade is vital to the Texas economy, with exports
accounting for roughly 15 percent of total economic
output. Exports have softened lately as growth abroad has
downshifted.
Source: U.S Department of Commerce and Wells Fargo Securities
Economic Outlook 37
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Texas Construction PayrollsYear-over-Year Percent Change, 3-Month Moving Average, NSA
Construction of Buildings: Jul @ 3.1%Heavy & Civil Engineering: Jul @ 10.6%Specialty Trade Contractors: Jul @ 4.3%
Construction Activity
Construction is booming in Texas. Aside from the waves of
new residential and commercial development, numerous
infrastructure projects are underway to keep pace with surging population and job
growth.
Source: U.S Department of Commerce and Wells Fargo Securities
Economic Outlook 38
0
50
100
150
200
250
0
50
100
150
200
250
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
Texas Housing PermitsThousands of Permits, Annual Rate
Single-Family: Jun @ 121,632Single-Family, 12-MMA: Jun @ 119,621Multifamily, 12-MMA: Jun @ 63,739
Single-Family Average (1998-2003): 110,689
Texas Housing
Homebuilding has softened a bit lately, however Texas remains
by far the largest market for new residential construction.
Source: U.S Department of Commerce and Wells Fargo Securities
Economic Outlook 39
15%
11%
10%
3%
2%
1%
0%
0%
-1%
-2%
-3%
-12%
-12%
-20% -15% -10% -5% 0% 5% 10% 15% 20%
Houston
Midland
San Antonio
El Paso
Beaumont
Texas
Brownsville
Forth Worth
Austin
United States
McAllen
Dallas
Corpus Christi
Texas Building PermitsYear-over-Year Percent Change of 12-Month Moving Average
July 2019
Housing Activity by Metro
New homebuilding activity has moderated in Dallas but remains highly elevated.
Houston, Midland and San Antonio lead the state in terms
of residential construction.
Source: U.S Department of Commerce and Wells Fargo Securities
Economic Outlook 4040
Texas Home Prices
Housing affordability is a major advantage for Texas. Relatively low land costs and an entitlement process that works closely with builders helps keep the housing market in balance.
Source: CoreLogic and Wells Fargo Securities
Home Price Growth by MSAHome Price Index
-20%
-16%
-12%
-8%
-4%
0%
4%
8%
12%
16%
20%
-20%
-16%
-12%
-8%
-4%
0%
4%
8%
12%
16%
20%
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
CoreLogic HPI: TX vs. U.S.Year-over-Year Percent Change
United States: Jul @ 3.6%Texas: Jul @ 3.2%
-0.2%
1.3%
2.4%
2.8%
3.2%
3.4%
3.4%
3.5%
3.6%
5.0%
5.4%
-1% 1% 3% 5% 7%
Austin
McAllen
Houston
San Antonio
Texas
Corpus Christi
El Paso
Dallas
U.S.
Fort Worth
Midland
Texas Core Logic Home PricesYear-over-Year Percent Change
July 2019
Economic Outlook 41
80
90
100
110
120
130
140
80
90
100
110
120
130
140
82 85 88 91 94 97 00 03 06 09 12 15 18
Texas Leading Economic IndexIndex, 1987= 100, Seasonally Adjusted
Texas Leading Index: Jul @ 128.6
Texas Outlook
Despite mounting headwinds, Texas’s increasingly diverse and
balanced economic landscape will help the state grow solidly
over the next few years.
Source: The Federal Reserve Bank of Dallas and Wells Fargo Securities
Appendix
Economic Outlook 43
U.S. Economic Forecast
q 3 2 01 9
2019
2018 2019 20201Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Real Gross Domestic Product 1 2.6 3.5 2.9 1.1 3.1 2.0 1.6 1.5 1.6 2.2 1.9 1.8 2.0 2.1 2.3 2.3 2.9 2.2 1.8Personal Consumption 1.7 4.0 3.5 1.4 1.1 4.7 2.9 1.7 2.0 2.0 1.9 1.9 1.8 2.1 2.2 2.2 3.0 2.6 2.2Business Fixed Investment 8.8 7.9 2.1 4.8 4.4 -0.6 0.4 0.6 3.9 1.2 3.3 3.7 4.2 4.1 4.0 4.0 6.4 2.7 2.0
Equipment 6.6 3.4 2.9 7.4 -0.1 0.7 -3.5 -2.7 3.4 -2.2 1.2 2.0 3.4 3.4 3.2 3.0 6.8 1.4 -0.2Intellectual Property Products 9.7 11.9 4.1 11.7 10.8 3.7 5.6 5.0 5.4 4.7 6.2 6.5 6.4 6.2 6.1 6.2 7.4 7.8 5.3Structures 12.1 11.0 -2.1 -9.0 4.0 -9.4 -3.0 0.5 2.5 3.0 2.5 2.2 1.8 1.9 2.0 2.1 4.1 -2.6 0.7
Residential Construction -5.3 -3.7 -4.0 -4.7 -1.0 -2.9 1.5 2.0 2.0 1.5 1.5 1.5 1.0 1.0 1.0 1.0 -1.5 -2.1 1.4Government Purchases 1.9 2.6 2.1 -0.4 2.9 4.5 0.8 1.2 1.0 1.0 0.9 0.8 0.8 0.8 0.7 0.7 1.7 2.1 1.2Net Exports 2 0.0 0.7 -2.1 -0.4 0.7 -0.7 -0.1 -0.1 0.3 -0.2 -0.2 -0.4 -0.2 -0.1 0.0 0.0 -0.4 -0.3 -0.1Inventories 2 0.1 -1.2 2.1 0.1 0.5 -0.9 -0.3 0.1 -0.9 0.5 0.1 0.1 0.2 0.0 0.0 0.0 0.1 0.1 -0.2
Nominal GDP 1 5.0 7.1 4.8 2.9 3.9 4.6 3.5 3.6 3.9 4.3 3.7 3.7 4.1 4.1 4.1 4.1 5.4 4.1 3.9Corporate Profits Before Taxes 3 2.9 2.4 4.2 4.2 -2.2 2.7 3.5 2.1 3.0 1.4 -1.2 1.5 2.1 2.0 3.0 1.5 3.4 1.5 1.1
Forecast as of: September 11, 20191 Compound Annual Growth Rate Quarter-over-Quarter 2 Percentage Point Contribution to GDP 3 Year-over-Year Percentage Change
20212020Forecast
Wells Fargo U.S. Economic Forecast
ForecastActualActual2018 2019
Source: IHS Global Insight and Wells Fargo Securities
Economic Outlook 44
Texas Economic Forecast
2012 2013 2014 2015 2016 2017 2018 2019 2020Real Gross Domestic Product by State, $ Millions 1,411,379 1,472,104 1,512,351 1,589,956 1,593,149 1,624,949 1,676,679 1,738,725 1,789,150Annual Rate 5.0% 4.3% 2.7% 5.1% 0.2% 2.0% 3.2% 3.7% 2.9%
Nominal Personal Income, $ Millions 1,133,801 1,160,362 1,250,850 1,282,380 1,287,687 1,340,568 1,411,021 1,490,500 1,565,220Nominal Personal Income, Percent Change 7.2% 2.3% 7.8% 2.5% 0.4% 4.1% 5.3% 5.6% 5.0%Real Median Household Income, $ 55,542 54,183 55,839 58,432 59,396 59,295 61,580 62,825 63,950Population, Thousands 26,090 26,489 26,977 27,487 27,937 28,323 28,702 29,130 29,600Change in thousands 443 400 488 510 451 385 379 428 470Percent Change 1.7% 1.5% 1.8% 1.9% 1.6% 1.4% 1.4% 1.5% 1.6%
Nonfarm Employment, Thousands 10,915 11,241 11,594 11,866 12,013 12,228 12,503 12,800 13,100Change in thousands 309 326 353 272 147 214 276 297 300Percent Change 2.9% 3.0% 3.1% 2.3% 1.2% 1.8% 2.3% 2.4% 2.3%
Unemployment Rate, Annual Average 6.7% 6.3% 5.1% 4.4% 4.6% 4.3% 3.9% 3.6% 3.5%Total Housing Permits 133,297 146,372 166,054 173,990 162,323 169,885 188,161 180,000 180,000Single-Family Permits 78,809 89,872 98,736 104,096 106,101 114,094 123,249 122,500 124,000Multi-Family Permits 54,488 56,500 67,318 69,894 56,222 55,791 64,912 57,500 56,000FHFA Home Price Index, Percent Change
1.5% 4.5% 7.2% 7.4% 7.6% 8.0% 7.1% 6.8% 6.2%
Sources: National Association of Realtors, Federal Housing Finance Authority, U.S. Department of Commerce, U.S. Department of Labor, Moody's Analytics & Wells Fargo SecuritiesForecast as of: September 09, 2019
Texas Economic OutlookActual Forecast
Source: IHS Global Insight and Wells Fargo Securities
Economic Outlook 45
Economic Outlook Group Publications
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A Sampling of Our Recent Special, Regional & Industry Commentary
Date Title AuthorsU.S. Macro
August-29 Counting Throes: August & Everything After Quinlan, House & SeeryAugust-23 Don't Rush Your Swing: Inventory Outlook & GDP Quinlan & HouseAugust-22 Recession Update: Is the Yield Curve Still Effective? IqbalAugust-22 The Economics of College Football: Season II Vitner, Dougherty & HonnoldAugust-14 Down, Not Out: Late Cycle Business Spending Quinlan & House
U.S. RegionalAugust-28 Oregon and Auburn Collide in Texas Vitner, Dougherty & HonnoldAugust-28 North Carolina vs. South Carolina VitnerAugust-22 Florida vs Miami: Kickoff Comes Early this Year VitnerAugust-20 Pennsylvania 2019 Midyear Outlook Vitner & DoughertyAugust-16 California Sees Modest Job Gains in July Vitner & Dougherty
Global EconomyAugust-30 India: In-dire Shape McKenna & BennenbroekAugust-28 Brexit: The Show That Never Ends NelsonAugust-27 Zeroing in on Germany NelsonAugust-15 Is There Too Much Debt in the Eurozone?: Part II Bryson, Pugliese & MathewsAugust-14 Italy Back in Poll Position Nelson & Pugliese
Interest Rates/Credit MarketJuly-31 FOMC Cuts Rates 25 bps, but Two Members Dissent BrysonJuly-31 Treasury Refunding Highlights Bryson & PuglieseJuly-30 Was the Fed's Rate Hike in December a "Policy Mistake"? Iqbal & LicisJuly-29 Rate Cuts & Consumers: Will the Medicine Take? Quinlan & SeeryJuly-25 Treasury Refunding Preview: T-Bill Barrage Bryson & Pugliese
Real Estate & HousingJuly-30 Housing Demographics Turn More Positive Vitner, Dougherty & HonnoldJuly-09 Housing Chartbook: July 2019 Vitner, Dougherty & HonnoldJune-18 Housing Chartbook: June 2019 Vitner, Dougherty & Honnold
March-20 Q4 CRE Chartbook: Construction Outlook Vitner, Dougherty & HonnoldMarch-18 Housing Chartbook: March 2019 Vitner, Dougherty & Honnold
To view any past research please visit: www.wellsfargo.com/economics
Recent Special Commentary
Economic Outlook
Wells Fargo Securities Economics Group
46
Jay H. Bryson, Global Economist …[email protected]
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