Analysis Roundup for November 21, 2012

Watch the skies… “gobble, gobble”

Wells Fargo Economics
Leading Indicators Continue Slow Growth Trend

The national index of Leading Economic Indicators (LEI), updated earlier today, only increased 0.2% for October, indicating continued slow growth.

The six-month annualized rate of change in the LEI has
weakened since the start of the year, but remains well above the
negative 3.5 percent rate which often signals recession…

After the interest rate spread, the next largest contribution was
the Leading Credit Index, followed by first-time claims for
unemployment insurance. As fewer people file for jobless
benefits, this component pushes LEI higher.


BLS/NC Employment Security
October Sees Continued, Slow Employment Growth

Total Employment in North Carolina increased by nearly 44,000 in October, according to last week’s release of seasonally adjusted employment and unemployment data. The adjusted unemployment rate declined from 9.6% to 9.3%. Since last October, the state has gained a little more than 95,000 jobs.

With respect to nonfarm payrolls (more accurate depiction of permanent workforce), North Carolina only saw an increase of 8,000 jobs in October, all the result of private sector employment growth (+8,900). Since last October, total nonfarm payrolls have grown by 35,700, with private sector growth of 40,000. This means that there have been some employment losses in the public sector, reflecting the need for state agencies and local governments to reduce their workforces in response to permanent fiscal challenges.


Overall and private payrolls still remain more than 6% below pre-recession high levels.

Wells Fargo Economics
November Outlook focuses Globally

This month’s video outlook from Wells Fargo Economics Group provides further analysis on current global economic conditions and how they are influencing conditions here in the US. This month’s outlook host, Wells Fargo Economist Michael Brown, will present an Economic Update during the Winter 2012 NCLGBA Conference in Concord on December 7th.

NCSU/Dr. Michael Walden
NC Leading Indicators Improve a Little

Dr. Walden’s Index of Leading Economic Indicators in North Carolina did show a slight increase for September (+0.2%), ending four consecutive months of decline. All of the measures incorporated into the index showed improvement except building permits, which fell by 25%.

Compared to a year ago, the overall index is up 2.4%, with all categories except personal earnings showing improvement.

Wells Fargo/Modeled Behavior
October Home Sales Continue Market Improvement Trend

2012 has been a good year for the housing market, compared to where its position since the start of the last recession. Existing sales continued to improve in October, volume increasing 2.1% to an annual rate of 4.79 million units.

In a blog post, UNC School of Government Economist Karl Smith provides some analysis on the appearance of growth in housing starts, a prediction he discussed during his presentation at the Winter 2011 NCLGBA Conference. If trends pick up in a manner consistent with his original prediction (which he admits anticipated housing growth sooner in 2012 than what actually took place), overall economic activity might look better in 2013.

Finviz/Gas Buddy
Oil Prices Rise with Middle East Tension, Gas Prices Slide Little More

Some parts of NC are seeing retail prices for Regular Unleaded below $3.20/Gallon this week. Crude prices did go above $90/bbl this week as a result of hostilities initiated by terrorists in Gaza against Israel, creating concern for a prolonged conflict and potential supply disruptions. Weak demand, however, does limit the impact of this developing situation, especially here in the US.

Articles of Interest

Philadelphia Fed – November 2012 Business Outlook Survey

Firms responding to the November Business Outlook Survey reported declines in business activity this month following the disruptive effects of Hurricane Sandy on the region. The survey’s indicators for general activity, which had shown improvement in October, fell back into negative territory this month. Firms reported slight declines in shipments, employment, and hours worked. Indicators for the firms’ expectations over the next six months were near their levels in the previous month, but expectations for future employment and capital spending have weakened in the last two months.

WSJ – Investment Falls Off a Cliff

Forbes – The Entrepreneurs of Plymouth Rock

WITN – Computer Frozen, Message Says You’re Under FBI Investigation

GovLoop – Either Way a Fiscal Cliff

TBJ – Top 7 Emerging Trends in Real Estate

Bloomberg – Hospital Medicare Cash Lures Doctors as Costs Increase

St. Louis Fed – Price Level Targeting… The Fed Has It About Right(?)

Census – Facts for Features: Thanksgiving Day!

Have a Happy, Safe and Enjoyable Thanksgiving Holiday!


Analysis Roundup: October 22, 2012

Here’s a collection of data and information from the past couple weeks of interest to local budget and financial analysts:

NC Department of Transportation
FY 2013 Powell Bill Allocations Released

The first half of Powell Bill allocations for qualifying municipalities were distributed on September 30th. The remaining 50% will be distributed on or before December 31st.

According to the NCDOT report detailing the September 30th distribution, payouts to municipalities were 3.2% higher than last December. Total payouts were $71.4 million, reflecting a total FY 2013 allocation to cities and towns of $142.8 million, distributed in shares of $20.43 per capita and $1,610.94 per mile.

Bureau of Labor Statistics/NC Employment Security
North Carolina Added 29k Jobs in September, or Did We?

Last Friday saw the release of the latest employment and unemployment numbers for states. North Carolina’s seasonally-adjusted unemployment rate dropped slightly from 9.7% to 9.6%. The state “gained” 29,232 jobs (+0.7%) while the labor force grew by 25,656 (+0.6%).

According to BLS, North Carolina was one of 35 states that saw an increase in jobs, and among 41 with a decrease in the unemployment rate.

The Employment Security Commission provides an overview of distribution of nonfarm employment through their Current Employment Statistics. Comparing September to August, growth looks a lot more murky:

  • Seasonally-adjusted total growth is only 100 nonfarm jobs for September
  • Unadjusted numbers indicate total growth of 11,900 nonfarm jobs, though the private sector contracted by 18,700.
  • Goods producing jobs did increase by 1,900, signalling some help for manufacturing and contraction by more than 20,000 in the private service sector
  • Government jobs grew by 30,600, almost entirely facilitated by education services and the start of the school year

According to BLS, North Carolina has gained 50,839 total jobs since January 2009 (+1.2%), not keeping pace with labor growth of 88,387 (+2.7%).

With respect to nonfarm employment, North Carolina has lost 52,700 jobs since January 2009.

County-level data should be available on or by November 2nd.

NC Department of Transportation
Joint Legislative Committee Reviewing NCDOT Progress

The Metro Mayors Coalition shared several presentations last week from September and October meetings of the Joint Legislative Transportation Oversight Committee. These presentations give us an idea of what NCDOT is work on with respect to several major initiatives:

2040 Plan

Consolidation of Division of Highways

Secondary Roads Program

NC Turnpike Authority Projects

The General Assembly’s Program Evaluation Division also just completed an analysis of the North Carolina Railroad Company, recommending that the company’s “unique relationship” with the State as sole shareholder should facilitate payment of an annual dividend to the State, along with improving reporting requirements.

NC Department of Revenue
August 2012 Retail Taxable Sales Slightly Above Last Year

NCLGBA will start creating monthly reports of retail sales activity, analyzing monthly report distributed by the North Carolina Deparment of Revenue. For August, taxable sales were 0.7% higher than last August. Compared to July 2012, sales were 6.9% less, reflecting seasonal differences.

From the perspective of a 3-month rolling average, August 2012 sales were 3.1% higher than last year. Tax collections were down, reflecting the last month where the difference includes the presence of the 1% temporary sales tax increase that was in place through June 2011.

Click Here to Review Our Analysis

Wells Fargo/ABFM
Economist Vitner sees Continued Economic Slowdown

Wells Fargo Senior Economist Mark Vitner did not express much optimism for improved economic growth through the end of 2012 and into next year, as he shared several concerns during his October 2012 Economic Outlook discussion.

Click Here to Access Video & Review Summary of Topics

Click Here for Wells Fargo’s Latest Economic & Financial Commentary

Lincoln Institute of Land Policy
What’s going on with voluntary nonprofit PILOT’s

This study takes a look at recent activity with voluntary payments in lieu of taxes (PILOTs) by nonprofits to local governments. Here are the highlights with respect to their findings:

  • PILOTs have been received by at least 218 localities in at least 28 states since 2000; these payments are collectively worth more than $92 million per year. This is a much greater number of PILOTs than identified in previous studies, with the increase due to a more expansive methodology.
  • Although more than 90 percent of all PILOT revenue comes from “eds and meds”—college payments are far more important than hospital payments with colleges contributing about two-thirds of PILOT payments and hospitals another quarter.
  • Many other types of nonprofits also make PILOTs even if their contributions are generally small. This report identifies nonprofits that make PILOTs of these types: housing (47), religious organizations including churches (36), social services (15), and arts/culture (11).
  • The Northeast accounts for roughly 75 to 80 percent of PILOT activity, with the  largest share in Massachusetts and Pennsylvania.
  • Most nonprofits make fairly small PILOTs while most revenue generated comes from a small number of multi-million dollar PILOTs. As a result, the average PILOT for all nonprofits ($292,952) is nearly 10 times larger than the median ($30,000).
  • While at least 420 nonprofits make PILOTs, the majority of revenue comes from just 10 organizations: Harvard University, Yale University, Stanford University, Brown University, Boston University, Massachusetts General Hospital, Dartmouth College, Brigham & Women’s Center, Massachusetts Institute of Technology, and Princeton University (in order of payments, beginning with the highest).
  • PILOTs generate little revenue in most localities—accounting for less than 1 percent of total general revenue in 165 out of 181 localities that have information available.
  • Localities use a variety of methods to receive PILOTs; the most common are long-term contracts (used by 58 percent of localities) and routine annual payments (34 percent).
  • Most PILOTs go to cities and towns, but at least seven school districts and four counties also receive PILOTs.
Thanks to Tony McDowell (City of Asheville) for sharing this report.

Click Here to Access the Report

Cobalt Community Research/ABFM
Local Government Employee/Retiree Healthcare Coverage Struggling

“…The report shows 7% fewer local units of government provide health coverage to their active employees than in 2011.  Governments who do provide health coverage are paying a slightly smaller share of the premium.  Fewer local governments are self‐insuring…”

Click Here to Access Report & Summary Press Release

Articles of Interest

San Francisco Chronicle: Prudential Said to be Near Systemic-Risk Tag in US Review of Firm

Prudential, manager of North Carolina’s 401(k) program, is being reviewed by the Financial Stability Oversight Council, an arm of the Treasury Department established by Dodd-Frank. Due to its size in the overall financial market, the insurance and financial services company could be subject to greater federal oversight and restrictions on dividends and buybacks if deemed necessary by regulators following a final round of review and testing. Prudential did not receive any Federal bailout funds.

Charlotte Business Journal: Regulators: Duke Energy improperly sealed Progress merger records

Charlotte Business Journal: Charlotte wins $580 million from Feds for Light Rail Extension

WRAL: 2012 State Fair ends on a high note

WRAL: Amtrak through NC hits highest percentage of growth in the nation

Triangle Business Journal: NCDOT getting plenty of feedback on proposed rate increase