Can the Tenth District Survive the Asian Flu

1
Can the Tenth District Survive the Asian Flu?

• Russell Lamb
• Senior Economist
• Federal Reserve Bank of Kansas City

2
Can the Tenth District Survive the Asian Flu?

• Tenth District growth remains strong...

3
Total Employment
Percent change from a year ago
District
U.S.
4
Total Employment Growth
Percent change from August, 1997 to August, 1998
5
Unemployment Rate August,1998
Percent
6
Can the Tenth District Survive the Asian Flu?

• Tenth District growth remains strong...
• But the Asian financial mess is a threat.

7
Depreciation in Asian Exchange RatesJuly 1, 1997
to Oct. 1, 1998
Percent change
8
Decline in Asian Stock IndicesJuly 1, 1997 to
Oct.1, 1998
Percent change
9
The Asian Financial Mess Is A Threat.

• Tenth District agriculture has been hurt.

10
Tenth District Agriculture Has Been Hurt.

• Bulk Commodities

11
Tenth District Bulk Exports
1997
District Bulk Exports 7.2 billion
12
U.S. Agricultural Exports
13
Crop Prices
Dollars per bushel
Soybeans
Wheat
Corn
14
Livestock Prices
Dollars per hundredweight
Feeder Cattle
Fed Cattle
Hogs
15
Tenth District Agriculture Has Been Hurt

• Bulk Commodities
• Processed Foods

16
Tenth District Processed Food Exports
1997
District Processed Food Exports 3.2 billion
17
Decline in U.S. Agricultural Exports to
Asia Fiscal Year-to-Date
Percent Change
The fiscal year is October to June
18
The Asian Financial Mess Is A Threat

• District agriculture has been hurt.
• District manufacturers have less exposure.

19
Asias Share of Manufacturing ExportsTenth
District
1997
20
Asias Share of Manufacturing OutputTenth
District
1996
21
Exports to Asia as a Share of Sector OutputTenth
District
1995
22
Manufacturing Employment
Percent change from a year ago
District
U.S.
23
U.S. Import Price Index
24
The Asian Financial Mess Is A Threat.

• District agriculture has been hurt.
• District manufacturers have less exposure.
• Tourism is threatened.

25
Share of International Visitors By Origin
1997
26
Can the Tenth District Survive the Asian Flu?

• Tenth District growth remains strong...
• But the Asian financial mess is a threat.
• Asia and Latin America are still on shaky ground.

27
GDP Forecasts for Asia
August, 1998
1997
1998
1999
5.2
3.2
4.0
Latin America
Source Asia Pacific Consensus Forecasts
28
Depreciation in Latin American Exchange
RatesJuly 1, 1997 to Oct. 1, 1998
Percent change
29
Decline in Latin American Stock IndicesJuly 1,
1997 to Oct.1, 1998
Percent change
30
Can the Tenth District Survive the Asian Flu?

• Tenth District growth remains strong...
• But the Asian financial mess is a threat.
• Asia and Latin America are still on shaky ground.
• Slowing world demand will dampen U.S. growth.