Zions Bank Economic Overview Utah Taxpayers Association Legislative Outlook Conf
2021 Economic Outlook
January 11, 2021 The COVID-19 Pandemic is a Black Swan Event
2 Large Swings in Job Trends
5,000
0 May - November 2020 -5,000 12.4 Million Jobs Gained Feb 2008 – Feb 2010 8.7 Million Jobs Lost -10,000
March - April 2020 Thousands of Jobs of Thousands -15,000 22.1 Million Jobs Lost
-20,000 2007 2009 2011 2013 2015 2017 2019
Source: Bureau of Labor Statistics Job Growth Momentum Reverses
Month-to-Month Employment Change: Thousands of Employees 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0
-500
05-20 06-20 07-20 08-20 09-20 10-20 11-20 12-20 Source: Bureau of Labor Statistics When Will the Economy Recover? Number of Months to Reach the Previous Employment Peak After Recessions
100%
97%
94%
91%
88%
85% 0 12 24 36 48 60 72 1953 1957 1960 1969 1973 1980 1981 1990 2001 2007 2020 Source: Zions Bank Analysis of Bureau of Labor Statistics Data US Unemployment Dropping but Remains High
15% April 2020 14.7% 12%
9% February 2020 3.5% 6%
3% December 2020 6.7% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2018 2019 2020
Source: U.S. Bureau of Labor Statistics Labor Force Participation Lowest Since 1976
68%
66%
64% March 2000 67.3%
62%
60% Dec. 2020 61.5% 58%
56%
1956 2000 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2004 2008 2012 2016 2020
Source: Bureau of Labor Statistics Long-Term Unemployment Increasing 8,000 Unemployed 27 Weeks or More
7,000 Dec. 2020 4.0 m 6,000
5,000
4,000
3,000
2,000
1,000
0 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020
Source: Bureau of Labor Statistics Wage Growth Shows Low Income Job Loss Wage Growth: Year-Over-Year Percent Change 8.0% 7.0%
6.0% Dec. 2020 5.1% 5.0% 4.0%
3.0% 2007– 2019 Average: 2.5% 2.0% 1.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Bureau of Labor Statistics The Largest Quarterly GDP Increase on Record Gross Domestic Product 35% 28% Q3 2020 33.4% 21% 14% 7% 0% -7% -14% -21% Q2 2020 -28% -31.4%
-35%
Q1-1960 Q1-1982 Q1-1948 Q1-1950 Q1-1952 Q1-1954 Q1-1956 Q1-1958 Q1-1962 Q1-1964 Q1-1966 Q1-1968 Q1-1970 Q1-1972 Q1-1974 Q1-1976 Q1-1978 Q1-1980 Q1-1984 Q1-1986 Q1-1988 Q1-1990 Q1-1992 Q1-1994 Q1-1996 Q1-1998 Q1-2000 Q1-2002 Q1-2004 Q1-2006 Q1-2008 Q1-2010 Q1-2012 Q1-2014 Q1-2016 Q1-2018 Q1-2020
Source: Bureau of Economic Analysis GDP Has Not Returned to Pre-Crisis Levels
$19.5 $19.0 Q4 2019 $19.3 trillion $18.5 $18.0 $17.5 Q3 2020 $17.0 $18.6 trillion
Trillions Dollars of Trillions $16.5 $16.0 $15.5 $15.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Bureau of Economic Analysis Consumer Confidence Near 12-Month Lows
150 140 130 120 Above 110 indicates economic prosperity 110 100 90
80 Dec 2020 70 88.6 60 50 2013 2014 2015 2016 2017 2018 2019 2020
Source: The Conference Board Personal Savings Rate Dropping but Remains Elevated 40% 35% April 2020 30% 33.7% 25%
20% Nov 2020 15% 12.9% 10% 5%
0%
1967 2019 1963 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015
Source: Federal Reserve Bank of St. Louis Oil Demand Drop Caused Extraction to Drop
1,950 $120
1,650 $100
1,350 $80 Oil Prices Oil 1,050 $60
750 $40 Oil Rig Count Rig Oil 450 $20
150 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 US Oil Rigs Oil (WTI Crude)
Sources: Baker Hughes and U.S. Energy Information Administration Fed Reserve to Keep Rates at Zero for an Extended Time
Federal Funds Rate 6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2009 2016 2006 2007 2008 2010 2011 2012 2013 2014 2015 2017 2018 2019 2020
Source: Federal Reserve Board of Governors Inflation Below Target
Consumer Price Index 6.0% 5.0%
Change 4.0%
3.0% Fed’s Preferred Level
2.0% Percent
1.0% Year Year
- 0.0% Over - -1.0% Dec 2020 1.2% Year -2.0% -3.0% 2008 2010 2012 2014 2016 2018 2020
Source: Bureau of Labor Statistics Regional Economic Conditions Utah Population Fastest Growing in U.S. over Last Decade Percent Change: 2010 to 2020 U.S. Rate = 6.5%
DE 9.7% DC 17.8% 1.0% + 0.4% to 0.9% 0.2% to 0.3%
0.0% to 0.1% Loss
Source: U.S. Census Bureau Morgan 1.9% Daggett Utah Population 3.1% Growth Rates By County 2019 to 2020
State Average = 1.6%
2.0%+ 1.3% to 1.9% 0.8.0% to 1.2%
0.1% to 0.7% Loss/No Gain
Source: Kem C. Gardner Policy Institute and Utah Population Committee Utah Job Loss Lowest in the Nation Percent Change in Employment for States: November 2019 to November 2020 U.S. Rate = -6.1% UT Rate = -0.1%
VT NH -8.6% -8.0%
MA -9.1% RI -7.5% NJ -7.7% DE -8.1%
DC -6.6% -7.8% or less
-6.4% to -7.7%
-4.9% to -6.3%
-3.3% to -4.8% HI -15.2% -3.2% or more
Source: Bureau of Labor Statistics Utah Has Nearly Recovered All Jobs Lost Jobs Lost Jobs Gained 160,000 November -144,600 +14,100 144,000 October +8,100 +136,800 128,000 September
112,000 +17,800 August Net Jobs Change: 96,000 April +6,000 -139,900 -7,800 80,000
64,000 July June +14,200 48,000 +38,200
32,000 May 16,000 March +37,600 - -4,700
Source: Bureau of Labor Statistics Utah Leisure and Hospitality Still Down 24k Jobs Jobs Lost Jobs Gained 80,000 -75,100 October November +3,300 +2,600 September 64,000 +2,900 Net Jobs Change: August +48,200 +4,300 48,000 April -24,100 -70,200 July +2,100 32,000 June +10,700
16,000 May March +24,600 -4,900 -
Source: Bureau of Labor Statistics Utah Construction Industry Has Gained Jobs During Crisis Jobs Lost Jobs Gained 12,000 +11,000 11,000
November 10,000 +3,100 9,000
Net Jobs Change: 8,000
7,000 +5,800 October June -200 +3,100 6,000 -5,200 5,000 September 4,000 -2,100 August -400 3,000 May April +4,600 2,000 -1,500 March 1,000 -1,000 -
Source: Bureau of Labor Statistics Utah Employment Change Rates By County November 2019 to November 2020 State Rate = -0.1%
Less than -3.2% -1.5% to -3.2% -0.1% to -1.4% 0.0% to 1.7% More than 1.7%
Source: Utah Department of Workforce Services Utah Unemployment 6th Lowest in the Nation November 2020 U.S. Rate = 6.9%
MA 6.7% CT RI NJ 8.2% 7.3% 10.2%
MD 6.8% DC 7.5%
7.5% +
6.5% to 7.4%
5.7% to 6.4% HI 10.1% 4.7% to 5.6%
4.6% or less
Source: Bureau of Labor Statistics Utah and US Labor Force Participation Rate
74% Nov. 2020 72% 68.1% 70% 68%
66% Nov. 2020 64% 61.5% 62% 60% 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Source: Bureau of Labor Statistics United States Utah Idaho Utah Unemployment Rates By County November 2020
State Rate = 4.3%
8.0% + 5.4% to 7.9% 4.5% to 5.3% 3.8% to 4.4%
3.7% or lower
Source: Utah Department of Workforce Services Utah Home Values Much Higher Than U.S.
$400,000 Nov 2020 $350,000 $386,723 $300,000
$250,000
$200,000
$150,000 Nov 2020 $100,000 $263,351
$50,000
$0 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Source: Zillow Research Home Price Appreciation at 7-Year Highs
Year-Over-Year Percent Change 20% Nov 2020 16% 11.0% 12% 8% 4% 0% -4% Nov 2020 7.5% -8%
-12%
2013 2014 2015 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2016 2017 2018 2019 2020 Utah United States
Source: Zillow Research What’s Next? • The contraction was dramatic and swift
• Economic growth will be constrained in early 2021, especially in sectors particularly impacted by the pandemic
• Continued federal and state support is essential
• Economic growth will accelerate as the vaccination rollout accelerates and markets can return to normal
• Regional and U.S. economies are fundamentally sound and will recover, but will look different than the pre-virus world Robert Spendlove Economic and Public Policy Officer Email: [email protected] Phone: 801-560-5394
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