The National, State & Local Economies September 29, 2017 Tatiana Bailey, Ph.D. Director, UCCS Economic Forum Please do not reproduce, forward or post this presentation without permission. Platinum Level Sponsors: Gold Level Sponsors: Silver Level Sponsors: Sustaining Level Sponsors: ADD STAFF, Inc. Independent Bank Aventa Credit Union Integrity Bank and Trust CAMA South IREM Southern Colorado Chapter 53 Channelvation Legacy Bank Children’s Hospital Colorado Olive Real Estate Group, Inc. City of Fountain The Patterson Group Classic Companies Peoples Bank The Colomina Life Company Pikes Peak Small Business Development Center Colorado Springs Convention & Visitors Bureau Pikes Peak Workforce Center Downtown Partnership of Colorado Springs Red Leg Brewing Company dpiX, LLC RTA Architects The Eastern Colorado Bank Salzman Real Estate Services, Ltd. Financial Planning Association of Southern Colorado TMR Direct FirstBank UCHealth Memorial Hospital GH Phipps Construction Companies University of Colorado Executive Programs HUB International Insurance Services U.S. Bank Housing & Building Association of Colorado Springs Overview • A Few National Indicators – Big Picture • The Colorado State Economy • Our Local Economy Real Growth in GDP vs. Year Ago 5 4 3 Q2: 2.2% 2 1 0 -1 Percentage Jan-02 Jan-13 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-14 Jan-15 Jan-16 Jan-17 -2 Jan-01 -3 Forecasts 2017 2018 -4 Longest expansion in 150 years GDP 2.2% 2.3% -5 Time Period (Quarterly at Annualized Rate) Source: U.S. Bureau of Economic Analysis; GDP forecasts by CO Office of State Planning & Budgeting in “real” terms. GSP and GMP forecasts by the UCCS Economic Forum with input from the CO OSPB. Graph shows seasonally adjusted information. 100 120 60 80 20 40 fluctuated with presidential elections. Source: University of Michigan; Forecasts by UCCS Economic Forum Economic UCCS Forecastsby Michigan; ofUniversity Source: elections. with presidential fluctuated mid through expenditures consumption personalreal, in increase projected2.7% 0 Aug-90 University University of Michigan Consumer Sentiment Aug-91 2016: 91.8 2017: 95.0 Actual: Aug-92 Aug-93 Aug-94 Aug-95 Forecast: Aug-96 Aug-97 Aug-98 Aug-99 Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 - 2017 (UM). PCE over past 58 yrs. has NOT NOT yrs. has58 (UM). PCE past over 2017 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug.: Aug-15 96.8 Aug-16 Aug-17 Survey Employer Data through July 2017 Total U.S. Monthly Non-Farm Job Openings SA (000's) 7,000 6,000 5,000 4,000 3,000 July 2017: 6,170,000 Job Openings (000’s) Job Openings 2,000 (0.9% higher than June 2017) 1,000 0 Source: Federal Reserve Bank of St. Louis, U.S. Bureau of Labor Statistics Monthly Unemployment Rate – NSA 12 Actuals: 11 U.S. 2016: 4.9% CO 2016: 3.3% 10 EPC 2016: 3.8% 9 8 Current: 7 Aug. 2017 6 4.5% U.S. Percentage 5 2.2% CO 4 3 2 Aug-03 Aug-10 Aug-02 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Sources: U.S. Bureau of Labor Statistics, BLS unemployment rate is from the CPS and includes self employed. Monthly Unemployment Rate – NSA 12 11 Forecasts 10 2017 2018 9 U.S. 4.5% 4.4% 8 Current: 7 Aug. 2017 6 4.5% U.S. Percentage 5 2.2% CO 4 3 2 Aug-03 Aug-10 Aug-02 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Sources: U.S. Bureau of Labor Statistics, BLS unemployment rate is from the CPS and includes self employed. Industry Changes in the Past 12 Months – U.S. Highlights include: • Professional & Business Svc: +603,000 • HC & Social Assistance: +432,800 • Leisure and Hospitality: +361,000 • Construction: +174,000 • Financial Activities: +156,000 Source: U.S. Bureau of Labor Statistics, Comparing July 2017 to July 2016. U.S. Civilian Participation and Unemployment Rates, NSA 72% 11% 10% Rate Unemployment 70% U-3: 4.5% U-6: 8.6% 9% 68% 8% 66% 7% 6% 64% 5% 62% 4% Civilian Participation Rate Participation Civilian 60% 3% Oct-01 Apr-04 Oct-06 Apr-09 Oct-11 Apr-14 Oct-16 Jun-03 Jun-08 Jun-13 Feb-15 Feb-05 Feb-10 Aug-07 Aug-02 Dec-05 Dec-10 Aug-12 Dec-15 Aug-17 Recession Civilian Participation Rate Unemployment Rate U-6 includes unemployed, those marginally attached to LF, plus those employed PT for economic reasons. In August 2016, it was 9.7%. Source: Bureau of Labor Statistics data through August 2017. Household Data: U.S. Civilian Participation Rates SA Employment/Population SA 90 Civilian Participation Rate 25-54 80 70 Civilian Participation Rate 20-24 Civilian Participation Rate (Total) 60 Employment/Population Percentage 50 40 Civilian Participation Rate 55+ 30 Recession Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Data through August 2017 Source: Federal Reserve Bank of St. Louis, U.S. Bureau of Labor Statistics Unemployment Rate & Number Unemployed by Age, August 2017* 16% 858k 14% 12% 10% 1.07m 8% 1.79m 1.25m 6% 1.12m 866k 330k 4% Unemployment RateUnemployment 2% 0% 0 16-119 202-24 253-34 35-444 455-54 55-664 65+7 8 years years years years years years years *Bubble size represents number of unemployed. Data not seasonally adjusted. Source: U.S. Bureau of Labor Statistics A Little Bit on Housing National Picture – Housing Prices Q2 87% of measured MSAs (178) showed gains in single- family home prices in Q2. The national median existing single-family home price in Q2 was $255,600 (up 6.2% QoQ). 87% of MSAs (61) showed gains in median condo prices. The average condo price in the U.S. was $239,500 (up 5.4% QoQ). July marked the 65th consecutive month of YoY gains. Source: National Association of REALTORS ®; Core Logic March report U.S. Annual Average & Median Existing Single-Family Home Prices $300,000 $280,000 $269,492 $275,183 $260,000 $240,000 $222,092 $233,550 $220,000 Average Price $212,933 $200,000 Median Price $180,000 Aug. 2017: $160,000 $164,542 Average: $296,100 Median: $253,500 $140,000 Source: National Association of REALTORS ® National Picture – Housing Shortage Inventory of existing homes has fallen for 26 consecutive months – pushing up prices. Housing inventory was 7.1% lower in July than it was a year ago. At the end of 2016, housing inventory was at its lowest level since 1999. Sales of new single-family homes up 10.9% from a year ago. • Lot and labor shortages Number of homes sold pretty steady over last 3 years (5.4 million) Source: National Association of REALTORS®, Annual home sales include all housing types. U.S. Housing – Pace of Sales & Rates 51% of homes sold in July were OTM for <1 mo. (total DOM was 50). 19% of sales were all cash (down from 21% last year), distressed were 5%, 4% foreclosures, 1% short sales. Average rate for 30-yr mortgage in July: 3.97% (was 3.65% in all of 2016). Source: National Association of REALTORS®, July, 2017 report. U.S. Housing – Ownership Rates Homeownership rate was 63.7% in Q2, 2017 – up almost 1% from Q2, 2016 (lowest in over 50 years). Homeownership rate for those under age 35 was 35.3% in 2017 Q2 (latent 1.7m). El Paso County homeownership rate was 72.2% in 2006 and down to 64.1% in 2016. Source: U.S. Bureau of the Census for homeownership rates; Overview • National Indicators – The Big Picture • The Colorado State Economy • Our Local Economy Real Growth in GDP and GSP vs. Year Ago 10% Forecasts 8% 2017 2018 GDP 2.2% 2.3% 6% GSP 2.7% 2.6% 4% 2% 0% * * 2003 2006 2001 2002 2004 2005 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 -2% 2000 GDP (U.S.) Growth GSP (CO) Growth -4% Not seasonally adjusted, annualized information – Colorado ranked 12th in the U.S. for GSP growth. 2016 growth rate was 2.0%. *GDP forecasts by CO Office of State Planning & Budgeting and Forum in “real” terms. GSP and GMP forecasts by the UCCS Economic Forum with input from the CO Office of State Planning & Budgeting. Source: U.S. Bureau of Economic Analysis Colorado GSP, 2016 Based on GSP, Colorado had the 12th fastest “real” growth (2.0%) of all states in the U.S. (1.5%).* 2016 real GSP growth hindered by labor shortages, lower oil and gas prices/exploration (brought down GSP by ½ pt); lowest since 2011. Largest contributors to growth were IT sector and professional & technical sectors (half of 2016 GSP growth). • Also real estate, construction, and health care. Fastest growing states were Washington (3.7%) and Oregon (3.3%) Sources: U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics; Colorado State Demography Office Sources: Colorado Office of State Planning and Budgeting; Federal Reserve Bank ofPhiladelphia Bank Reserve Federal Budgeting; and State ofPlanning Office Colorado Sources: -3% -2% -1% 0% 1% 2% 3% 4% Coincident Economic Index for Activity Colorado, 1992=100, July 6-month change, % SA Leading Index for Colorado 3-months ahead, SA (3-month moving average) Recession Jan-08 Jul-08 Jan-09 Indices Economic Coincident Jul-09 Colorado Leading and and Leading Colorado Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Colorado GSP, 2017 - 2018 Projections for GSP for 2017 (2.7%) and 2018 (2.6%) are higher.