Zions Bank Economic Overview

Transcription

1 Zions Bank Economic Overview Utah Valley University Business and Economic Forum May 18, 2017

2 National Economic Conditions

3 Dow 20,000 The Trump Bump Dow Reaches New Heights Following U.S. Presidential Election Source: Wall Street Journal

4 Becomes The Trump Slump Source: Wall Street Journal

5 Expectations of Future Inflation on the Rise

6 Economic Surprise Index Dropping

7 Irrational Exuberance?

8 Current Level of Consumer Confidence Indicates Economic Prosperity Above 110 indicates economic prosperity Apr CCI = Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Source: The Conference Board

9 Business Optimism Booms Post Election Source: Trading Economics, NFIB Small Business Optimism Index

10 Divergence of Soft vs Hard Data

11 Why?

12 Cumulative Job Loss by Months of Recession Thousands Source: Euler Hermes analysis of Bureau of Labor Statistics Data

13 Cumulative Job Loss by Months of Recession Thousands Source: Euler Hermes analysis of Bureau of Labor Statistics Data

14 Index Slower Recovery than Past Recessions Periods from Value Scaled to Recession 2001 Recession 1990 Recession 1981 Recession 1980 Recession 1973 Recession Source: Federal Reserve Bank of St. Louis

15 Slower Recovery than Past Recessions

16 Trumponomics Repeal and replace the Affordable Care Act Cut corporate and income taxes Increase spending on infrastructure and military Reduce government regulations Renegotiate trade deals

17 April Job Indicators Indicator Expectation Actual Total Nonfarm Payrolls 185, ,000 Unemployment Rate 4.6% 4.4% Private Payrolls 180, ,000 Monthly Average Hourly Wage Growth Yearly Average Hourly Wage Growth 0.3% 0.3% 2.7% 2.5% Labor Force Participation 63.0% 62.9% Sources: Wall street Journal and Bureau of Labor Statistics

18 211,000 Jobs Added in April Payroll Change in thousands Million Jobs Lost 15.7 Million Jobs Recovered

19 ,000 Jobs Added in April Payroll Change 000 s Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 Source: Bureau of Labor Statistics

20 National Employment Change Percent Change in National Employment by Industry: Apr 2016 to Apr 2017 Ntl. Res. & Mining Construction Manufacturing Trade, Trans., Utilities Information -1.7% Financial Activity Prof. & Bus. Serv. Ed. & Health Serv. Leisure & Hospitality Other Services Government 0.3% 0.8% 1.0% 0.8% 3.1% 2.6% 2.1% 3.1% 2.3% 2.0% Total: 1.56% -2% -1% 0% 1% 2% 3% 4% Source: Bureau of Labor Statistics

21 National Employment Change Total Change in Number of Jobs by Industry in Thousands: Apr 2016 to Apr 2017 Ntl. Res. & Mining Construction Manufacturing Trade, Trans., Utilities Information Financial Activity Prof. & Bus. Serv. Ed. & Health Serv. Leisure & Hospitality Other Services Government Source: Bureau of Labor Statistics

22 Unemployment Rate Continues to Improve % = Full Employment Source: Bureau of Labor Statistics

23 Unemployed and Discouraged Workers Down from Last Month % % U-6 (Underemployed) U-3 (Unemployment) Source: Bureau of Labor Statistics

24 Long-Term Unemployment Decreasing Million Persons 8.0 Unemployed for more than 27 weeks March 2017: 1.6 m 0.0 Sources: Bureau of Labor Statistics and American Bankers Association

25 Unemployment Duration Remains High

26 % Labor Force Participation Among Lowest Level in Almost 40 Years Mar % Apr % Apr % Source: U.S. Bureau of Labor Statistics

27 % 68 Labor Force Participation Seeing Little Change Apr: 62.9% Source: U.S. Bureau of Labor Statistics

28 Civilian Labor Force Participation Rate 90% 80% 70% 60% 50% Men Women 40% 30% Source: Bureau of Labor Statistics

29 Participation Among Women Aged Has Surged

30 Level in Thousands Job Openings Outnumber Hires Hires Openings Federal Reserve Bank of St. Louis

31 Wage Growth Starting to Slow YoY Percent Change Average 2.4% Apr % Source: Federal Reserve Bank of St. Louis

32 5.0 Producer Price Index on the Rise Percent Year-to-Year Change Source: Bureau of Labor Statistics

33 4.5% U.S. Consumer Price Index Yearly Change Rate 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% Inflation Starting to Slow Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Source: Bureau of Labor Statistics

34 Growth in Consumer Spending Under Par Personal Consumption Expenditure Yearly Percent Change Percent Source: Bureau of Economic Analysis

35 Consumer Spending Drives Economic Growth 6.00% Components of Real Gross Domestic Product 4.00% 2.00% 0.00% -2.00% -4.00% Government Inventories Net Exports Fixed Investment Personal Consumption Real GDP Growth Q GDP 0.7%

36 = 100 The U.S. Dollar is Strong Trade Weighted U.S. Dollar Index: Broad

37 Euro compared to U.S. Dollar $1.60 $ $1.40 $1.30 $1.20 $1.10 $1.00 $0.90 $0.80 PARITY 1.06 Source: Federal Reserve Bank of St. Louis

38 U.S. Dollar Compared to Chinese Yuan $6.00 $6.50 $7.00 $7.50 $8.00 $ China stops the yuan s rise 2001 China joins WTO 2005 China allows the yuan to rise 2010 China allows the yuan to rise Aug 2015 China devalues the yuan by largest amount in 20 years Source: Federal Reserve Bank of St. Louis

39 Source: Wall Street Journal

40 $1.80 $1.70 $1.60 $1.50 $1.40 $1.30 $1.20 $1.10 British Pound Dropped to New Low Following BrexitVote Brexit Vote $ Source: Federal Reserve Bank of St. Louis

41 U.S. Total Rig Count Recovering from Low as Oil Prices Rise $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $ Oil Prices 2015 Source: Baker Hughes and U.S. Energy Information Administration Note: Total count includes oil and gas rigs 2016 Active Oil Rigs ,200 2,000 1,800 1,600 1,400 1,200 1,

42 Fed Funds Rate, Inflation and Unemployment Effective Fed Rate 12-month change in PCE price index Unemployment Rate (right axis) Fed Funds Rate Approaching 1 Percent Sources: U.S. Federal Reserve, Bureau of Economic Analysis, U.S. Bureau of Labor Statistics Note: PCE is total personal consumption expenditures

43 March 2017 Fed Rate Increase Projections 4% 3% 3.0% 3.0% 2% 1.4% 2.1% 1% 0% Long Run Source: Board of Governors of the Federal Reserve

44 Utah Economic Conditions

45 Utah Accolades CNBC: Utah Named 2016 Top State for Business WalletHub: Utah Named 2016 State with Best Economy CNBC: Salt Lake City (18), Ogden (7), and Provo (2) Named Among Top 20 Metro Areas to Start a Business in U.S. Forbes: Utah Named #1 Best State for Business (top stop 5 out of past 6 years) Standard & Poor s, Moody s Investors Service, and Fitch Ratings: Utah One of only 10 States with AAA Bond Rating

46 CA 0.7% OR 1.7% WA 1.8% NV 2.0% ID 1.8% AK 0.6% UT 2.0% AZ 1.7% Utah Population Fastest Growing in U.S. MT 1.0% WY -0.2% CO 1.7% NM 0.0% HI 0.2% Percent Change: 2015 to 2016 U.S. Rate = 0.7% ND 0.1% SD 0.9% NE 0.7% TX 1.6% KS 0.3% 0.0% OK 0.4% MN 0.7% IA 0.4% MO 0.3% AR 0.3% WI 0.2% LA 0.3% IL -0.3% MS 0.0% MI 0.1% IN 0.3% TN 0.9% AL 0.2% 1.5% or more OH 0.1% KY 0.3% 0.7% to 1.4% (at or above U.S. rate) 0.2% to 0.6% 0.0% to 0.1% Population Loss WV -0.5% VT -0.2% PA -0.1% NC 1.1% SC 1.4% GA 1.1% VA 0.5% FL 1.8% NH 0.4% NY 0.0% ME 0.2% DC 1.6% CT -0.2% DE 0.8% MD 0.4% MA 0.4% RI 0.1% NJ 0.1% Source: U.S. Census Bureau

47 Utah Population and Components of Change Total Population 3,600,000 3,300,000 3,000,000 2,700,000 2,400,000 2,100,000 1,800,000 1,500,000 1,200, , , , ,051, , , Components of Population Change Net Migration Natural Increase Total Population f 2018f Sources: U.S. Census Bureau; Data from 2014 on from State of Utah Revenue Assumptions Working Group e = estimate, f = forecast

48 Utah Population Growth Rates By County 2015 to 2016 Box Elder 2.2% Tooele 3.1% Davis 1.9% Cache 2.2% Rich 1.0% Weber 1.7% Morgan 3.1% Summit Salt Lake 2.1% 1.5% Utah 3.0% Wasatch 4.7% Duchesne -2.1% Daggett -1.4% Uintah -3.7% State Average = 2.0% Juab 4.2% Carbon -0.2% Increase of 3.0% or Greater Increase of 2.0% to 2.9% Millard 0.4% Sanpete 2.1% Sevier 1.6% Emery -1.3% Grand 0.9% Increase of 1.0% to 1.9% Beaver 1.9% Piute -2.5% Wayne 0.0% Increase of 0.0% to 0.9% Population Loss Iron 3.4% Washington 3.1% Kane 3.0% Garfield -0.1% San Juan 7.6% Source: U.S. Census Bureau

49 CA 2.1% OR 2.2% WA 2.9% Note: Seasonally Adjusted Source: Bureau of Labor Statistics Percent Change in Employment for States: March 2016 to March 2017 U.S. Rate = 1.5% NV 3.0% AK -2.1% ID 2.7% UT 3.2% AZ 2.0% Utah Employment Growth Highest in the Nation MT 2.1% WY -2.1% HI 0.7% CO 1.9% NM 0.9% ND -0.3% SD 1.6% NE 0.9% KS 0.3% TX 2.1% OK -0.1% MN 1.5% IA 0.5% MO 1.4% AR 1.1% WI 0.9% LA -0.1% IL 0.4% MS 0.0% MI 1.9% IN 1.5% TN 2.2% AL 1.4% OH 0.7% KY 1.5% GA 3.0% WV -0.8% VT 0.9% PA 1.0% NC 1.6% SC 1.8% VA 1.2% FL 3.0% NH 1.4% NY 1.2% 2.0% or more 1.6% to 1.9% (at or above the U.S. rate) 1.0% to 1.5% 0.0% to 0.9% Loss ME 0.9% DC 0.8% CT 0.1% DE 0.8% MD 1.6% MA 1.4% RI 0.8% NJ 1.2%

50 Utah Total Employment at New Highs Thousands of Employees Loss of 92,000 jobs from Gain of 287,400 jobs from low in Total Nonfarm Employment Source: U.S. Bureau of Labor Statistics, Total nonfarm seasonally adjusted Note: Numbers rounded to nearest thousand

51 Utah Industries Seeing Growth Percent Change in Utah Employment by Industry: March 2016 to March 2017 Ntl. Res. & Mining Construction Manufacturing Trade, Trans., Utilities Information Financial Activity Prof. & Bus. Serv. Ed. & Health Serv. Leisure & Hospitality Other Services Government -10.2% Total: 3.2% -1.7% 4.7% 3.8% 3.3% 2.0% 4.2% 3.6% 4.7% 3.1% 2.2% -13% -8% -3% 2% 7% Source: Utah Department of Workforce Services

52 Utah Industries Seeing Growth Total Change in Utah Employment by Industry: March 2016 to March 2017 Ntl. Res. & Mining -900 Construction 4,100 Manufacturing 4,800 Trade, Trans., Utilities 8,700 Information Financial Activity ,600 Prof. & Bus. Serv. 8,200 Ed. & Health Serv. 6,800 Leisure & Hospitality 6,500 Other Services Government 1,200 5,300 Total: 45,700-3,000-1,000 1,000 3,000 5,000 7,000 9,000 11,000 Source: Utah Department of Workforce Services

53 Utah Employment Change Rates By County Mar 2016 to Mar 2017 State Rate = 3.1% Box Elder 3.4% Tooele 5.8% Juab 0.5% Cache 2.0% Rich 2.5% Weber 1.7% Davis 2.9% Morgan 4.0% Salt Lake 2.6% Utah 4.0% Summit 2.4% Wasatch 5.4% Duchesne -0.5% Carbon -3.4% Daggett -13.8% Uintah -5.9% 5.0% or more 3.3% to 4.9% Millard 2.4% Sanpete 2.9% Sevier 2.0% Emery -3.1% Grand 0.7% 1.0% to 3.2% Beaver -3.1% Piute 8.1% Wayne -6.4% 0.0% to 0.9% Iron 6.0% Garfield -1.0% San Juan 1.7% Loss Washington 5.7% Kane 0.6% Source: Utah Department of Workforce Services; Not seasonally adjusted

54 OR 3.8% CA 4.9% WA 4.7% NV 4.8% AK 6.4% ID 3.5% UT 3.1% AZ 5.0% Note: Seasonally Adjusted Source: Bureau of Labor Statistics UT Unemployment Rates 8th th Lowest in the Nation MT 3.8% HI 2.7% WY 4.5% CO 2.6% NM 6.7% March 2017 U.S. Rate = 4.5% ND 2.8% SD 2.8% NE 3.1% KS 3.8% TX 5.0% OK 4.3% MN 3.8% IA 3.1% MO 3.9% AR 3.6% LA 5.7% WI 3.4% IL 4.9% MS 5.0% MI 5.1% IN 3.9% TN 5.1% AL 5.8% 3.9% or less OH 5.1% KY 5.0% GA 5.1% WV 4.9% VT 3.0% PA 4.8% NC 4.9% SC 4.4% VA 3.8% FL 4.8% NH 2.8% NY 4.3% 4.0% to 4.7% (at or below U.S. rate) 4.8% to 5.4% 5.5% to 5.9% 6.0% or more ME 3.0% DC 5.8% CT 4.8% DE 4.5% MD 4.3% MA 3.6% RI 4.3% NJ 4.2%

55 Utah Unemployment Rates By County March 2017 State Rate = 3.1% Box Elder 3.2% Tooele 3.5% Juab 3.2% Cache 2.7% Weber 3.5% Morgan Davis 2.9% 2.7% Salt Lake 3.0% Utah 2.8% Rich 3.3% Summit 2.9% Wasatch 3.1% Duchesne 6.3% Carbon 5.2% Daggett 3.9% Uintah 6.6% 3.1% or lower 3.2% to 3.9% Millard 3.3% Sanpete 3.7% Sevier 3.9% Emery 5.4% Grand 5.2% 4.0% to 5.9% Beaver 4.6% Piute 5.3% Wayne 7.6% 6.0% to 6.9% Iron 4.1% Garfield 7.6% San Juan 7.0% 7.0% or greater Washington 3.3% Kane 3.2% Source: Utah Department of Workforce Services

56 CA 4.5% WA 4.8% OR 4.5% NV 5.9% UT 5.6% AZ 4.3% Source: Bureau of Economic Analysis UT Personal Income Growth 2 nd Highest in the Nation AK -1.0% ID 3.6% Percent Change in Personal Income : U.S. = 3.6%; UT = 5.6% MT 2.3% WY -1.7% HI 4.5% CO 3.9% NM 2.1% ND -1.5% SD 1.2% NE 2.8% KS 2.8% TX 2.9% OK 0.6% MN 3.0% IA 2.3% MO 3.5% AR 3.2% WI 3.1% LA 1.5% IL 3.1% MS 3.2% MI 3.6% IN 3.9% TN 3.9% AL 3.3% 4.0% or more OH 3.0% KY 2.6% GA 4.8% WV 1.0% VT 3.3% PA 2.9% NC 4.1% SC 4.4% VA 3.6% FL 4.9% NH 4.7% NY 2.9% 3.6% to 3.9% (at or above the U.S. rate) 2.0% to 3.5% 0.0% to 1.9% Decrease ME 3.7% DC 4.5% CT 3.0% DE 2.9% MD 3.7% MA 4.3% RI 3.1% NJ 3.2%

57 Utah Has the Most Diverse Economy in the Nation Ten Most Diversified Economies in the Country: Hachman Index 2015 Utah Georgia North Carolina Illinois Missouri California Arizona Tennessee Pennsylvania Ohio Source: Kem C. Gardner Institute Analysis of BEA data Note: A Hachman Index value of 100 means that the distribution of employment among industries is exactly the same as the nation. The closer the value to 100, the more diverse the state s economy.

58 Utah Poverty Rate 5 th Lowest in the Nation CA 13.9% WA 11.4% OR 11.9% NV 13.0% AK 9.2% ID 12.3% UT 9.3% AZ 17.2% 2015 U.S. Rate = 13.5%, 2015 Utah Rate = 9.3% MT 11.9% WY 9.8% HI 10.9% CO 9.9% NM 19.7% ND 10.7% SD 13.9% NE 10.3% KS 14.2% TX 14.7% OK 14.2% MN 7.8% IA 10.4% MO 9.8% AR 16.1% WI 11.4% LA 18.6% IL 10.9% MS 19.1% MI 12.8% IN 13.5% TN 14.7% AL 16.3% 10.0% or less 10.1% to 11.0% OH 13.6% KY 19.5% WV 14.5% VT 10.7% PA 12.3% VA 10.9% NC 15.3% SC 14.3% GA 18.1% FL 16.2% NH 7.3% NY 14.2% 11.1% to 13.5% (at or below the U.S. rate) 13.6% to 16.0% 16.1% or more ME 12.3% DC 16.6% CT 9.1% DE 11.1% MD 9.6% MA 11.5% RI 11.8% NJ 11.2% Source: U.S. Census Bureau

59 Strong Consumer Sentiment Above 110 indicates economic prosperity U.S. Consumer Confidence Index Zions Bank Utah Consumer Attitude Index Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17

60 Consumer Price Index Yearly Growth United States vs. Wasatch Front 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% United States CPI: +2.2% Zions Bank Wasatch Front CPI: +2.8% Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Source: U.S. CPI from National Bureau of Labor Statistics and Wasatch Front CPI from Cicero Group

61 Utah Median Home Sale Prices Reaching Approaching Pre-Recession Highs $300,000 $280,000 $260,000 $240,000 $220,000 $200,000 $180,000 $160,000 $140,000 $120,000 $100, Utah U.S Source: Graphiq.com reporting data from CoreLogic

62 Utah Maintains Lower Percentage of Foreclosures than Nation Percentage of total homes in foreclosure process U.S. Utah Source: Graphiq.com

63 30,000 25,000 20,000 15,000 10,000 5,000 Utah Residential Construction Activity Continues to Rise Forecast e 2017f Single-Family Units Multifamily Total Source: State of Utah Revenue Assumptions Group, Moody s Economy.com, and HIS Global Insight

64 Utah Value of New Residential Construction Increasing $8,000 Millions of Dollars $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 Forecast $1,000 $ e 2018f Residential Nonresidential Renovations Total

65 Economic Positives Strong consumer and business confidence Housing growth Trumponomics pro growth agenda Strong population growth in the Intermountain West Utah has a diversified economy Utah job growth best in the country Wasatch Front inflation is strong Economic Negatives National and international uncertainty Continued low energy prices Trumponomics success? Depressed business investment Unstable inflation outlook Skills mismatch Low productivity growth Overregulation from Washington

66 Utah Economic Indicators f Population Nonfarm Employment Unemployment Rate Personal Income Home Prices Retail Sales e 2017f 2018f Sources: State of Utah Revenue Assumptions Working Group, Moody s Economy.com, IHS Global Insights e = estimate f = forecast

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