2014 Economic Forecast: Boulder & Beyond. Keynote Presentation

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1 2014 Economic Forecast: Boulder & Beyond Keynote Presentation

2 Business Research Division Richard Wobbekind Executive Director Business Research Division & Senior Associate Dean Leeds School of Business

4 Real GDP Growth Percent Quarterly and Annualized Real GDP Annualized GDP Annualized GDP Sources: Bureau of Economic Analysis and December 2013 NABE Forecast. Quarterly GDP

5 National Employment Thousands, Monthover-Month Recession 8 Months Recession 18 Months Sources: Bureau of Labor Statistics (Seasonally Adjusted), National Bureau of Economic Research, and NABE Outlook December 2013.

6 National Employment Months to Recovery Percent Present Number of Months Since Peak Source: Bureau of Labor Statistics (Seasonally Adjusted).

7 U.S. Income and Consumption Percent Change 5.0 Disposable Personal Income Percent Change 4.0 Personal Consumption % 2.8% % 2.8% Sources: Bureau of Economic Analysis and Blue Chip Economic Forecasts.

8 Household Wealth $ Billions 45,000 40,000 Mutual Funds 35,000 30,000 25,000 Corporate Equities 20,000 15,000 10,000 Real Estate 5, Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2013 Source: Federal Reserve Board, Balance Sheet of Households and Nonprofit Organizations (B100) (Not Seasonally Adjusted).

9 Household Debt Burden Percent of Disposable Income DSR Financial Obligations Ratio (R) 13.0 FOR Debt Service Ratio (L) Q3 93 Q1 95 Q3 96 Q1 98 Q3 99 Q1 01 Q3 02 Q1 04 Q3 05 Q1 07 Q3 08 Q1 10 Q3 11 Q Source: Federal Reserve, Household Debt Service and Obligations Ratios.

10 Index of Consumer Confidence 1985= Recession 8 months Mountain Region Recession 8 months Recession 18 months United States Sources: The Conference Board and National Bureau of Economic Research.

11 Vehicle Sales and Retail Sales Thousands, SAAR 25,000 Vehicle Sales Retail Sales YOY, Percentage Change , ,000 10, , Sources: Seasonally Adjusted Annual Rate, Autodata Corp., Motor Intelligence, U.S. Census Bureau.

12 Nominal Corporate Profits and U.S. Business Fixed Investment Percent Change Nominal Pre-Tax Corporate Profits Percent Change Business Fixed Investment % 5.4% % 5.0% Sources: Bureau of Economic Analysis and Blue Chip Economic Forecasts.

13 ISM Indices 70 ISM Manufacturing Index 70 ISM Non-Manufacturing Index Source: Institute for Supply Management (ISM).

14 S&P/Case-Shiller Home Price Indices 1-year Home Price Change, December 2013 New York Boston Denver Dallas Chicago Minneapolis Seattle Miami Detroit Atlanta San Francisco Las Vegas 0% 5% 10% 15% 20% 25% 30% Percent Change Source: Standard & Poor s (Not Seasonally Adjusted).

15 Housing Affordability Index Composite Index Jan-81 Jan-85 Jan-89 Jan-93 Jan-97 Jan-01 Jan-05 Jan-09 Jan-13 Source: National Association of Realtors.

16 National Housing Starts Millions Sources: U.S. Census Bureau, NABE Outlook December 2013, and the Colorado Business Economic Outlook Committee.

17 Federal Budget Balance $ Billions ,000 -$811 -$776-1,200-1,400-1, Sources: Bureau of Economic Analysis and Dismal.

18 U.S. Nominal Broad Dollar Index and Real Net Exports U.S. Nominal Broad Dollar Index 1973= $ Billions Real Net Exports $410 -$ Sources: Federal Reserve, Bureau of Economic Analysis, and Blue Chip Economic Forecasts.

19 Money, Interest Rates, Prices, and Finance

20 Interest Rates Percent Interest Rates, Year T-Note Month T-Bill Source: U.S. Treasury.

21 Consumer Price Index All Items Percent CPI Percent Change, United States Denver- Boulder- Greeley % Sources: Bureau of Labor Statistics and Colorado Business Economic Outlook Committee.

22 U.S. Summary GDP growing as the year progresses Housing in recovery Balance sheets getting stronger Consumers stay in the marketplace Business investment grows Fiscal drag (slower growth of G) continues but is a smaller issue Tapering continues with modest impact on long term rates Inflation low and stable

23 The Colorado Economy

24 Change in Population Change in Colorado Population Thousands Among top 7 states for percentage growth 9 th fastest for absolute growth 22 nd - most population in U.S. Continued net migration into the state % of population in 12 Front Range counties Source: Colorado Demography Office.

25 Colorado Employment Workers Added Thousands Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.

26 Employment Change Employment in Thousands 2,450 2,440 Govt Finance Other Mfg Mining Info ,430 L&H 2,420 2,410 2,400 2,390 PBS Const TTU EHS Total jobs gained: 61,600 Net change: 61,300 Total jobs lost: 300 2, ,370 Source: Bureau of Labor Statistics, Current Employment Statistics (NSA).

27 Employment Recovery National, State, and Local Percent Number of Months Since Peak Source: Bureau of Labor Statistics (Seasonally Adjusted). Employment Recovery: National, State, and Local Denver and Boulder MSAs Colorado US

28 Regional Employment Growth and Unemployment Employment Growth Rate, December 2013 YoY Greeley Denver-Aurora-Broomfield Boulder Pueblo Grand Junction Fort Collins-Loveland Colorado Springs Colorado 1.9% Greeley Denver-Aurora- Broomfield Boulder Pueblo Grand Junction Fort Collins-Loveland Colorado Springs Unemployment Rate November 2013 Colorado 5.9% NSA, 6.2% SA Percentage Sources: CES (Seasonally Adjusted) and LAUS (Not Seasonally Adjusted) Percentage

29 The Top 5 vs. The Bottom 5 States Jobs Added in 2013 and 2014 Forecast (1) North Dakota (2) Arizona (3) Texas (4) Florida (5) South Carolina (6) Colorado (48) Washington (47) New Hampshire (49) New Mexico (50) Maine (51) District of Columbia 2014 (1) Arizona (2) Texas (3) Colorado (4)Florida (5) Georgia (48) Wyoming (47) Louisiana (50) Illinois (49) Maine (51) District of Columbia % 0.0% 1.0% 2.0% 3.0% 4.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% Source: Moody s Economy.com

30 Colorado Per Capita Personal Income By MSA (2012) United States $43,735 Colorado $45,775 Boulder Denver-Aurora-Broomfield Colorado Springs Fort Collins-Loveland Grand Junction Pueblo Greeley $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 Source: Bureau of Economic Analysis, 2012 annual data.

31 Colorado Total Nonfarm Wages 4Q Rolling Sum $ Billions Q Q Q Q Q Q Source : Bureau of Labor Statistics, QCEW.

32 Construction Photo Courtesy

33 Federal Housing Finance Agency (FHFA) House Price Index Federal Housing Finance Agency Home Prices by MSA Q Q Colorado 7.8% Federal Housing Finance Agency Home Prices by MSA CAGR Q Q Colorado 1.4% Denver-Aurora-Broomfield Denver-Aurora-Broomfield Boulder Greeley Fort Collins-Loveland Colorado Springs Grand Junction Pueblo Boulder Greeley Fort Collins-Loveland Colorado Springs Grand Junction Pueblo Percent Percent Source: Federal Housing Finance Agency, All Transactions Indexes.

34 Residential Building Permits 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Single Family Multifamily Residential Building Permits , Sources: U.S. Census Bureau and Colorado Business Economic Outlook Committee.

35 Value of Construction Colorado $ Millions 18,000 16,000 $15.1 B 14,000 12,000 Nonbuilding 10,000 8,000 Nonresidential 6,000 4,000 2,000 0 Residential Sources: McGraw-Hill Construction Dodge Research and Analytics and Colorado Business Economic Outlook Committee.

36 Retail Trade Sales Colorado Taxable Retail Sales 12-Month Rolling Sum 12-Month Rolling Sum, $ Millions Percent Change Colorado Retail Trade Sales Nominal Growth Real Growth Sources: Colorado Department of Revenue and Colorado Business Economic Outlook Committee.

37 Colorado General Fund Gross Revenue (excluding reserves, diversions, and transfers) $ Millions $10,000 General Fund Projections $ Millions $10,400 Colorado General Fund $9,500 December 2013 $9,900 $9,400 $9,000 September 2013 $8,900 $8,500 December 2012 September 2012 $8,400 $8,000 $7,900 $7,500 December 2011 $7,400 $7,000 $6,900 $6,400 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Source: Colorado Office of State Budgeting and Planning, excluding reserves, diversions, and transfers, June FY 2012 FY 2013 FY 2014 FY 2015

38 State Factors Colorado outperforms nation in employment growth Weather a factor for Ag and Tourism Home prices rising slowly, steadily Growing population Broad based employment growth Falling unemployment

U.S. and Colorado Economies Q1 2004 Q1 2013 Index (50=Neutral) 75 National and State Expectations 70 65 60 55 Colorado

39 U.S. and Colorado Economies Q Q Index (50=Neutral) 75 National and State Expectations Colorado United States Q Q Q Q Q Q Q Q Q Q Q1 2014

40 Employment and New Entity Filings Employment, thousands 2, month total new entity filings 90,000 2,350 Employment 84,000 2,300 78,000 2,250 72,000 2,200 New Entity Filings 66,000 2, Note: Solid line displays actual seasonally adjusted employment numbers; dotted line reflects calculated forecasts. Source: Seasonally adjusted. Colorado total nonfarm employees from the Bureau of Labor Statistics, Current Employment Statistics (CES), calculations by BRD research team. 60,000

41 Colorado Economic Indicators Year Consumer Price Inflation Percent Change Retail Sales Percent Change Personal Income Unemployment Rate Percent Change Employment 2011 a a a Historical data.

42 The Boulder Economy

43 Boulder Employment Thousands Boulder Employment, Months 53 Months Sources: Bureau of Labor Statistics, Current Employment Statistics (Seasonally Adjusted).

44 Months to Recovery Employment Change By MSA Percent Fort Collins-Loveland Boulder Pueblo Denver-Aurora-Broomfield Number of Months Since Peak Source: Bureau of Labor Statistics (Seasonally Adjusted).

45 Boulder County Employment and Wages, 2012 Other 27% Employment by Industry Manufacturing 10% Retail trade 10% Other 19% Wages by Industry Manufacturing 14% Retail trade 5% Healthcare and social assistance 12% Healthcare and social assistance 10% Prof. Tech. Services 19% Government 16% Information 5% Prof. Tech. Services 28% Government 15% Information 10% Sources: Bureau of Labor Statistics, Quarterly Census of Employment and Wages.

46 Boulder County Wages Boulder County Wages, Quarterly, $ Millions ,500 $ Millions 9,500 Boulder County Wages, Annual Rolling Sum, ,400 2,300 9,000 2,200 2,100 2,000 1,900 1,800 1,700 1,600 1,500 Q Q Q Q Q Q ,500 8,000 7,500 7,000 6,500 Q Q Q Q Q Q Sources: Bureau of Labor Statistics, Quarterly Census of Employment and Wages.

47 Boulder County Employment and Education, 2012 Other 60% Employment by Occupation Management 5% Bus. and financial operations 7% Computer and math 7% Architecture and engineering 4% Science 3% Education training 7% Arts and entertainment 2% Healthcare 5% Educational Attainment Adults over age 25 with a bachelor s degree or higher U.S. 29.1% Colorado 37.5% Boulder 57.9% Adults over age 25 with a high school diploma U.S. 86.4% Colorado 90.6% Boulder 94.5% Sources: Bureau of Labor Statistics, Quarterly Census of Employment and Wages.

48 Retail Sales State Collections Boulder County v. Colorado $ Billions Boulder County Taxable Retail Sales, 12-Month Rolling Sum, Indexed Taxable Retail Sales Boulder County Colorado Source: Colorado Department of Revenue.

49 Boulder County Value of Construction $ Thousands 1,200 1,000 Value of Construction, Colorado Nonbuilding Nonresidential Residential December YTD $ Thousands 1,200 1, Sources: McGraw-Hill Construction Dodge Research and Analytics

50 Boulder County Building Permits $ Millions Number of units Source: U.S. Census Bureau, Building Permits Survey.

51 Commercial Vacancy Rates: City of Boulder Percent Office Warehouse Flex Retail Q4 05 Q4 07 Q2 09 Q2 10 Q2 11 Q2 12 Q2 13 Source: Newmark Grubb Knight Frank.

52 Median Price Homes Sold: Single Family vs. Number of Single Family Homes Sold - Boulder 650,000 Number of Homes Sold 1, ,000 1, , , , , , , * Source: Boulder Area Realtor Association. *YoY through November 2013.

53 Boulder Venture Capital Investment (In Millions) $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 Boulder Quarterly VC Funding Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q Boulder VC Industry Allocation Retailing/Distribution 1.2% IT Services 41.5% Software 49.8% Source: PwC/NVCA MoneyTree, Boulder County Business Report.

S. (Florida) 2 nd highest concentration of high-tech employment

(BLS) 9 th best performing city in the US 2013 (Milken

54 Boulder Most educated community in U.S. (BLS) Highest high-tech startup density in U.S. (Kauffman) Highest ranked creative class community in U.S. (Florida) 2 nd highest concentration of high-tech employment in U.S. (BLS) 9 th best performing city in the US 2013 (Milken Institute) Startup/entrepreneurial accolades from Inc., BusinessWeek, Forbes, NY Times Foodiest, happiest, healthiest!

55 Thank you

56 Manufacturing Employment Jan 2001= U.S Boulder Colorado Sources: Bureau of Labor Statistics, Current Employment Statistics (NSA).

57 Manufacturing GDP Index 2001 = Boulder Colorado 130 U.S Source: Bureau of Economic Analysis, Chained Dollars.

58 Professional, Scientific, and Technical Services Employment Jan 2000= Boulder Colorado 110 U.S Sources: Bureau of Labor Statistics, Current Employment Statistics (NSA).

59 Professional, Scientific, and Technical Services GDP Index 2001 = Colorado Boulder U.S Source: Bureau of Economic Analysis, Real GDP, Chained Dollars.

60 Information Employment Jan 2001= Colorado U.S. Boulder Sources: Bureau of Labor Statistics, Current Employment Statistics (NSA).

61 Information GDP Index 2001 = U.S Colorado 120 Boulder Source: Bureau of Economic Analysis, Chained Dollars.

62 Education and Health Services Employment Jan 2001= Colorado U.S. Boulder Sources: Bureau of Labor Statistics, Current Employment Statistics (NSA).

63 Education and Health Services GDP Index 2001= U.S Source: Bureau of Economic Analysis, Chained Dollars.

Dr. Richard Wobbekind Executive Director, Business Research Division and Senior Associate Dean for Academic Programs University of Colorado Boulder

Dr. Richard Wobbekind Executive Director, Business Research Division and Senior Associate Dean for Academic Programs University of Colorado Boulder Member FDIC VectraBank.com Economic Outlook 2015 Richard