Zions Bank Economic Overview

Transcription

1 Zions Bank Economic Overview Kenworth National Dealers Conference November 8,

2 National Economic Conditions 2

3 Volatility Returns to the Stock Market 27,000 Dow Jones Industrial Average October 10, 2018 Dow falls 832 points 3 rd largest decline in history 25,000 23,000 November 8, 2016 Presidential Election 21,000 19,000 17,000 15,000 February 5, 2018 Dow falls 1,175 points largest decline in history Jan-2016 Apr-2016 Jul-2016 Oct-2016 Jan-2017 Apr-2017 Jul-2017 Oct-2017 Jan-2018 Apr-2018 Jul-2018 Oct-2018 Source: Federal Reserve Bank of St. Louis

4 Business Optimism Near All-Time High Source: Trading Economics, NFIB Small Business Optimism Index

5 Consumer Confidence Remains High Above 110 indicates economic prosperity Oct Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Nov-15 Apr-16 Sep-16 Feb-17 Jul-17 Dec-17 May-18 Oct-18 Source: The Conference Board

6 Optimism Booming Source: Trading Economics, NFIB Small Business Optimism Index 6

7 Trumponomics Repeal and replace the Affordable Care Act Tax Reform Increase spending on infrastructure and military Reduce government regulations Renegotiate trade deals But can they get it done? 7

8 CBO Projections Show a Spike Followed by a Slowdown in Economic Growth Source: Congressional Budget Office

9 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% Economic Growth Improving in 2018 Gross Domestic Product Source: Bureau of Economic Analysis Personal Consumption Fixed Investment Net Exports Inventories Government Real GDP Growth

10 October Job Indicators Indicator Expectation Actual Total Nonfarm Payrolls 190, ,000 Unemployment Rate 3.7% 3.7% Private Payrolls 181, ,000 Monthly Average Hourly Wage Growth Yearly Average Hourly Wage Growth 0.2% 0.2% 3.0% 3.1% Labor Force Participation 62.8% 62.9% Sources: Wall street Journal and Bureau of Labor Statistics

11 500 October Marks 97 Consecutive Months of Job Growth in the U.S. 300 Thousands of Jobs Source: Bureau of Labor Statistics

12 The US is currently in the 2 nd longest economic expansion on record Duration of Economic Expansion by Months July 2009 November 2001 March 1991 December 1982 March 1975 November 1970 February 1961 April 1958 May 1954 October 1949 October Source: National Bureau of Economic Research

13 National Employment Change Percent Change in National Employment by Industry: October 2017 to October 2018 Ntl. Res. & Mining 9.4% Construction 4.7% Manufacturing 2.4% Trade, Trans., Utilities 1.1% Information -0.5% Financial Activities 1.4% Prof. & Bus. Serv. 2.5% Ed. & Health Serv. 2.1% Leisure & Hospitality 1.6% Other Services Government 0.3% 1.3% Total: 1.7% -2% 0% 2% 4% 6% 8% 10% Source: Bureau of Labor Statistics

14 National Employment Change Total Change in Number of Jobs by Industry in Thousands: October 2017 to October 2018 Ntl. Res. & Mining Construction Manufacturing Trade, Trans., Utilities Information Financial Activities Prof. & Bus. Serv. Ed. & Health Serv. Leisure & Hospitality Other Services Government Source: Bureau of Labor Statistics

15 11.0% US Unemployment Rate Remains Historically Low 10.0% 9.0% 8.0% October % 7.0% 6.0% 5.0% 4.0% % = Full Employment 3.0% Source: Bureau of Labor Statistics

16 Unemployment Hits Lowest Level Since % 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 4.5% - 5.0% = Full Employment 3.0% 2.0% 1.0% 0.0% Unemployment Rate Source: Bureau of Labor Statistics

17 Source: Wall Street Journal Low Unemployment Leads to Recessions

18 18% 16% Unemployment and Underemployment Remain Low 14% 12% 7.1% 10% 8% 6% 3.7% 4% 2% Underemployment: 7.6% Unemployment: 3.8% Source: Bureau of Labor Statistics

19 68% Labor Force Participation Rose in October 67% 66% 65% October % 64% 63% 62% Source: Bureau of Labor Statistics

20 Labor Force Participation Among Lowest Level in Almost 40 Years 68% 66% 64% 62% 60% 58% 56% Apr % Mar % Oct % Source: Bureau of Labor Statistics

21 90% 80% Civilian Labor Force Participation Rate Men Aug % 70% 60% 50% 40% Women Aug % 30% Men Women Source: Bureau of Labor Statistics

22 Baby Boomers Head for Retirement 68% 38% U.S. Participation Rate 67% 66% 65% 64% 63% 62% 61% 36% 34% 32% 30% 28% 26% 24% 22% Share of % 20% U.S. Participation Rate Age 55+ Share of Working Age Pop Source: Bureau of Labor Statistics

23 Long-Term Decline of the Teenage Workforce 70% 65% 60% 55% 50% 45% 40% 35% 30% U.S. Labor Force Participation Rate Participation Rate Ages Source: Bureau of Labor Statistics

24 24

25 Standard of Living Best Ever 25

26 Fewer than One Unemployed Worker Per Job Opening August Unemployed/Openings Source: Bureau of Labor Statistics

27 Job openings continue to outpace job hires Level in Thousands 7,000 6,000 5,000 4,000 3,000 2, Hires Openings Source: Bureau of Labor Statistics

28 Highest Annual Wage Growth Since % 3.5% October % 3.0% 2.5% Average 2.4% 2.0% 1.5% 1.0% Source: Bureau of Labor Statistics

29 Wage Growth Lagging Job Growth Source: Wall Street Journal 29

30 Year-over-year percent change 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% Inflation Remains Above 2% Consumer Price Index Fed s Preferred Level Sept % -3.0% Source: Bureau of Labor Statistics

31 Federal Funds Target Rate Sees 8th Increase in 3 Years 6.0% 5.0% Recession 4.0% 3.0% Federal Funds Target Rate = 2.00% 2.25% 2.0% 1.0% 0.0% Federal Funds Target Rate PCE (core) Inflation Source: Federal Reserve Board of Governors and BEA

32 Fed Rate Increase Projections for 2018 FOMC meetings 4% 3% 2% 3.4% 3.1% 3.1% 2.9% 2.4% 2.4% 2.1% 3.4% 3.4% 3.4% 2.9% 2.9% 3.0% 1% 0% Longer run March June September Source: Board of Governors of the Federal Reserve

33 Economic Protectionism Increases Costs Source: Wall Street Journal 33

34 Trade Wars Hurt Growth Source: Wall Street journal 34

35 Trade Wars Hurt Growth Source: Wall Street Journal 35

36 The Dollar is Strengthening After a Decline in Trade Weighted Dollar Index Index 1997 = 100 Source: Federal Reserve Bank of St. Louis

37 Oil Prices $160 $140 $120 $100 $80 $60 $40 $20 Nov. 2, 2018 $63.12 $ Source: Federal Reserve Bank of St. Louis

38 Regional Economic Conditions 38

39 CA 0.6% OR 1.4% WA 1.7% NV 2.0% Utah Population 3 rd Fastest Growing in U.S. ID 2.2% UT 1.9% AZ 1.6% AK -0.2% MT 1.1% WY -1.0% CO 1.4% NM 0.1% Percent Change: 2016 to 2017 U.S. Rate = 0.7% ND 0.0% SD 0.9% NE 0.7% TX 1.4% KS 0.3% 0.2% OK 0.2% MN 0.9% IA 0.5% MO 0.4% AR 0.5% WI 0.4% LA 0.0% IL -0.3% MS 0.0% MI 0.3% IN 0.5% TN 1.0% AL 0.3% OH 0.3% KY 0.4% WV -0.7% VT 0.0% PA 0.1% NC 1.1% SC 1.3% GA 1.1% VA 0.7% FL 1.6% NH 0.6% NY 0.1% ME 0.4% DC 1.4% CT 0.0% DE 1.0% MD 0.5% MA 0.5% RI 0.2% NJ 0.4% 1.5% + 0.7% to 1.4% 0.2% to 0.6% 0.0% to 0.1% Loss HI -0.1% Source: U.S. Census Bureau

40 Western Counties Growth Outpacing Nation Percent Change: 2016 to 2017 U.S. Rate = 0.7% 1.5% + 0.7% to 1.4% 0.2% to 0.6% 0.0% to 0.1% Loss Source: U.S. Census Bureau 40

41 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, , , , ,101,833 22,587 34, f 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, ,000-20,000 Components of Population Change Net Migration Natural Increase Total Population Sources: U.S. Census Bureau e = estimate, f = forecast

42 Utah Population Growth Rates By County 2016 to 2017 State Average = 1.9% 3.0%+ 1.8% to 2.9% 1.0% to 1.7% 0.0% to 0.9% Loss Source: U.S. Census Bureau

43 Utah is has the 2nd Fastest Employment Growth Percent Change in Employment for States: September 2017 to September 2018 U.S. Rate = 1.7% UT Rate = 3.6% NH 4.4% NJ 2.7% MA 3.8% 2.0% + 1.6% to 1.9% 1.0% to 1.5% HI 1.7% 0.0% to 0.9% Loss Source: Bureau of Labor Statistics

44 Utah Total Employment at New Highs 1,600 1,500 Gain of 354,700 jobs from low in 2010 Thousands of Employees 1,400 1,300 1,200 1,100 1, Loss of 92,000 jobs from Source: U.S. Bureau of Labor Statistics Note: Numbers rounded to nearest thousand Total Nonfarm Employment

45 Utah Industries Seeing Growth Percent Change in Utah Employment by Industry: September 2017 to September 2018 Ntl. Res. & Mining Construction Manufacturing Trade, Trans., Utilities Information Financial Activity Prof. & Bus. Serv. Ed. & Health Serv. Leisure & Hospitality Other Services Government Total: 3.6% -1.2% 0.0% 1.2% 2.5% 3.6% 4.2% 3.8% 4.1% 3.4% 4.6% 4.4% -13% -8% -3% 2% 7% Source: Utah Department of Workforce Services

46 Utah Industries Seeing Growth Total Change in Utah Employment by Industry: September 2017 to September 2018 Ntl. Res. & Mining Construction ,600 Manufacturing 5,400 Trade, Trans., Utilities 12,800 Information Financial Activity 0 3,700 Total: 53,200 Prof. & Bus. Serv. 7,900 Ed. & Health Serv. 8,300 Leisure & Hospitality Other Services 500 4,900 Government 6,200-3,000-1,000 1,000 3,000 5,000 7,000 9,000 11,00013,00015,000 Source: Utah Department of Workforce Services

47 Utah Employment Change Rates By County September 2017 to September 2018 State Rate = 3.6% 5.0% + 3.3% to 4.9% 1.0% to 3.2% 0.0% to 0.9% Loss Source: Utah Department of Workforce Services

48 Utah Has the 14 th Lowest Unemployment Rate September 2018 U.S. Rate = 3.7%; UT = 3.2% 6.0% + 5.5% to 5.9% 4.8% to 5.4% 4.0% to 4.7% 3.9% or less Source: Bureau of Labor Statistics

49 Utah Unemployment Rates By County September 2018 State Rate = 3.2% 7.0% + 6.0% to 6.9% 4.0% to 5.9% 3.2% to 3.9% 3.1% or lower Source: Utah Department of Workforce Services

50 Utah Personal Income Growth 3 rd Highest in the Nation Percent Change in Personal Income : U.S. = 3.1%, UT = 4.4% ID = 4.7% VT 3.4% NH 4.4% MA 3.8% CT NJ 3.9% 2.7% RI 3.5% MD 2.6% DE 2.5% DC 5.7% 4.0% or more 3.6% to 3.9% 2.0% to 3.5% 0.0% to 1.9% Decrease Source: Bureau of Labor Statistics 50

51 Utah Poverty Rate 7 th Lowest in the Nation CA 14.3% WA 11.3% OR 13.3% NV 13.8% ID 14.4% UT 10.1% AZ 16.3% 2016 U.S. Rate = 14.0%, Utah Rate = 10.1% MT 13.3% WY 11.3% CO 11.0% NM 19.8% ND 10.6% SD 13.3% NE 11.4% KS 12.1% OK 16.3% MN 9.9% IA 11.8% MO 14.0% AR 17.1% WI 11.8% IL 13.0% MS 20.8% MI 15.0% IN 14.1% TN 15.8% AL 17.1% OH 14.6% KY 18.5% WV 17.8% VT 11.9% PA 12.9% NC 15.4% SC 15.3% GA 16.0% NH 7.2% NY 14.6% VA 11.0% ME 12.5% DC 18.6% CT 9.8% DE 11.6% MD 9.6% MA 10.4% RI 12.8% NJ 10.4% AK 9.9% TX 15.6% LA 20.1% 18.1% % to 18.0% FL 14.6% HI 9.3% 12.1% to 15.0% 10.1% to 12.0% 10.0% or less Source: U.S. Census Bureau, Annual Community Survey 1-year estimate

52 Year-over-year percent change 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% Dec-2011 Mar-2012 Utah Inflation Near All-Time Highs Jun-2012 Sep-2012 Dec-2012 Mar-2013 Jun-2013 Sep-2013 Dec-2013 Mar-2014 Jun-2014 Sep-2014 Dec-2014 Mar-2015 Jun-2015 Sep-2015 Dec-2015 Mar-2016 Jun-2016 Sep-2016 Dec-2016 Mar-2017 Jun-2017 Sep-2017 Utah 4.8% Dec-2017 US 2.3% Mar-2018 Jun-2018 Sep-2018 United States CPI: +2.3% Zions Bank Wasatch Front CPI: +4.8% Source: U.S. CPI from National Bureau of Labor Statistics and Wasatch Front CPI from Cicero Group

53 Strong Consumer Sentiment Jun-12 Above 110 indicates economic prosperity Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 U.S. Consumer Confidence Index: Zions Bank Utah Consumer Attitude Index: Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Jun-17 Oct-17 Feb-18 Jun-18 Oct-18 Sources: Conference Board and Cicero Group

54 Economic Overview Negatives Potential trade wars Potential of overheating economy National and international uncertainty Trumponomics success? Unsure inflation outlook Skills mismatch Low productivity growth Positives Strong consumer and business confidence Trumponomics pro growth agenda The Western US has: Strong population growth Strong employment growth Low unemployment Strong income growth 54

55 Zions Bank, A Division of ZB, N.A. Member FDIC. Content is offered for informational purposes only and should not be construed as tax, legal, financial or business advice. Please contact a professional about your specific needs and advice. Content may contain trademarks or trade names owned by parties who are not affiliated with ZB, N.A. Use of such marks does not imply any sponsorship by or affiliation with third parties, and ZB, N.A. does not claim any ownership of or make representations about products and services offered under or associated with such marks. Robert Spendlove Economic and Public Policy Officer Robert.Spendlove@zionsbank.com Phone: