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

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

2 Economic Outlook 2015 Richard Wobbekind Executive Director Business Research Division & Senior Associate Dean Leeds School of Business

3 Real GDP Growth Percent Quarterly and Annualized Real GDP Annualized GDP Annualized GDP Quarterly GDP Sources: Bureau of Economic Analysis and Consensus Forecasts.

4 National Employment Thousands, Monthover-Month Recession 8 Months Recession 18 Months Month Moving Average Sources: Bureau of Labor Statistics (Seasonally Adjusted), National Bureau of Economic Research, and Moody s Analytics

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

6 National Employment Growth Peak-to-December 2014 Source: Bureau of Labor Statistics, Seasonally Adjusted.

7 National Employment 84 Months Since Peak Percent Present Number of Months Since Previous Peak Source: Bureau of Labor Statistics, CES (Seasonally Adjusted).

8 U.S. Income and Consumption Percent Change 4.5 Real Disposable Income % % Percent Change 4.0 Personal Consumption 3.2% % Sources: Bureau of Economic Analysis and Consensus Forecasts.

9 Household Wealth $ Billions 50,000 45,000 40,000 35,000 Mutual Funds 30,000 25,000 Corporate Equities 20,000 15,000 Real Estate 10,000 5, Q Q Q Q Q Q Q Q 2014 Source: Federal Reserve Board, Balance Sheet of Households and Nonprofit Organizations (B100) (Not Seasonally Adjusted).

10 Household Debt Burden Percent of Disposable Income DSR Financial Obligations Ratio (R) Debt Service Ratio (L) FOR Q3 94 Q3 96 Q3 98 Q3 00 Q3 02 Q3 04 Q3 06 Q3 08 Q3 10 Q3 12 Q3 14 Source: Federal Reserve, Household Debt Service and Obligations Ratios.

11 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.

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

13 Nominal Corporate Profits and U.S. Business Fixed Investment Percent Change 30.0 Nominal Pre-Tax Corporate Profits Percent Change 10.0 Business Fixed Investment % 5.8% % % Sources: Bureau of Economic Analysis, Consensus Forecasts.

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

15 Housing Affordability Index Composite Index Source: National Association of Realtors.

16 S&P/Case-Shiller Home Price Indices 1-year Home Price Change, November % 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Percent Change Cleveland Minneapolis New York Washington Phoenix Chicago Detroit Charlotte Boston San Diego Atlanta Los Angeles Seattle Portland Tampa Denver Dallas Las Vegas Miami San Francisco Source: Standard & Poor s (Not Seasonally Adjusted).

17 National FHFA Home Price Growth Year over Year Q Source: Federal Housing Finance Agency Home Price Index, All Transactions Index.

18 National Housing Starts Millions Sources: U.S. Census Bureau and Consensus 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 Summary Global output and trade growth modest Value of the dollar strengthening GDP growth accelerates Fiscal tightening Housing continues to recover Balance sheets getting stronger Consumers active Business investment grows Inflation and interest rates remain low

22 The Colorado Economy

23 Colorado Employment Growth Jobs Added Thousands Sources: Colorado Department of Labor and Employment, BEOF Committee Members.

24 Employment Change Professional and Business Services Leisure and Hospitality Education and Health Services Trade, Transportation, and Utilities Construction Government Financial Activities Natural Resources and Mining Manufacturing Other Services Information Thousands of Jobs

Employment Change 2013-2014 Employment in Thousands 2,480 2,470 2,460 2,450 2,440 2,430 EHS Const Govt Mfg PBS Mining Total jobs gained: 65,000 TTU Finance

25 Employment Change Employment in Thousands 2,480 2,470 2,460 2,450 2,440 2,430 EHS Const Govt Mfg PBS Mining Total jobs gained: 65,000 TTU Finance Info Other 2014 Net change: 62,300 Total jobs lost: 2,700 2,420 L&H 2, ,400 Source: Bureau of Labor Statistics, Current Employment Statistics (NSA).

26 Colorado Employment Months to Recovery Colorado Employment Months to Recovery Percent January 2008-September January 2001-May Number of Months Since Peak Source: Bureau of Labor Statistics (Seasonally Adjusted).

27 Employment Recovery National, State, and Local Percent Greeley Ft. Collins-Loveland Denver Boulder Colorado Pueblo National Colorado Springs Grand Junction Number of Months Since Peak Source: Bureau of Labor Statistics (Seasonally Adjusted).

28 Employment and Unemployment By MSA % Growth 2014 Employment Growth 1 Year Avg. YoY by MSA (SA) Greeley State 2.6% % Growth Greeley Unemployment Rate By MSA December 2014 (NSA) State 4% (NSA), 4% SA) Denver-Aurora-Broomfield Boulder Fort Collins-Loveland Pueblo Colorado Springs Grand Junction Denver-Aurora- Broomfield Boulder Fort Collins- Loveland Pueblo Colorado Springs Grand Junction -2% 0% 2% 4% 6% 0% 2% 4% 6% Source: Bureau of Labor Statistics.

29 Colorado Per Capita Personal Income By MSA, 2013 Boulder Colorado $46,897 United States $44,765 Denver-Aurora-Broomfield Fort Collins-Loveland Colorado Springs Grand Junction Pueblo Greeley $20,000 $30,000 $40,000 $50,000 $60,000 Source: Bureau of Economic Analysis, 2013 annual data.

30 Construction

31 Federal Housing Finance Agency Home Price Index Federal Housing Finance Agency Home Prices by MSA Q Q Denver-Aurora- Lakewood Boulder Fort Collins Greeley Colorado Springs Grand Junction Pueblo Colorado 8.7% Percent Federal Housing Finance Agency Home Prices by MSA CAGR Q Q Denver-Aurora-Lakewood Boulder Fort Collins Greeley Colorado Springs Grand Junction Pueblo Colorado Percent Source: Federal Housing Finance Agency, All Transactions Indexes.

32 Residential Building Permits 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Residential Building Permits Multifamily Single Family 32,000 Impacted by: Household formation Mortgage interest rates Construction defects law Demographics Sources: U.S. Census Bureau and Colorado Business Economic Outlook Committee.

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

34 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.

35 Colorado General Fund Gross Revenue (excluding reserves, diversions, and transfers) $ Millions $10,500 $10,000 $9,500 $9,000 $8,500 General Fund Projections December 2014 September 2014 June 2014 Sept 2013 June 2013 March 2013 Mar 2014 Dec 2013 December 2012 $ Millions $11,400 $10,800 $10,200 $9,600 $9,000 $8,400 $7,800 $7,200 Colorado General Fund $6,600 $8,000 FY FY FY FY $6,000 FY 2007 FY 2009 FY 2011 FY 2013 FY 2015 FY 2017 Source: Colorado Office of State Budgeting and Planning, excluding reserves, diversions, and transfers, December 2014.

36 Colorado Employment Growth Jobs Added, Thousands Best years since Sources: Bureau of Economic Analysis, NIPA Table 3.18B, Consensus Forecasts.

37 State Summary Colorado outperforms nation in employment growth Growing population Strong in-migration Home prices rising slowly, steadily Falling unemployment Labor Force Pressures

38 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 Q Q1 2015

39 Employment and New Entity Filings Employment, thousands 2, month total new entity filings 105,000 2,450 2,400 2,350 2,300 2,250 2,200 Employment New Entity Filings 100,000 95,000 90,000 85,000 80,000 75,000 70,000 65,000 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

40 Colorado Economic Indicators Year Consumer Price Inflation Percent Change Retail Sales Percent Change Personal Income Unemployment Rate Percent Change Employment 2012 a a p a Historical data. p Preliminary. Note: Represents annual averages of the month to month growth rate.

41 Colorado Ranking Among Other States Metric 1-Year 3-Year 5-Year 10-Year Real GDP Growth Employment Growth Population Growth Personal Income Growth PCPI Growth PCPI Average Annual Pay Growth Average Annual Pay Unemployment Rate Labor Force FHFA Home Price Index Data Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, U.S. Census Bureau, Federal Housing Finance Agency, and the Colorado State Demography Office. BRD calculations. Note: 1-year, 3-year, and 5-year are based on the compound annual growth rate.

42 Boulder County Courtesy of the Regents of the University of Colorado.

43 Boulder County Employment and Education, 2013 Other 59% 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 Healthcare 2% 5% Educational Attainment Adults over age 25 with a bachelor s degree or higher U.S. 29.6% Colorado 37.8% Boulder 58.5% Adults over age 25 with a high school diploma U.S. 86.6% Colorado 90.5% Boulder 93.0% Sources: Bureau of Labor Statistics, Quarterly Census of Employment and Wages; Census, 2013 American Community Survey 1-Year Estimates

44 Non-Ag Employment Boulder MSA Thousands Months +9,500 jobs, 5.6% Months Source: Bureau of Labor Statistics, CES Data Series, SA.

45 Single Family v. Multifamily Permits Boulder MSA Permits 1,800 1,600 1,400 Multifamily Single Family 1,200 1, Sources: U.S. Census Bureau.

46 Median Price Homes Sold: Single Family vs. Number of Single Family Homes Sold - Boulder $ Number of Homes Sold 750,000 1, ,000 Boulder: $685k; 724 sales Broomfield: $357k; 385 sales 1, , , , , , , , , Source: Boulder Area Realtor Association. *Boulder refers to the City of Boulder.

47 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 Q2 14 Source: Newmark Grubb Knight Frank.

48 Value of Construction Boulder County $ Thousands 1,400 1,200 1,000 Nonbuilding Nonresidential Residential Sources: McGraw-Hill Construction Dodge Research and Analytics.

49 Retail Sales State Collections Boulder County v. Colorado $ Billions 4.8 Boulder County Taxable Retail Sales, 12-Month Rolling Sum, Indexed 145 Taxable Retail Sales Boulder County Colorado Source: Colorado Department of Revenue.

50 Concerns Global Growth Fed exit Strength of the dollar Median family income Political gridlock Availability of labor Availability/Cost of space Cost of housing Price of oil

2014 Economic Forecast: Boulder & Beyond. Keynote Presentation

2014 Economic Forecast: Boulder & Beyond Keynote Presentation Business Research Division Richard Wobbekind Executive Director Business Research Division & Senior Associate Dean Leeds School of Business