How Much Wind Is in the Sails?

How Much Wind Is in the Sails? Erie Chamber of Commerce Place cover image here Richard Wobbekind Senior Economist and Associate Dean for Business and Government Relations September 20, 2017

Real GDP Growth Quarterly and Annualized Real GDP 1990-2017 Percent 10.0 8.0 6.0 4.0 2.0 0.0-2.0-4.0-6.0-8.0 Annualized GDP 1990-1999 Annualized GDP 2000-2009 Annualized GDP 2010- Present Quarterly GDP -10.0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Sources: Bureau of Economic Analysis and August 2017 Consensus Forecast.

Long-Term Real GDP Growth Trend Percent Change 20-Year Quarterly Moving Average 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1967 1973 1979 1985 1991 1997 2003 2009 2015 Source: Bureau of Economic Analysis, Real GDP.

Economic Growth Percent Change 8 6 4 2 0-2 Percent Change 25 20 15 10 5 0-5 Personal Consumption Expenditures -4-6 -8-6 -10 2000 2002 2005 2008 2011 2014 2017 2000 2002 2005 2008 2011 2014 2017 Fixed Business Investment Percent Change 10 8 Year-over-Year 6 Year-over-Year 4 2 0 SAAR -2-4 SAAR Percent Change Government Spending Imports and Exports 20.0 Year-over-Year 15.0 10.0 Exports 5.0 0.0 Imports SAAR -5.0-10 -10.0-15 -15.0-20 -20.0-25 -30-25.0 2000 2002 2005 2008 2011 2014 2017 2000 2002 2005 2008 2011 2014 2017 Sources: Bureau of Economic Analysis, the National Bureau of Economic Research, and the Business Research Division.

Recession 8 Months Thousands, Month-over- Month, 12-Mo Average 300 200 100 0-100 National Employment Month-over-Month Change, 12-Month Average -200-300 -400-500 Recession 18 Months -600 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Sources: Bureau of Labor Statistics (Seasonally Adjusted), Moody s Analytics, and NBER.

Labor Underutilization Percentage of Labor Force 18.0 16.0 14.0 12.0 10.0 Average U-6 U-6 8.0 8.6% 6.0 4.0 Average U-3 U-3 4.4% 2.0 0.0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Source: Bureau of Labor Statistics (Seasonally Adjusted).

Labor Force and Unemployment Rate National by Educational Attainment, Population 25 and Over, August 2017 Percentage 80 70 60 50 LFPR 40 30 20 10 Unemployment Rate 0 Less than a high school diploma High school graduates Some college, no degree Associate degree Bachelor's degree Advanced degree Source: Bureau of Labor Statistics, Current Population Survey (CPS), Not Seasonally Adjusted.

State Employment Growth Year-over-Year August 2017 Source: Bureau of Labor Statistics (Seasonally Adjusted).

Wage Growth Year-over-Year Percent Change 4.0% 3.0% 2.0% Year-over-Year 12-Month Average 1.0% 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bureau of Labor Statistics, CES, Average hourly earnings of all employees, total private, not seasonally adjusted.

U.S. Income and Consumption Percent Change 5.0 Real Disposable Income Percent Change 4.0 Real Personal Consumption 4.0 3.0 2.6% 3.0 2.0 2.7% 2.5% 2.0 1.0 1.6% 1.0 0.0 0.0-1.0-1.0-2.0-2.0-3.0 2007 2009 2011 2013 2015 2017-3.0 2008 2010 2012 2014 2016 2018 Sources: Consensus Forecasts.

Household Wealth Q4 2000-Q4 2016 $ Trillions 120 100 80 Other Assets 60 40 20 Mutual Funds Corporate Equities Real Estate 0-20 2000 2004 2008 2012 2017 Total Liabilities Source: Federal Reserve Board, Balance Sheet of Households and Nonprofit Organizations (B.101) (Not Seasonally Adjusted).

Household Debt Burden Percent of Disposable Income DSR 13.5 13.0 12.5 12.0 11.5 Debt Service Ratio (L) FOR 18.5 18.0 17.5 17.0 11.0 10.5 10.0 9.5 Financial Obligations Ratio (R) 16.5 16.0 15.5 9.0 15.0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Source: Federal Reserve, Household Debt Service and Obligations Ratios.

Index of Consumer Confidence 1985=100 Recession 8 months 160 Recession 18 months 140 Mountain Region 120 100 80 United States 60 40 20 0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Sources: The Conference Board and National Bureau of Economic Research.

Vehicle Sales and Retail Sales Thousands, SAAR 25,000 Vehicle Sales Retail and Food Services Sales Annual Percent Change 15.0 20,000 10.0 15,000 10,000 5.0 0.0-5.0 5,000-10.0 0 2003 2005 2007 2009 2011 2013 2015 2017-15.0 2004 2006 2008 2010 2012 2014 2017 Sources: Bureau of Economic Analysis, Moody s Analytics, U.S. Census Bureau (Seasonally Adjusted Annual Rate).

Nominal Corporate Profits and Business Fixed Investment Percent Change Nominal Pre-Tax Corporate Profits Percent Change Business Fixed Investment 30.0 10.0 25.0 20.0 5.0 4.4% 4.1% 15.0 10.0 5.0 4.2% 3.8% 0.0-5.0 0.0-5.0-10.0-10.0-15.0-15.0-20.0 2004 2006 2008 2010 2012 2014 2016 2018-20.0 2004 2006 2008 2010 2012 2014 2016 2018 Sources: Bureau of Economic Analysis, Consensus Forecasts.

ISM Indices 70 65 60 ISM Manufacturing Index 70 65 60 ISM Non-Manufacturing Index 55 55 50 50 45 45 40 40 35 35 30 2003 2005 2007 2009 2011 2013 2015 2017 30 2003 2005 2007 2009 2011 2013 2015 2017 Source: Institute for Supply Management (ISM).

National FHFA Home Price Growth Year over Year Q2 2017 Source: Federal Housing Finance Agency Home Price Index, All Transactions Index.

National Housing Starts Millions 2.5 2.0 1.5 1.0 1.2 1.3 0.5 0.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sources: U.S. Census Bureau and Consensus Forecasts.

Federal Budget Balance $ Billions 0-200 -400-600 -800 -$660 -$653-1,000-1,200-1,400-1,600 2002 2004 2006 2008 2010 2012 2014 2016 2018 Sources: Bureau of Economic Analysis and Consensus Forecasts.

U.S. Nominal Broad Dollar Index and Real Net Exports U.S. Nominal Broad Dollar Index 1973=100 130 125 $ Billions 0-100 Real Net Exports 120 115 110 105 100 95 90 2001 2003 2005 2007 2009 2011 2013 2015 2017-200 -300-400 -500-600 -700-800 -900 -$620 -$662 2001 2003 2005 2007 2009 2011 2013 2015 2017 Sources: Federal Reserve, Bureau of Economic Analysis, and Consensus Forecasts.

Money, Interest Rates, Credit, and Prices

Interest Rates 2000-2018 (Forecast) Percent 7.0 6.0 10-Year T-Note 5.0 4.0 3.0 2.0 1.0 3-Month T-Bill 0.0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Sources: Federal Reserve and Moody s.

Mortgage Rates 2000-2018 (Forecast) Percent 9.0 8.0 7.0 30-Year Fixed Mortgage 6.0 5.0 15-Year Fixed Mortgage 4.0 3.0 10-Year Treasury Rate 2.0 1.0 0.0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: Freddie Mac, Federal Reserve, Moody s Analytics.

The FED $ in Millions 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Treasury Securities Federal Agency Debt Securities Mortgage Backed Securities Other Assets 0-1,000,000-2,000,000 Deposits -3,000,000 Reserve Notes Outstanding, Net Holdings -4,000,000 Other Liabilities -5,000,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Federal Reserve Balance Sheet, H.4.1 Statistical Release.

National Inflation Year-over-Year Percent Change 6.0 5.0 4.0 3.0 2.0 Shelter All items less food and energy 1.0 0.0 All items -1.0-2.0-3.0 2001 2003 2005 2007 2009 2011 2013 2015 2017 Source: Bureau of Labor Statistics (SA).

Colorado Economy

Change in Population Change in Colorado Population 2000-2018 Thousands 140,000 120,000 100,000 80,000 Net Migration 7th-fastest state for percentage growth 8th-fastest state for absolute growth 84% of growth along Front Range Denver now the most populous county 60,000 40,000 20,000 0 2000 2006 2012 2018 Natural Increase Continued net migration into the state Source: Colorado Demography Office.

Population Broomfield Douglas Weld Denver Adams Larimer Arapahoe Gilpin Elbert Boulder Jefferson Park Clear Creek Annualized Growth Rate 2006-2016 Colorado: 1.6% Percentage of 2016 Population Elbert, Park, Clear Broomfield Creek, and Gilpin< 1% 1.2% Other 31.1% Denver 12.6% Arapahoe 11.6% Weld 5.3% Boulder 5.8% Jefferson 10.3% Douglas 5.9% Larimer 6.1% Adams 9.0% 0.0% 1.0% 2.0% 3.0% Source: Colorado Demography Office.

Colorado Employment Growth Jobs Added Thousands 100 80 60 40 20 0-20 -40-60 -80-100 -120 58,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sources: Colorado Department of Labor and Employment and the Colorado Business Economic Outlook Committee.

Colorado Employment Change August 2016 August 2017 Employment in Thousands 2,660 2,650 Other Finance Govt Info Const Mining MFG 2017 PBS 2,640 EHS 2,630 L&H Total jobs lost: 1,200 2,620 TTU Total jobs gained: 47,000 2,610 2,600 2016 Net change: 45,800 Source: Bureau of Labor Statistics, Current Employment Statistics (SA).

The Top 5 vs. The Bottom 5 States Jobs Added in 2017 and 2018 Forecast 2017 (1T) Nevada (1T) Utah (3) Florida (4T) Georgia (4T) Texas (11T) Colorado (46) Oklahoma (47) Kansas (48) West Virginia (49) Wyoming (50) Alaska -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 2018 (1) Nevada (2) Texas (3) Oregon (4T) Florida (4T) Arizona (9T) Colorado (42T) Pennsylvania (42T) Louisiana (42T) Oklahoma (49) West Virginia (50) Alaska -1.0% 0.0% 1.0% 2.0% 3.0% Source: Moody s Analytics, Economy.com.

Regional Employment Growth and Unemployment Employment Growth Rate, August 2017 YoY Fort Collins- Loveland Greeley Boulder Colorado Springs Denver-Aurora- Lakewood Pueblo Colorado 1.8% Pueblo Grand Junction Colorado Springs Denver-Aurora- Lakewood Unemployment Rate August 2017 Greeley Boulder Colorado 2.5% Grand Junction 0 1 2 3 4 5 Percentage Fort Collins- Loveland 0 2 4 Percentage Sources: CES (Seasonally Adjusted) and LAUS (Not Seasonally Adjusted).

Employment In Current Decade National, State, and Local Percent 35% 30% 25% 20% 15% 10% 5% Greeley Ft. Collins-Loveland Denver Colorado Boulder Colorado Springs National Pueblo Grand Junction 0% -5% 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bureau of Labor Statistics (Seasonally Adjusted).

Employment Clear Creek Gilpin Elbert Park Boulder Jefferson Denver Arapahoe Larimer Broomfield Weld Adams Douglas Annualized Growth Rate 2006-2016 Colorado 1.1% Douglas: 4.6% Larimer: 6% Percentage of 2016 State Employment Boulder: 6.9% Adams: 7.8% Weld: 3.9% Jefferson: 9.1% Arapahoe: 12.6% Broomfield: 1.4% Other: 27.7% Denver: 19.4% Clear Creek, Elbert, Gilpin, Park: 0.5% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% Source: Bureau of Labor Statistics (QCEW).

National Personal Income Growth 2016 Q1 to 2017 Q1 Source: Bureau of Economic Analysis

Real Estate and Construction Photo Courtesy www.rtd-fastracks.com

Housing Units vs. Households Annual Change 70,000 60,000 2001-2007 120,000 more housing units than households 50,000 40,000 Households 2008-2016 103,000 more households than housing units 30,000 20,000 10,000 Housing Units 0 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Source: Colorado State Demography Office. Data as of June 2017.

Federal Housing Finance Agency (FHFA) House Price Index Federal Housing Finance Agency Home Prices by MSA Q2 2016 Q2 2017 Federal Housing Finance Agency Home Prices by MSA CAGR Q2 2007 Q2 2017 Colorado 10.4% Colorado 3.7% Fort Collins Denver-Aurora-Lakewood Boulder Greeley Pueblo Colorado Springs Grand Junction 0% 3% 6% 9% 12% 15% Percent Boulder Denver-Aurora-Lakewood Fort Collins Greeley Colorado Springs Pueblo Grand Junction -1% 0% 1% 2% 3% 4% 5% Percent Source: Federal Housing Finance Agency, All Transactions Indexes.

Colorado Foreclosures 2004-2016 80,000 YTD Foreclosures and Sales 70,000 60,000 50,000 Sales 40,000 30,000 20,000 10,000 0 Filings 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016 Q1 2017 Q1 Source: Colorado Division of Housing.

Residential Building Permits 2006-2017 45,000 July YTD 2016-2017 40,000 35,000 30,000 25,000 Multifamily 20,000 15,000 10,000 5,000 Single Family 0 Source: U.S. Census Bureau. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD July 2016 YTD July 2017

Value of Construction 2006-2017 20,000 July YTD 2016-2017 18,000 16,000 Non-Building 14,000 12,000 10,000 Non- Residential 8,000 6,000 4,000 2,000 Residential 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: McGraw-Hill Construction Dodge Research and Analytics. YTD July 2016 YTD July 2017

Retail Trade Sales Colorado Taxable Retail Sales 12-Month Rolling Sum 12-Month Rolling Sum, $ Millions 95 90 85 Percent Change 10.0 5.0 Colorado Retail Trade Sales 2007-2017 Nominal Growth 4.4 80 75 70 65 70 Months 0.0-5.0 Real Growth 60-10.0 55 50 2001 2003 2006 2008 2011 2013 2016-15.0 2007 2009 2011 2013 2015 2017 Sources: Colorado Department of Revenue and Colorado Business Economic Outlook Committee.

Retail Sales Denver Boulder Arapahoe Clear Creek Park Jefferson Gilpin Larimer Elbert Douglas Broomfield Adams Weld Annualized Growth Rate 2009-2015 0.0% 2.0% 4.0% 6.0% 8.0% Percentage of 2015 State Retail Sales Douglas: 5.4% Broomfield: 1.3% Creek, Park, Gilpin: 0.4% Elbert, Clear Larimer: 5.4% Boulder: 5.7% Weld: 5.8% Jefferson: 9.4% Adams: 11.9% Arapahoe: 11.8% Other 31.0% Denver: 15.4% Source: DOLA Retail Sales Report.

County Marijuana Tax and Fee Revenue Annual 2016, Grey Counties Forbid Medical and Retail Marijuana Sales Largest: Denver County $14,129,757 Source: The Gazette, (Colorado Springs Newspaper).

Colorado General Fund $ Millions $14,000 $12,000 $10,000 $8,000 Excise $6,000 $4,000 $2,000 $0 Individual and Corporate Income Sales, Use, and Other Excise 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Fiscal Years Source: Colorado Office of the State Controller and the Colorado Office of State Planning and Budgeting (June 2017). Note: Excludes revenue transferred to the State Education Fund.

U.S. and Colorado Economies Q3 2003 Q3 2017 Index (50=Neutral) 75 National and State Expectations 70 65 60 55 Colorado 50 45 40 35 United States 30 25 Q2 2003 Q2 2004 Q2 2005 Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 2017

Employment and New Entity Filings Employment, thousands 2,700 12-month total new entity filings 120,000 2,600 2,500 Employment 110,000 100,000 2,400 90,000 2,300 2,200 New Entity Filings 80,000 70,000 2,100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 60,000 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.

Colorado Ranking Among Other States Metric 1-Year 3-Year 5-Year 10-Year Real GDP Growth 14 7 3 6 Employment Growth 14 9 5 4 Population Growth 7 4 4 3 Personal Income Growth 13 14 1 4 PCPI Growth 36 19 2 33 PCPI 15 14 21 13 Average Annual Pay % Growth 35 26 25 26 Average Annual Pay 10 13 12 10 Unemployment Rate 1 14 30 13 Labor Force % Growth 2 5 5 5 FHFA Home Price Index Growth 3 1 3 1 Data Sources: Bureau of Economic Analysis (2017), Bureau of Labor Statistics (10/16), U.S. Census Bureau (2015), Bureau of Labor Statistics (2015), Bureau Federal Housing Finance Agency All Transactions Index (Q3 2016), BRD calculations. Note: 1-year, 3-year, and 5-year are based on the compound annual growth rate.

Thank You!

1960 1963 1966 1969 1972 1975 1979 1982 1985 1988 1991 1994 1998 2001 2004 2007 2010 2013 2017 National Labor Force Thousands 160,000 140,000 120,000 100,000 Labor Force Participation Rate Labor Force Percent 68% 66% 64% 62% 80,000 60% 60,000 58% 40,000 56% 20,000 54% 0 52% Sources: Bureau of Labor Statistics, Current Population Survey.

Labor Force Participation Rates National by Age Cohort Percent 90 80 70 1986 2017 1998 1990 1997 2009 60 50 40 30 20 Peak 2016 Current 2017 10 0 20-24 25-34 35-44 45-54 55-64 65 + Age Group Source: Bureau of Labor Statistics, Current Population Survey (CPS).

Natural Resources and Mining

Colorado Energy Rankings (2016) 7 th for Crude Oil 6 th for Natural Gas 11 th for Coal 8 th for Solar 10 th for Wind 7 th for Electricity Production 34 th for Electricity Consumption Hydroelectric Facilities account for one-sixth of renewable power production in the state. There are 60 small hydroelectric generators in Colorado s mountainous western region. Colorado does not have any Nuclear power plants Sources: EIA

Marijuana and Hemp

Marijuana Tax and Fee Revenue Monthly Totals, February 2014-July 2017 Millions of Dollars $25 $20 April 2017 $22,867,587 $15 $10 $5 $0 2014 2015 2016 2017 Source: Colorado Department of Revenue, Taxation Division.

YTD Marijuana Tax and Fee Revenue YTD totals, July, 2014-2017 Millions of Dollars $140 $120 $100 $80 $60 $40 $20 2014 2015 2016 2017 Source: Colorado Department of Revenue, Taxation Division.

County Marijuana Tax and Fee Revenue Annual 2016, Grey Counties Forbid Medical and Retail Marijuana Sales Largest: Denver County $14,129,757 Source: The Gazette, (Colorado Springs Newspaper).

Colorado Industrial Hemp Production Annual 2016, Statistics 2016 Totals Increase Over Prior Year Increase Since 2014 Registered Acres 8,988 145% 396% Registered Sq. Ft 1.36 Million 138% 438% Active Registrations 424 27% 64% Active Registrants 312 88% 138% 2.2 million square feet of indoor production Colorado accounts for about of half of U.S. industrial hemp production Source: Colorado Department of Agriculture.

Employment By Industry Counties of Concern N&R 0.8% Info 3.2% Other 3% Colorado N&R 1.6% Info 2.8% Other 3.1% TTU 17.9% Financial 6.5% MFG 6.2% TTU 17.6% MFG 5.6% Const 6.1% Govt 14.6% Const 6.1% Govt 15.9% Financial 6.2% PBS 17.5% EHS 12.6% L&H 11.5% PBS 15.9% L&H 12.7% EHS 12.6% Source: Bureau of Labor Statistics (QCEW).

Wages Broomfield Denver Arapahoe Boulder Douglas Jefferson Adams Larimer Weld Clear Creek Gilpin Elbert Park Average Annual Wages Colorado $54,669 $0 $40,000 $80,000 Percentage of 2016 State Wages Other 35.5% Pueblo 1.7% Mesa 1.7% Arapahoe 14.3% Jefferson 9.0% Weld 3.3% Douglas 5.0% Larimer 5.3% El Paso 8.9% Adams 7.3% Boulder 7.8% Source: Bureau of Labor Statistics (QCEW).

Assessed Valuation Clear Creek Douglas Adams Arapahoe Larimer Broomfield Boulder Denver Jefferson Weld Annualized Growth Rate 2006-2016 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Percentage of 2016 Assessed Values Adams: 5.5% Douglas: 5.6% Boulder: 6.8% Jefferson: 8.2% Larimer: 5% Arapahoe: 9% Weld: 9% Broomfield, Clear Creek, Park, Gilpin, Elbert: 2.9% Other: 33.6% Denver: 14.4% Source: State Of Colorado Forty-Sixth Annual Report To The Governor And The General Assembly.

Total Revenue Elbert Jefferson Park Douglas Adams Arapahoe Larimer Broomfield Boulder Denver Annualized Growth Rate 2006-2016 0.0% 2.0% 4.0% 6.0% 8.0% Percentage of 2016 Total Revenue Broomfield: 1.8% Larimer: 5.5% Douglas: 6.8% Adams: 7.4% Boulder: 7.8% Weld: 7.9% Jefferson: 9.6% Other: 25.3% Arapahoe: 11.1% Denver: 15.4% Clear Creek, Elbert, Park, Gilpin: 1.2% Source: State Of Colorado Forty-Sixth Annual Report To The Governor And The General Assembly.

Colorado Foreclosures Number of Occupied Units per Foreclosure Colorado Occupied Units per Completed Foreclosure Broomfield Boulder Denver Jefferson Larimer Arapahoe Douglas Weld Adams State Average El Paso Q1 2017 Q1 2016 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Sources: DOLA Foreclosure Reports and Statistics.

Colorado Foreclosure Filings Foreclosure Filings El Paso Denver Arapahoe Adams Jefferson Weld Douglas Larimer Boulder Broomfield Q1 2017 Q1 2016 0 50 100 150 200 250 300 350 400 450 Sources: DOLA Foreclosure Reports and Statistics.