Zions Bank Economic Overview

Zions Bank Economic Overview National Assoc of Credit Managers Member Seminar December 12, 2017

National Economic Conditions

Dow Breaks 24,000 The Trump Bump Dow Reaches New Heights Following U.S. Presidential Election Source: Federal Reserve Bank of St. Louis

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

Consumer Confidence at 17-Year High 140 130 November 129.5 120 110 Above 110 indicates economic prosperity 100 90 80 70 60 50 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Jun-17 Oct-17 Source: The Conference Board

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?

November Marks 86 Straight Months Of Job Creation Employment Change in thousands 500 300 100-100 -300-500 -700 8.7 Million Jobs Lost 16.6 Million Jobs Recovered -900 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bureau of Labor Statistics

National Employment Change Percent Change in National Employment by Industry: November 2016 to November 2017 Ntl. Res. & Mining 9.6% Construction 2.7% Prof. & Bus. Serv. 2.7% Ed. & Health Serv. 2.1% Financial Activity 1.8% Leisure & Hospitality 1.8% Manufacturing 1.5% Other Services 1.4% Trade, Trans., Utilities 0.5% Government Information -2.3% 0.2% Total: 1.4% -4% -2% 0% 2% 4% 6% 8% 10% 12% Source: Bureau of Labor Statistics

National Employment Change Total Change in Number of Jobs by Industry in Thousands: November 2016 to November 2017 Prof. & Bus. Serv. Ed. & Health Serv. Leisure & Hospitality Manufacturing Construction Financial Activity Trade, Trans., Utilities Other Services Ntl. Res. & Mining Government Information -65 47 80 64 189 184 150 124 279 471 548-100 0 100 200 300 400 500 600 Source: Bureau of Labor Statistics

Unemployment Continues Lower 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 5.0% = Full Employment 3.0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bureau of Labor Statistics

68% Labor Force Participation Remains Flat 67% 66% 65% 64% Nov: 62.7% 63% 62% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: U.S. Bureau of Labor Statistics

Labor Force Participation Among Lowest Level in Almost 40 Years 68% 66% 64% 62% 60% 58% Apr 1978 63.0% Mar 2000 67.3% Nov 2017 62.7% 56% 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Source: U.S. Bureau of Labor Statistics

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 55+ 60% 20% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 U.S. Participation Rate Age 55+ Share of Working Age Pop Source: Zions Bank Analysis of Federal Reserve Bank of St. Louis

Long-Term Decline of the Teenage Workforce 70% 65% 60% 55% 50% 45% 40% 35% 30% 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 U.S. Labor Force Participation Rate Participation Rate Ages 16-19 Source: Federal Reserve Bank of St. Louis

Standard of Living Best Ever

Fewer Unemployed Workers Per Job Opening 7 6 5 4 3 October 2017 1.08 2 1 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Unemployed/Openings Source: Federal Reserve Bank of St. Louis

Real GDP Growth 6.0% 4.0% Q3 2017 3.3% 2.0% 0.0% -2.0% -4.0% 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 Personal Consumption Fixed Investment Net Exports Inventories Government Real GDP Growth Source: Bureau of Economic Analysis

Wage Growth Rose in November 4.0% 3.5% Nov 2017 2.5% 3.0% 2.5% 2007 2017 Average 2.4% 2.0% 1.5% 1.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Federal Reserve Bank of St. Louis

Growth in Consumer Spending Under Par 5% Personal Consumption Expenditure Yearly Percent Change 4% 3% Oct 1.6% 2% 1% 0% -1% -2% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bureau of Economic Analysis

Federal Funds Target Has Risen Four Times in the Last Decade 6 5 4 3 2 Federal Funds Target Rate = 1.25 1 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: U.S. Federal Reserve

Federal Reserve Rate Increase Projections 4% 3% 2.9% 3.0% 2% 1.4% 2.1% 1% 0% 2017 2018 2019 Long Run Source: Board of Governors of the Federal Reserve

Markets Expect Rate Increase in 2017

2018 Rate Increase Expectations Rising

Fed Announces Plan to Reduce Balance Sheet $5.00T $4.50T $4.00T $3.50T $3.00T $2.50T $2.00T $1.50T $1.00T $0.50T Recession QE1 QE2 QE3 $0.00T 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Mortgage-Backed Securities U.S. Treasury Securities Federal Agency Debt Other Source: Federal Reserve Bank of St. Louis

Yield Curve Flattening

Yield Curve Showing Signs of Distress 10-year minus 2-year spread 3.0% 2.50% 2.0% 1.50% 1.0% 0.50% 0.0% -0.50% -1.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ource: Federal Reserve Bank of St. Louis

Bond Spreads Tightening

Bond Spreads Tightening

U.S. Total Oil Rigs and Oil Prices 1,700 $120 1,500 $100 Oil Rig Count 1,300 1,100 900 700 $80 $60 $40 Oil Prices 500 $20 300 2011 2012 2013 2014 2015 2016 2017 $0 US Oil Rigs Oil (WTI Crude) Sources: Baker Hughes and Federal Reserve Bank of St. Louis

Changing Energy Markets

Is Bitcoin in a Bubble?

Utah Economic Conditions Source: U.S Census Bureau

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% 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% OH 0.1% KY 0.3% 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% 1.5% + 0.7% to 1.4% 0.2% to 0.6% 0.0% to 0.1% Loss HI 0.2% Source: U.S. Census Bureau

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 1,200,000 900,000 600,000 300,000 0 3,051,217 25,412 34,997 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0-10,000-20,000 Components of Population Change 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Net Migration Natural Increase Total Population 2015 2017f 2018f Sources: U.S. Census Bureau; Data from 2014 on from State of Utah Revenue Assumptions Working Group e = estimate, f = forecast

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% 3.0%+ 1.8% to 2.9% 1.0% to 1.7% Millard 0.4% Beaver 1.9% Piute -2.5% Sanpete 2.1% Sevier 1.6% Wayne 0.0% Emery -1.3% Grand 0.9% 0.0% to 0.9% Loss Iron 3.4% Washington 3.1% Kane 3.0% Garfield -0.1% San Juan 7.6% Source: U.S. Census Bureau

Utah has the 2nd Highest employment growth in the nation CA 1.5% OR 2.5% WA 2.1% NV 2.8% Percent Change in Employment for States: Oct. 2016 to Oct. 2017 U.S. Rate = 1.4%, UT Rate = 2.7% AK 0.1% ID 2.4% UT 2.7% AZ 1.2% MT 1.2% WY -0.5% HI 1.1% CO 1.4% NM 1.6% ND 0.6% SD 0.1% NE 1.0% KS -0.4% TX 2.6% OK 1.2% MN 1.5% IA 0.9% MO 1.1% AR 1.9% WI 1.4% LA 0.4% IL 0.3% MS 0.6% MI 1.0% IN 0.9% TN 1.2% AL 1.5% OH 1.1% KY 1.5% GA 2.0% VT 1.0% WV 0.4% PA 1.1% NC 1.7% SC 2.1% VA 0.9% FL 2.3% NH 0.9% NY 1.1% ME 0.8% DC 0.9% CT 0.1% DE 0.7% MD 2.0% MA 1.9% RI 0.9% NJ 0.7% 2.0% + 1.6% to 1.9% 1.0% to 1.5% 0.0% to 0.9% Loss Note: Seasonally Adjusted Source: Bureau of Labor Statistics

Most Utah Industries Seeing Growth Percent Change in Utah Employment by Industry: October 2016 to October 2017 Other Services Prof. & Bus. Serv. Construction Leisure & Hospitality Ed. & Health Serv. Trade, Trans., Utilities Government Manufacturing Financial Activity Information Ntl. Res. & Mining -2.7% -3.7% 6.1% 4.8% 4.5% 3.9% 2.8% 2.2% 1.9% 1.7% 0.2% Total: 2.7% -13% -8% -3% 2% 7% 12% Source: Utah Department of Workforce Services

Utah Employment Change Rates By County October 2016 to October 2017 State Rate = 2.7% Box Elder 1.6% Tooele -1.5% Juab -1.7% Cache 2.5% Rich 4.0% Weber 1.9% Da1is 4.1% Morgan 4.0% Salt Lake 2.5% Utah 4.4% Summit 2.8% Wasatch 5.8% Duchesne 4.9% Carbon 1.9% Daggett 8.1% Uintah 5.9% 5.0% + 3.3% to 4.9% 1.0% to 3.2% Millard 2.9% Beaver 3.6% Piute 6.4% Sanpete 0.3% Sevier 2.8% Emery 2.4% Wayne 1.9% Grand 3.6% 0.0% to 0.9% Loss Iron 1.8% Garfield 2.2% San Juan 0.7% Washington 4.5% Kane 1.2% Source: Utah Department of Workforce Services; Not seasonally adjusted

Utah has the 10 th lowest unemployment rate in the nation OR 4.3% CA 4.9% WA 4.5% NV 5.0% AK 7.2% ID 2.9% UT 3.3% AZ 4.5% October 2017 U.S. Rate = 4.1%, UT Rate: 3.3% MT 3.9% WY 4.2% CO 2.7% NM 6.1% ND 2.5% SD 3.5% NE 2.7% KS 3.6% TX 3.9% OK 4.4% MN 3.3% IA 3.0% MO 3.5% AR 3.6% LA 4.8% WI 3.4% IL 4.9% MS 4.9% MI 4.5% IN 3.9% TN 3.0% AL 3.6% OH 5.1% KY 5.0% GA 4.3% WV 5.1% VT 2.9% PA 4.7% NC 4.1% SC 3.9% VA 3.6% FL 3.6% NH 2.7% NY 4.8% ME 3.5% DC 6.6% CT 4.5% DE 4.8% MD 3.8% MA 3.7% RI 4.2% NJ 4.9% 6.0% + 5.5% to 5.9% 4.8% to 5.4% 4.0% to 4.7% 3.9% or less HI 2.2% Source: Bureau of Labor Statistics

Utah Unemployment Rates By County October 2017 State Rate = 3.3% Box Elder 3.2% Tooele 3.6% Juab 3.4% Cache 2.7% Weber 3.7% Morgan Davis 3.0% 2.9% Salt Lake 3.0% Utah 2.8% Rich 2.9% Summit 3.0% Wasatch 3.3% Duchesne 5.2% Carbon 5.0% Daggett 5.6% Uintah 5.6% 7.0% + 6.0% to 6.9% 4.0% to 5.9% Millard 3.1% Beaver 3.7% Piute 5.3% Sanpete 3.9% Sevier 3.8% Emery 4.9% Grand 5.1% Wayne 7.1% 3.2% to 3.9% 3.1% or lower Iron 3.9% Garfield 6.7% San Juan 6.8% Washington 3.3% Kane 3.3% Source: Utah Department of Workforce Services

CA 3.4% WA 4.1% OR 2.8% UT Personal Income Growth 2 nd Highest in the Nation NV 4.8% AK 1.3% Percent Change in Personal Income : 2016 Q2 2017 Q2 U.S. = 2.9%; UT = 4.4% ID 3.4% UT 4.4% AZ 3.9% MT 2.7% WY 1.2% HI 2.9% CO 3.9% NM 1.9% ND -0.5% SD 1.1% NE 1.3% KS 0.9% TX 2.6% OK 0.8% MN 3.3% IA 0.8% MO 1.8% AR 3.0% WI 2.7% LA 3.0% IL 1.8% MS 2.4% MI 3.0% IN 3.4% TN 3.5% AL 2.9% 4.0% or more 3.6% to 3.9% 2.0% to 3.5% 0.0% to 1.9% Decrease OH 2.1% KY 2.1% WV 1.9% GA 4.0% VT 2.5% PA 2.7% NC 3.8% SC 3.7% VA 3.1% FL 4.0% NH 3.0% NY 2.3% ME 2.2% DC 2.9% CT 1.0% DE 3.9% MD 2.9% MA 2.8% RI 1.5% NJ 1.9% Source: Bureau of Economic Analysis

Utah Poverty Rate 7 th Lowest in the Nation CA 14.3% WA 11.3% OR 13.3% NV 13.8% AK 9.9% 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% HI 9.3% CO 11.0% NM 19.8% ND 10.6% SD 13.3% NE 11.4% KS 12.1% TX 15.6% OK 16.3% MN 9.9% IA 11.8% MO 14.0% AR 17.1% WI 11.8% LA 20.1% IL 13.0% MS 20.8% 18.1% + MI 15.0% IN 14.1% TN 15.8% AL 17.1% 15.1% to 18.0% 12.1% to 15.0% 10.1% to 12.0% 10.0% or less OH 14.6% KY 18.5% WV 17.8% VT 11.9% PA 12.9% VA 11.0% NC 15.4% SC 15.3% GA 16.0% FL 14.6% NH 7.2% NY 14.6% ME 12.5% DC 18.6% CT 9.8% DE 11.6% MD 9.6% MA 10.4% RI 12.8% NJ 10.4% Source: U.S. Census Bureau, Annual Community Survey 1-year estimate

Strong Inflation in Utah 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: +2.0% Zions Bank Wasatch Front CPI: +3.3% Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Source: U.S. CPI from National Bureau of Labor Statistics and Wasatch Front CPI from Cicero Group

Consumer Sentiment on the Rise 140 130 120 110 100 90 80 70 60 50 Jun-12 Above 110 indicates economic prosperity Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 U.S. Consumer Confidence Index: 129.5 Zions Bank Utah Consumer Attitude Index: 124.4 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Sources: Conference Board and Cicero Group

Real Estate and Construction

$275,000 $255,000 $235,000 $215,000 $195,000 $175,000 $155,000 $135,000 $115,000 $95,000 1996 Utah home values continue to rise 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Utah Oct 2017 $268,600 2016 U.S. Oct 2017 $203,400 2017 United States Utah Source: Zillow Research

1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 Utah Maintains Lower Percentage of Foreclosures than Nation Percentage of total homes in foreclosure process 2008 2009 2010 2011 2012 2013 2014 2015 2016 U.S. Utah Source: Graphiq.com

Utah Residential Construction Activity Continues to Rise 30,000 25,000 20,000 15,000 10,000 5,000 Forecast 0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016e 2018f Single-Family Units Multifamily Total Source: State of Utah Revenue Assumptions Group, Moody s Economy.com, and HIS Global Insight

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 $0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016e 2018f Residential Nonresidential Renovations Total

Utah Economic Indicators 2015-2018f Population Nonfarm Employment Unemployment Rate Personal Income Home Prices Retail Sales 0 1 2 3 4 5 6 7 8 2015 2016e 2017f 2018f Sources: State of Utah Revenue Assumptions Working Group, Moody s Economy.com, IHS Global Insights e = estimate f = forecast

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 Utah inflation is strong Economic Overview Negatives National and international uncertainty Trumponomics success? Unsure inflation outlook Skills mismatch Low productivity growth Overregulation from Washington

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