Big Changes, Unknown Impacts Boulder Economic Forecast Place cover image here Richard Wobbekind Senior Economist and Associate Dean for Business and Government Relations January 17, 2018
Real GDP Growth Quarterly Real GDP Percent Change, SAAR 10.0 8.0 6.0 4.0 2.0 0.0-2.0-4.0-6.0-8.0-10.0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Sources: Bureau of Economic Analysis and Consensus Forecasts.
Economic Growth Percent Change 8 6 4 2 0-2 -4-6 00 01 02 04 05 07 08 09 11 12 14 15 17 Year Percent Change Fixed Business Investment 25 20 15 10 5 0-5 -10-15 -20-25 -30 Personal Consumption Expenditures Year-over-Year Quarterly SAAR Quarterly SAAR Year-over-Year 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Year Percent Change 10 8 6 4 Year-over-Year 2 0-2 -4 Quarterly SAAR -6-8 -10 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Year Percent Change Net Exports 20 15 10 5 0-5 -10-15 -20-25 Government Spending Exports Imports 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Year Sources: Bureau of Economic Analysis, the National Bureau of Economic Research, and the Business Research Division.
Recession 8 Months National Employment Month-over-Month Change, 12-Month Average Thousands, Month-over-Month, 12- Mo Average 300 200 100 0-100 -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.
Employment Growth by State Year-over-Year November 2017 Source: Bureau of Labor Statistics (Seasonally Adjusted).
Labor Underutilization Percentage of Labor Force 18.0 16.0 14.0 12.0 10.0 Average U-6 U-6 8.0 U-5 8.1% 6.0 4.0 Average U-3 U-3 5.1% 4.1% 2.0 0.0 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: Bureau of Labor Statistics (Seasonally Adjusted).
Labor Force Participation 68.0 Labor Force Participation Rate 67.0 66.0 65.0 64.0 63.0 62.0 61.0 60.0 59.0 1980 1984 1988 1992 1996 2000 2005 2009 2013 2017 LFPR LFPR by Age Cohort 1967-2017 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 1987 2000 1991 1999 Historical Peak Current: 2017 2010 2017 20-24 25-34 35-44 45-54 55-64 65+ Source: Bureau of Labor Statistics (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 2.7% 3.0 2.0 2.6% 2.0 1.0 1.0 0.0 0.0-1.0-1.0-2.0 2008 2010 2012 2014 2016 2018-2.0 2008 2010 2012 2014 2016 2018 Sources: Consensus Forecasts.
Securities Trends Trough of Recession in 2009 to December 2017 Indexed, 2009=100 450 400 350 300 NASDAQ Russell 2000 S&P 500 Dow Jones 250 200 150 CPI 100 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bloomberg.
Household Debt Burden Percent of Disposable Income DSR 13.5 13.0 12.5 12.0 11.5 Debt Service Ratio (L) FOR 18.4 17.9 17.4 16.9 11.0 10.5 10.0 9.5 Financial Obligations Ratio (R) 16.4 15.9 15.4 9.0 14.9 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Source: Federal Reserve, Household Debt Service and Obligations Ratios.
Consumer Confidence and Retail Sales 1985=100 Consumer Confidence 160 140 120 Mountain Annual Percent Change 10.0 5.0 Retail and Food Services Sales 100 80 60 40 20 United States 0.0-5.0-10.0 0 1991 1993 1996 1999 2001 2004 2007 2009 2012 2015 2017-15.0 2004 2006 2008 2010 2012 2014 2017 Sources: Conference Board and National Bureau of Economic Research. Bureau of Economic Analysis, Moody s Analytics, U.S. Census Bureau (Seasonally Adjusted Annual Rate).
Nominal Corporate Profits and Business Fixed Investment Percent Change 30.0 25.0 20.0 15.0 10.0 5.0 0.0-5.0-10.0-15.0-20.0 Nominal Pre-Tax Corporate Profits 5.8% 2004 2006 2008 2010 2012 2014 2016 2018 Percent Change 10.0 5.0 0.0-5.0-10.0-15.0-20.0 Business Fixed Investment 4.7% 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 Q3 2017 Source: Federal Housing Finance Agency Home Price Index, All Transactions Index.
Federal Budget Balance $ Billions 400 200 0-200 -400-600 -800-1,000 -$734-1,200-1,400-1,600 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sources: Bureau of Economic Analysis, NIPA Table 3.18B, Consensus Forecasts.
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 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sources: Federal Reserve and Moody s.
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 2000 2002 2003 2005 2007 2008 2010 2012 2013 2015 2017 Source: Bureau of Labor Statistics (SA).
Photo courtesy of the University of Colorado. Colorado Population, Employment, and Prices
Colorado Employment Growth Jobs Added Thousands 100 80 60 40 20 0-20 -40-60 -80-100 -120 56,330 47,100 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sources: Colorado Department of Labor and Employment and the Colorado Business Economic Outlook Committee.
Employment In Current Decade National, State, and Local Percent 40% 35% 30% 25% 20% 15% 10% 5% Greeley Ft. Collins-Loveland Denver Boulder Colorado Colorado Springs National Pueblo Grand Junction 0% -5% 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bureau of Labor Statistics (Seasonally Adjusted).
Colorado Employment Change 2018 Forecast Employment in Thousands 2,710 2,700 2,690 2,680 2,670 Professional Business Services Trade, Transportation, Utilities Education, Health Services Financial Actvities Construction Leisure and Hospitality Government Total jobs gained: 47,100 Other Manufacturing Mining and Logging Information 2018 2,660 2017 2,650 Source: Bureau of Labor Statistics, Current Employment Statistics (SA).
Colorado Wages 2016 Sector Total Employment YoY Employment Growth Wages YoY Wage Growth Mgmt of Companies and Enterprises 36.7 0.3% $128,275-9.9% Mining and Logging 23.7-22.8% $114,630-0.1% Utilities 8.2 0.0% $95,715 2.6% Information 71.7 1.4% $95,511 1.4% Professional and Technical Services 210.1 2.7% $90,437 1.8% Finance and Insurance 113.4 2.5% $90,007 2.3% Wholesale Trade 105.1 1.6% $79,510 0.5% Manufacturing 142.5 1.1% $66,329-0.2% Construction 155.1 4.2% $57,344 3.6% Real Estate and Rental and Leasing 50.2 3.7% $54,984 3.6% All Industries 2,599.2 2.3% $54,664 0.9% Government 427.3 2.4% $53,556 2.2% Transportation and Warehousing 72.9 1.8% $53,090 2.4% Health Care and Social Assistance 286.9 4.1% $48,801 1.3% Educational Services 39.8 3.4% $39,361 1.2% Administrative and Waste Services 158.5 0.8% $38,771 2.9% Other Services 105.2 2.1% $38,204 1.9% Arts, Entertainment, and Recreation 52.5 3.3% $36,072 2.0% Retail Trade 268.6 2.1% $30,625 1.8% Accommodation and Food Services 270.8 3.4% $20,996 3.0% Sources: Colorado Business Economic Outlook Committee and Bureau of Labor Statistics, Quarterly Census of Employment and Wages.
Photo Courtesy Regional Transportation District. Construction
Residential Building Permits 1996-2018 60,000 Permits 50,000 40,000 Multifamily 43,400 30,000 20,000 10,000 Single Family 0 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: U.S. Census Bureau.
Value of Construction 1996-2018 $25 Value in Billions $20 $15 Non-Building Non-Residential Residential $19.2 B $10 $5 $- 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: McGraw-Hill Construction Dodge Research and Analytics.
Retail Trade Sales Total and Percentage Change $ Millions, 12-Month Rolling Sum $3,000 Percent Change 10.0 $2,500 $2,000 Net Sales Taxes General Fund Sales Taxes 5.0 4.6 0.0 $1,500-5.0 $1,000 $500-10.0 $0 1990 1994 1997 2000 2004 2007 2010 2014 2017-15.0 2008 2010 2012 2014 2016 2018 Sources: Colorado Department of Revenue and Colorado Business Economic Outlook Committee.
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 Fiscal Years Source: Colorado Office of the State Controller and the Colorado Office of State Planning and Budgeting (December 2017). Note: Excludes revenue transferred to the State Education Fund.
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Real Gross Domestic Product Boulder MSA Millions of Chained 2009 Dollars $25,000 Percentage Change 8.0% $20,000 $15,000 4.0% $10,000 0.0% $5,000 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-4.0% Source: Bureau of Economic Analysis.
Single Family v. Multifamily Permits Boulder MSA, Year-to-Date through November 2017 Permits 1,800 1,600 1,400 Permits 1,800 1,600 1,400 1,200 1,000 Multifamily Single Family 1,200 1,000-26% 800 800 600 600 400 400 +4% 200 200 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 2016 YTD 2017 YTD Source: U.S. Census Bureau.
City of Boulder Median Price of Single Family Homes Sold, Number of SF Homes Sold Dollars 900,000 800,000 700,000 600,000 500,000 400,000 Number of Homes Sold 1,100 900,000 1,000 800,000 900 700,000 800 700 600,000 600 500,000 500 400,000 400 1,100 900 700 500 300 100 300,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Boulder Area Realtor Association. *YoY through November 2017. Excludes condos and townhomes. 300,000 2016 YTD Nov. 2017 YTD Nov. -100
Commercial Vacancy Rates: City of Boulder Percent 21 18 15 Office Warehouse Flex Retail 12 9 6 3 0 2005 2007 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Newmark Grubb Knight Frank.
Boulder County Value of Construction $ Thousands 1,600 1,400 1,200 1,000 Nonbuilding Nonresidential Residential 800 600 400 200 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Sources: McGraw-Hill Construction Dodge Research and Analytics. 2016 YTD Nov. 2017 YTD Nov.
Boulder MSA Employment Thousands YoY +4,100 jobs, 2.2% 195.0 190.0 185.0 180.0 175.0 170.0 165.0 160.0 155.0 150.0 145.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bureau of Labor Statistics, CES (SA).
Boulder County Jobs Added, 5 Years Professional, Scientific, and Technical Health Care Accommodation and Food Services Government Retail Manufacturing Construction Wholesale Other Education Real Estate Arts, Entertainment, and Recreation Management of Companies Administrative and Waste Transportation Agriculture Utilities Mining Financial Information -2,000-1,000 0 1,000 2,000 3,000 4,000 5,000 Source: Colorado Department of Labor and Employment, QCEW.
Employment Comparison 100% Colorado Rest of Boulder County City of Boulder 90% All Other 80% 70% 60% 50% 40% 30% 3% 6% 6% 8% 11% 11% 3% 9% 4% 14% 10% 11% 6% 11% 2% 16% 10% 9% Information Manufacturing Construction Prof., Scientific, and Tech. Accommodations & Food Retail 20% 11% 15% 9% Healthcare 10% 0% 16% 16% 17% Government Source: Colorado Department of Labor and Employment, QCEW.
City of Boulder Employment Total Employment ~93,000 Government Professional and Technical Services Manufacturing Accommodation and Food Services Health Care and Social Assistance Retail Trade Information Wholesale Trade Finance and Insurance Other Services Administrative and Waste Services Arts, Entertainment and Recreation Educational Services Construction Real Estate and Rental and Leasing All Other 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Source: Colorado Department of Labor and Employment, QCEW.
$ Millions Boulder County Wages Annual Rate (4Q Rolling) $11,000 5-Year Average Growth: 5% $10,000 $9,000 $8,000 $7,000 $6,000 Q2 2002 Q3 2003 Q4 2004 Q1 2006 Q2 2007 Q3 2008 Q4 2009 Q1 2011 Q2 2012 Q3 2013 Q4 2014 Q1 2016 Q2 2017 Source: Bureau of Labor Statistics, QCEW Data Series, NSA.
Boulder County Average Wages Annual Rate (4Q) $70,000 $65,000 5-Year Average Growth: 2.4% $60,000 $55,000 $50,000 $45,000 $40,000 Q2 2002 Q3 2003 Q4 2004 Q1 2006 Q2 2007 Q3 2008 Q4 2009 Q1 2011 Q2 2012 Q3 2013 Q4 2014 Q1 2016 Q2 2017 Source: Bureau of Labor Statistics, QCEW Data Series, NSA.
Dollars $100,000 2017 Average Annual Wages Front Range $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $63,999 Colorado: $56,232 Source: Bureau of Labor Statistics, QCEW.
Sales and Use Tax Collections City of Boulder $ Millions 140.0 City of Boulder Sales and Use Tax, 12-Month Rolling Sum 120.0 100.0 80.0 60.0 City of Boulder: -5.0% Longmont: +11.8% Broomfield: +1.8% Colorado: +7.0% 40.0 20.0 0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: City of Boulder.
Sales and Use Tax Collections City of Boulder, 12-Month Rolling Sum $ Millions 140.0 120.0 100.0 Construction Use -33.8% YTD Consumer and Vehicle Use -14.9% YTD Sales +0.3% YTD 80.0 60.0 40.0 20.0 0.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: City of Boulder.
Venture Capital Investment City of Boulder Millions $300 $250 $200 $150 $100 $50 Boulder Quarterly VC Funding Q4 2017 Deals: Prima-Temp Alpine Start Congruex Jump Cloud Clear Comfort Temp Quest Surna CaliberMind Stateless Alpin $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: PwC/NVCA MoneyTree, Boulder County Business Report.
Summary Faster GDP growth Slower employment growth Deficit-financed tax cuts Rising interest rates Moderate global growth Higher commodity prices Depreciating dollar Policy Slower state job growth
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