Zions Bank Economic Overview Cache Valley Home Builders Association April 12, 2017
National Economic Conditions
Dow 20,000 The Trump Bump Dow Reaches New Heights Following U.S. Presidential Election Source: Wall Street Journal
130.0 Current Level of Consumer Confidence Indicates Economic Prosperity 120.0 110.0 Above 110 indicates economic prosperity 100.0 90.0 80.0 70.0 60.0 50.0 Mar 2012 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 Sept 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Mar 2017 Source: The Conference Board
Expectations of Future Inflation on the Rise
Small Business Optimism on the Rise
Irrational Exuberance?
Divergence of Soft vs Hard Data
Why?
Cumulative Job Loss by Months of Recession Thousands Source: Euler Hermes analysis of Bureau of Labor Statistics Data
Cumulative Job Loss by Months of Recession Thousands Source: Euler Hermes analysis of Bureau of Labor Statistics Data
Index Slower Recovery than Past Recessions 150 140 130 120 110 100 90 80 0 5 10 15 20 25 30 35 40 Periods from Value Scaled to 100 2007 Recession 2001 Recession 1990 Recession 1981 Recession 1980 Recession 1973 Recession Source: Federal Reserve Bank of St. Louis
Slower Recovery than Past Recessions
Mixed March Job Indicators Indicator Expectation Actual Total Nonfarm Payrolls 175,000 98,000 Unemployment Rate 4.7% 4.5% Private Payrolls 200,000 89,000 Monthly Average Hourly Wage Growth Yearly Average Hourly Wage Growth 0.3% 0.2% 2.8% 2.7% Labor Force Participation 62.9% 63.0% Sources: Wall street Journal and Bureau of Labor Statistics
98,000 Jobs Added in March 500 300 8.7 Million Jobs Lost Payroll Change 000 s 100-100 -300-500 -700 15.5 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: Mar 2016 to Mar 2017 Ntl. Res. & Mining Construction Manufacturing Trade, Trans., Utilities Information Financial Activity Prof. & Bus. Serv. Ed. & Health Serv. Leisure & Hospitality Other Services Government -1.2% Total: 1.5% 0.4% 0.3% 0.7% 0.9% 0.7% 2.6% 2.2% 3.2% 2.3% 1.7% -2% -1% 0% 1% 2% 3% 4% Source: Bureau of Labor Statistics; seasonally adjusted
National Employment Change Total Change in Number of Jobs by Industry in Thousands: Mar 2016 to Mar 2017 Ntl. Res. & Mining Construction Manufacturing Trade, Trans., Utilities Information Financial Activity Prof. & Bus. Serv. Ed. & Health Serv. Leisure & Hospitality Other Services Government -32 3 37 54 177 192 178 152 258 527 639-100 0 100 200 300 400 500 600 700 Source: Bureau of Labor Statistics; seasonally adjusted
Unemployment Rate Indicates Full Employment 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
18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 Unemployed and Discouraged Workers Down from Last Month 2.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 U-6 (Underemployed) U-3 (Unemployment) Source: Bureau of Labor Statistics
Long Term Unemployment Too High
Unemployment Duration Remains High
% 68 66 Labor Force Participation Among Lowest Level in Almost 40 Years Mar 2000 67.3% 64 62 Apr 1978 63.0% 60 58 Mar 2017 63.0% 56 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: U.S. Bureau of Labor Statistics Note: Seasonally adjusted
% 68.0 Labor Force Participation Seeing Little Change 67.0 66.0 65.0 64.0 63.0 63.0 62.0 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 Note: Seasonally adjusted
90% 80% 70% 60% 50% Male vs Female Civilian Labor Force Participation Rate 40% 30% Men Women 1948 1954 1960 1966 1972 1978 1984 1990 1996 2002 2008 2014 Source: Bureau of Labor Statistics
Participation Among Women Aged 25-34 Has Surged
4.0% 3.5% Yearly Wage Growth Down Slightly in March Mar. 2017 2.7% 3.0% 2.5% 2007-2016 Average = 2.4% 2.0% 1.5% 1.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: U.S. Bureau of Labor Statistics Note: Growth rate calculated using real chained 1982-1984 dollars
5.0 Producer Price Index on the Rise 4.0 3.0 2.0 Percent 1.0 0.0-1.0-2.0 Year-to-Year Change 2011 2012 2013 2014 2015 2016 2017 Source: Bureau of Labor Statistics; not seasonally adjusted
4.5% U.S. Consumer Price Index Yearly Change Rate 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% Inflation Surpasses Fed Target Aug 2011 Nov 2011 Feb 2012 May 2012 Aug 2012 Nov 2012 Feb 2013 May 2013 Aug 2013 Nov 2013 Feb 2014 May 2014 Aug 2014 Nov 2014 Feb 2015 May 2015 Aug 2015 Nov 2015 Feb 2016 May 2016 Aug 2016 Nov 2016 Feb 2017 Source: Bureau of Labor Statistics
Growth in Consumer Spending At Par Personal Consumption Expenditure Yearly Percent Change 5.0 4.0 3.0 Percent 2.0 1.0 0.0-1.0-2.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bureau of Economic Analysis
Growth in Consumer Spending At Par Personal Consumption Expenditure Yearly Percent Change 5 4 3 Percent 2 1 0-1 -2 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Bureau of Economic Analysis
Consumption Drives Growth 5% Total GDP Growth 3% Growth Rate 1% -1% -3% -5% Fixed Investment Inventories Net Exports Government Personal Consumption 4Q GDP 2.1% 2012 2013 2014 2015 2016 Source: Bureau of Economic Analysis
140 1973 = 100 The U.S. Dollar is Strong Trade Weighted U.S. Dollar Index: Broad 130 120 110 100 90 80 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Federal Reserve
Euro compared to U.S. Dollar $1.60 $1.50 $1.40 $1.39 $1.30 USD $1.20 $1.10 PARITY $1.00 $0.90 $0.80 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $1.05 Source: Investing.com
U.S. Dollar Compared to Chinese Yuan $6.00 $6.50 $7.00 $7.50 $8.00 $8.50 2008 China stops the yuan s rise 2001 China joins WTO 2005 China allows the yuan to rise 2010 China allows the yuan to rise Aug 2015 China devalues the yuan by largest amount in 20 years 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Federal Reserve Bank of St. Louis
$1.80 British Pound Dropped to New Low Following Brexit Vote $1.70 $1.60 USD $1.50 $1.40 $1.30 $1.20 $1.10 2010 2011 2012 2013 2014 2015 2016 2017 Source: Investing.com
U.S. Total Rig Count Recovering from Low as Oil Prices Rise $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 2013 2014 Oil Prices 2015 Source: Baker Hughes and U.S. Energy Information Administration Note: Total count includes oil and gas rigs 2016 Active Oil Rigs 2017 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400
Federal Funds Target Rate Sees 3 nd Increase in Over a Decade 6.0 5.0 4.0 3.0 2.0 Federal Funds Target Rate = 1.0 1.0 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: U.S. Federal Reserve
March 2017 Fed Rate Increase Projections 4% 3% 3.0% 3.0% 2% 1.4% 2.1% 1% 0% 2017 2018 2019 Long Run Source: Board of Governors of the Federal Reserve
Utah Economic Conditions
Utah Accolades CNBC: Utah Named 2016 Top State for Business WalletHub: Utah Named 2016 State with Best Economy CNBC: Salt Lake City (18), Ogden (7), and Provo (2) Named Among Top 20 Metro Areas to Start a Business in U.S. Forbes: Utah Named #1 Best State for Business (top stop 5 out of past 6 years) Standard & Poor s, Moody s Investors Service, and Fitch Ratings: Utah One of only 10 States with AAA Bond Rating
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% HI 0.2% 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% 1.5% or more OH 0.1% KY 0.3% 0.7% to 1.4% (at or above U.S. rate) 0.2% to 0.6% 0.0% to 0.1% Population Loss 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% 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 70000 25,412 60000 34,997 90000 80000 50000 40000 30000 20000 10000 0-10000 -20000 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% Increase of 3.0% or Greater Increase of 2.0% to 2.9% Millard 0.4% Sanpete 2.1% Sevier 1.6% Emery -1.3% Grand 0.9% Increase of 1.0% to 1.9% Beaver 1.9% Piute -2.5% Wayne 0.0% Increase of 0.0% to 0.9% Population Loss Iron 3.4% Washington 3.1% Kane 3.0% Garfield -0.1% San Juan 7.6% Source: U.S. Census Bureau
CA 1.9% OR 2.2% Percent Change in Employment for States: February 2016 to February 2017 U.S. Rate = 1.6% WA 2.7% NV 3.2% AK -2.0% ID 3.6% UT 3.3% AZ 2.2% Note: Seasonally Adjusted Source: Bureau of Labor Statistics Utah Employment Growth 2 nd Highest in the Nation MT 2.4% WY -2.5% HI 0.8% CO 1.9% NM 0.7% ND -0.7% SD 1.4% NE 1.3% KS 0.0% TX 1.9% OK -0.4% MN 1.3% IA 0.7% MO 1.9% AR 1.3% WI 1.0% LA 0.2% IL 0.8% MS 0.1% MI 1.9% IN 1.3% TN 2.2% AL 1.5% OH 0.8% KY 1.4% GA 2.6% WV -0.4% VT 1.1% PA 1.3% NC 1.8% SC 1.6% VA 1.4% FL 3.0% NH 1.7% NY 1.4% 2.0% or more 1.6% to 1.9% (at or above the U.S. rate) 1.0% to 1.5% 0.0% to 0.9% Loss ME 0.5% DC 0.5% CT 0.1% DE 0.7% MD 2.1% MA 1.6% RI 1.2% NJ 1.8%
Utah Total Employment at New Highs Thousands of Employees 1500 1400 1300 1200 1100 1000 900 Loss of 92,000 jobs from 2007-2009 Gain of 284,000 jobs from low in 2009 800 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total Nonfarm Employment Source: U.S. Bureau of Labor Statistics, Total nonfarm seasonally adjusted Note: Numbers rounded to nearest thousand
Utah Industries Seeing Growth Percent Change in Utah Employment by Industry: February 2016 to February 2017 Ntl. Res. & Mining Construction Manufacturing Trade, Trans., Utilities Information Financial Activity Prof. & Bus. Serv. Ed. & Health Serv. Leisure & Hospitality Other Services Government -9.1% Total: 3.3% -1.6% 4.1% 3.0% 4.3% 2.0% 4.2% 3.8% 3.1% 4.4% 2.3% -13% -8% -3% 2% 7% Source: Utah Department of Workforce Services
Utah Industries Seeing Growth Total Change in Utah Employment by Industry: February 2016 to February 2017 Ntl. Res. & Mining -800 Construction 3,500 Manufacturing 3,800 Trade, Trans., Utilities 11,500 Information Financial Activity -600 1,600 Prof. & Bus. Serv. 8,200 Ed. & Health Serv. 7,200 Leisure & Hospitality 4,200 Other Services Government 1,700 5,400 Total: 45,700-3,000-1,000 1,000 3,000 5,000 7,000 9,000 11,000 13,000 Source: Utah Department of Workforce Services
Utah Employment Change Rates By County Feb 2016 to Feb 2017 State Rate = 3.3% Box Elder 4.1% Tooele 5.3% Juab 1.2% Cache 1.6% Rich 12.4% Weber 3.7% Davis 3.1% Morgan 3.0% Salt Lake 3.5% Utah 4.4% Summit 3.1% Wasatch 5.9% Duchesne -3.7% Carbon -3.6% Daggett 6.5% Uintah -3.7% 5.0% or more 3.3% to 4.9% Millard 5.1% Sanpete 4.0% Sevier 2.0% Emery -4.1% Grand 5.0% 1.0% to 3.2% Beaver -3.8% Piute 3.3% Wayne -1.7% 0.0% to 0.9% Iron 6.4% Garfield 1.9% San Juan 0.5% Loss Washington 5.1% Kane -1.8% Source: Utah Department of Workforce Services; Not seasonally adjusted
OR 4.0% CA 5.0% WA 4.9% NV 4.9% AK 6.4% ID 3.6% UT 3.1% AZ 5.1% Note: Seasonally Adjusted Source: Bureau of Labor Statistics UT Unemployment Rates 7 th Lowest in the Nation MT 3.8% HI 2.8% WY 4.7% CO 2.9% NM 6.8% February 2017 U.S. Rate = 4.7% ND 2.9% SD 2.8% NE 3.2% KS 4.0% TX 4.9% OK 4.6% MN 4.0% IA 3.2% MO 4.1% AR 3.7% LA 5.8% WI 3.7% IL 5.4% MS 5.2% MI 5.3% IN 4.1% TN 5.3% AL 6.2% 3.9% or less OH 5.1% KY 4.9% GA 5.3% WV 5.2% VT 3.0% PA 5.0% NC 5.1% SC 4.4% VA 3.9% FL 5.0% NH 2.7% NY 4.4% 4.0% to 4.7% (at or below U.S. rate) 4.8% to 5.4% 5.5% to 5.9% 6.0% or more ME 3.2% DC 5.7% CT 4.7% DE 4.5% MD 4.2% MA 3.4% RI 4.5% NJ 4.4%
Utah Unemployment Rates By County February 2017 State Rate = 3.1% Box Elder 3.2% Tooele 3.3% Juab 3.2% Cache 2.8% Weber 3.5% Morgan Davis 2.9% 2.7% Salt Lake 2.9% Utah 2.8% Rich 2.9% Summit 2.8% Wasatch 3.0% Duchesne 6.5% Carbon 5.4% Daggett 3.5% Uintah 6.8% 3.1% or lower 3.2% to 3.9% Millard 3.2% Sanpete 3.7% Sevier 3.6% Emery 5.6% Grand 5.4% 4.0% to 5.9% Beaver 4.8% Piute 5.2% Wayne 7.6% 6.0% to 6.9% Iron 4.1% Garfield 7.9% San Juan 7.3% 7.0% or greater Washington 3.3% Kane 3.4% Source: Utah Department of Workforce Services
CA 4.5% WA 4.8% OR 4.5% NV 5.9% UT 5.6% AZ 4.3% Source: Bureau of Economic Analysis UT Personal Income Growth 2 nd Highest in the Nation AK -1.0% ID 3.6% Percent Change in Personal Income : 2015 2016 U.S. = 3.6%; UT = 5.6% MT 2.3% WY -1.7% HI 4.5% CO 3.9% NM 2.1% ND -1.5% SD 1.2% NE 2.8% KS 2.8% TX 2.9% OK 0.6% MN 3.0% IA 2.3% MO 3.5% AR 3.2% WI 3.1% LA 1.5% IL 3.1% MS 3.2% MI 3.6% IN 3.9% TN 3.9% AL 3.3% 4.0% or more OH 3.0% KY 2.6% GA 4.8% WV 1.0% VT 3.3% PA 2.9% NC 4.1% SC 4.4% VA 3.6% FL 4.9% NH 4.7% NY 2.9% 3.6% to 3.9% (at or above the U.S. rate) 2.0% to 3.5% 0.0% to 1.9% Decrease ME 3.7% DC 4.5% CT 3.0% DE 2.9% MD 3.7% MA 4.3% RI 3.1% NJ 3.2%
Utah Poverty Rate 5 th Lowest in the Nation CA 13.9% WA 11.4% OR 11.9% NV 13.0% AK 9.2% ID 12.3% UT 9.3% AZ 17.2% 2015 U.S. Rate = 13.5%, 2015 Utah Rate = 9.3% MT 11.9% WY 9.8% HI 10.9% CO 9.9% NM 19.7% ND 10.7% SD 13.9% NE 10.3% KS 14.2% TX 14.7% OK 14.2% MN 7.8% IA 10.4% MO 9.8% AR 16.1% WI 11.4% LA 18.6% IL 10.9% MS 19.1% MI 12.8% IN 13.5% TN 14.7% AL 16.3% 10.0% or less 10.1% to 11.0% OH 13.6% KY 19.5% WV 14.5% VT 10.7% PA 12.3% VA 10.9% NC 15.3% SC 14.3% GA 18.1% FL 16.2% NH 7.3% NY 14.2% 11.1% to 13.5% (at or below the U.S. rate) 13.6% to 16.0% 16.1% or more ME 12.3% DC 16.6% CT 9.1% DE 11.1% MD 9.6% MA 11.5% RI 11.8% NJ 11.2% Source: U.S. Census Bureau
Consumer Sentiment on the Rise 130.0 120.0 110.0 100.0 90.0 80.0 70.0 60.0 50.0 Mar 2012 Above 110 indicates economic prosperity Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013 Mar 2014 Jun 2014 Sep 2014 Dec 2014 Mar 2015 Zions Bank Utah Consumer Attitude Index United States Consumer Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Mar 2017 Source: U.S. CCI from The Conference Board and Utah CAI from Cicero Group
4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% Aug 2011 Nov 2011 Consumer Price Index Yearly Growth United States vs. Wasatch Front Feb 2012 May 2012 Aug 2012 Nov 2012 Feb 2013 May 2013 Aug 2013 Nov 2013 Feb 2014 May 2014 United States CPI: +2.7% Zions Bank Wasatch Front CPI: +3.2% Aug 2014 Nov 2014 Feb 2015 May 2015 Aug 2015 Nov 2015 Feb 2016 May 2016 Aug 2016 Nov 2016 Feb 2017 Source: U.S. CPI from National Bureau of Labor Statistics and Wasatch Front CPI from Cicero Group
Utah Median Home Sale Prices Reaching Approaching Pre-Recession Highs $300,000 $280,000 $260,000 $240,000 $220,000 $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 Utah 2009 2010 U.S. 2011 2012 2013 2014 2015 2016 Source: Graphiq.com reporting data from CoreLogic
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
30,000 Utah Residential Construction Activity Continues to Rise 25,000 20,000 15,000 10,000 5,000 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2016e 2017f 2018f Single-Family Units Multifamily Total Source: State of Utah Revenue Assumptions Group, Moody s Economy.com, and HIS Global Insight
Millions $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 Utah Value of New Residential Construction Increasing $0 1970 1975 1980 1985 1990 1995 2000 2005 Residential Nonresidential Renovations Total 2010 2015 2016e 2017f 2018f Source: State of Utah Revenue Assumptions Group, Moody s Economy.com, and HIS Global Insight e= estimate f = forecast
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
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