Will the Recovery Ever End? Boulder Economic Forecast

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1 Will the Recovery Ever End? Boulder Economic Forecast Place cover image here Richard Wobbekind Senior Economist and Associate Dean for Business and Government Relations January 17, 219 #COBizOutlook

2 Real GDP Growth Quarterly Real GDP Percent Change, SAAR Average Average Average Sources: Bureau of Economic Analysis and Consensus Forecasts.

3 Economic Growth Percent Change Personal Consumption Expenditures Year-over-Year Fixed Business Investment Quarterly SAAR Year-over-Year Quarterly SAAR Year Percent Change Imports Government Spending Exports Net Exports Year-over-Year Quarterly SAAR Year Sources: Bureau of Economic Analysis, the National Bureau of Economic Research, and the Business Research Division.

4 Recession 8 Months Recession 18 Months Thousands, Month-over- Month, 12-Mo Average National Employment Month-over-Month Change, 12-Month Average Sources: Bureau of Labor Statistics (Seasonally Adjusted), Moody s Analytics, and NBER.

5 State Employment Growth Year-over-Year November 218 Source: Bureau of Labor Statistics (Seasonally Adjusted).

6 Labor Underutilization Percentage of Labor Force Average U-6 U Average U-3 U-3 7.6% 3.9% Source: Bureau of Labor Statistics (Seasonally Adjusted).

7 Labor Force Participation Rate Percent of Population 16 and Over Colorado National 69.1% 62.9% Source: Bureau of Labor Statistics (Seasonally Adjusted).

8 Colorado LFPR State Ranking December November 218 Rank, 12-Month Average Source: Bureau of Labor Statistics, Current Population Survey. Notes: Colorado ranked 6th in July 218 based on the 12-month average and 4th in July alone.

9 U.S. Income and Consumption Percent Change Real Disposable Income Percent Change Real Personal Consumption % 3 2.7% Source: Consensus Forecasts.

10 Household Debt Burden Percent of Disposable Income DSR 14 FOR Financial Obligations Ratio (R) Debt Service Ratio (L) Source: Federal Reserve, Household Debt Service and Obligations Ratios.

11 Index of Consumer Confidence 1985= 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 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, Vehicle Sales Annual Percent Change Retail and Food Services Sales Sources: Bureau of Economic Analysis, Moody s Analytics, U.S. Census Bureau (Seasonally Adjusted Annual Rate).

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

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

U.S. and Colorado Economies Q2 24 Q2 219 Index (5=Neutral) 75 7 65 National and State Expectations 6 55 Colorado 5 45 4 United States 35 3

15 U.S. and Colorado Economies Q2 24 Q2 219 Index (5=Neutral) National and State Expectations 6 55 Colorado United States Q2 24 Q2 25 Q2 26 Q2 27 Q2 28 Q2 29 Q2 21 Q2 211 Q2 212 Q2 213 Q2 214 Q2 215 Q2 216 Q2 217 Q2 218 Q2 219 Source: Business Research Division.

16 National FHFA Home Price Growth Year over Year Q3 218 Source: Federal Housing Finance Agency Home Price Index, All Transactions Index.

17 Federal Budget Balance $ Billions , -1,2 -$779 -$1,13-1,4-1, Sources: Bureau of Economic Analysis, NIPA Table 3.18B, Consensus Forecasts.

18 Percent Interest Rates 5 3-Year Conventional Year T-Note 3-Month T-Bill Sources: Federal Reserve and Moody s Analytics.

19 Percent Federal Funds Rate 219. March 218 Meeting June 218 Meeting September 218 Meeting December 218 Meeting Source: Bloomberg.

20 Securities Trends Indexed, January 2, 218= NASDAQ Dow Jones S&P 5 Russell Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Source: Yahoo! Finance.

21 Percent of Balance 9+ Days Delinquent by Loan Type Percent 16% 14% Mortgage HELOC Auto CC Student Loan Other All 12% 1% 8% 6% 4% 2% % 23 Q3 24 Q3 25 Q3 26 Q3 27 Q3 28 Q3 29 Q3 21 Q3 211 Q3 212 Q3 213 Q3 214 Q3 215 Q3 216 Q3 217 Q3 218 Q3 Source: FRBNY Consumer Credit Panel/Equifax.

22 Percent Change Percent Change Percent Change Percent Change Inflation 4 All Items Denver-Aurora-Lakewood MSA United Sates 4 Core Inflation * * Shelter Medical Care * * Source: Bureau of Labor Statistics (NSA). * November 218 year-over-year.

23 Colorado Population, Employment, and Prices

24 Thousands 12, Colorado Change in Population 1, Colorado s population changes 79,7 in ,2 in 219 8, 6, 4, 2, Net Migration Natural Increase Ranked 8 th in total state growth Ranked 9 th for fastest growth Continued net migration into the state Sources: Colorado Demography Office, U.S. Census Bureau, and the Business Research Division.

25 Colorado Employment Growth Jobs Added Thousands , 53, Sources: Colorado Department of Labor and Employment and the Colorado Business Economic Outlook Committee.

26 Employment In Current Decade National, State, and Local Percent Change from January Greeley Ft. Collins-Loveland Denver Colorado Boulder Colorado Springs National Pueblo Grand Junction Source: Bureau of Labor Statistics (Seasonally Adjusted).

27 Professional and Business Services Trade, Transportation, and Utilities Leisure and Hospitality Government Education and Health Services Construction Manufacturing Financial Activities Information Natural Resources and Mining Other Services Colorado Employment Change 219 Growth Employment in Thousands 2,79 2, ,77 2,76 2,75 Total jobs gained: 53,2 2,74 2,73 2, Source: Bureau of Labor Statistics, Current Employment Statistics (SA).

28 Colorado Wages 218 Q2 (4Q Rolling Average) Sector Total Employment YoY Employment Growth Average Wages YoY Wage Growth Management of companies and enterprises 39,8 5.4% $142,575.4% Utilities 8,25-1.9% $11, % Information 73,36 2.3% $11, % Professional and technical services 219, % $95, % Finance and insurance 111, % $95,13 2.7% Natural Resources and Mining 45, % $86,563 3.% Wholesale trade 17, % $84, % Federal Government 53,24-1.8% $8, % Manufacturing 145,55 1.7% $7,3 2.5% State Government 11,34 3.6% $64, % Construction 168,722 6.% $6,772 3.% All Industries 2,642, % $57, % Real estate and rental and leasing 51, % $58, % Transportation and warehousing 74,88 6.7% $56, % Health care and social assistance 296,23 1.9% $5, % Local Government 26, % $47,547 2.% Administrative and waste services 158,2 -.3% $41, % Educational services 36,28 2.3% $4, % Other services, except public administration 8, % $4, % Arts, entertainment, and recreation 56, % $37,36 4.3% Retail trade 272,28.7% $31, % Accommodation and food services 28,77 2.3% $22, % Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages.

29 Real Wage Growth Colorado Percent Change Year-over-Year Source: Bureau of Labor Statistics, QCEW and the Consumer Price Index. *218 based on Q1 QCEW.

30 Residential Building Permits Permits 6, 5, Multifamily Single Family 4, 41,1 3, 2, 1, Sources: U.S. Census Bureau and the Colorado Business Economic Outlook Committee.

31 $ Millions 25, Value of Construction Colorado $21.6 B 2, 15, Nonbuilding Nonresidential Residential 1, 5, Sources: Dodge Data & Analytics and the Colorado Business Economic Outlook Committee.

32 Colorado Sales Tax Collections $ Millions, 12-Month Rolling Sum $3,5 $3, $2,5 $2, $1,5 $1, Strong job and income growth High consumer confidence High profile bankruptcies Competition from e-commerce Retail sales growth 5.5% in % in 219 $5 $ Sources: Colorado Office of the State Controller and the Colorado Department of Revenue.

33 $ Millions $16, $14, $12, Colorado General Fund $1, Other $8, $6, $4, Individual and Corporate Income $2, $ Sales, Use, and Other Excise Fiscal Years Source: Colorado Office of the State Controller and the Colorado Office of State Planning and Budgeting (December 218). Note: Excludes revenue transferred to the State Education Fund.

34 Colorado Ranking Among Other States Metric 1-Year 3-Year 5-Year 1-Year Real GDP Growth Employment Growth Population Growth Personal Income Growth PCPI Growth (NA) PCPI (NA) Average Annual Pay % Growth Average Annual Pay Unemployment Rate Labor Force % Growth FHFA Home Price Index Growth Data Sources: Bureau of Economic Analysis (218), Bureau of Labor Statistics (1/18), U.S. Census Bureau (217), Bureau of Labor Statistics (218), Bureau Federal Housing Finance Agency All Transactions Index (Q3 218), BRD calculations. Note: 1-year, 3-year, and 5-year are based on the compound annual growth rate.

35 Real Gross Domestic Product Boulder MSA Millions of Chained 29 Dollars 25, Percentage Change 8% 2, 15, 4% 1, % 5, % Source: Bureau of Economic Analysis.

36 Single Family v. Multifamily Permits Boulder MSA, Year-to-Date Permits 2,5 2, 1,5 Multifamily Single Family +126% 1, 5 +18% Source: U.S. Census Bureau Oct. 217 YTD Oct. 218 YTD

37 Dollars 9, 8, 7, 6, 5, 4, Median Price of Single Family Homes Sold City of Boulder Number of Homes Sold 1,2 1,, 1, 9, 8, 8 7, 6 6, 4 5, 2 4, 1, , Source: Boulder Area Realtor Association. *YoY through November 217. Excludes condos and townhomes. 3, 217 YTD Oct. 218 YTD Oct. -1

38 Commercial Vacancy Rates: City of Boulder Percent Office Warehouse Flex Retail Source: Newmark Grubb Knight Frank.

39 Boulder County Value of Construction $ Millions 1,6 1,4 1,2 1, Nonbuilding Nonresidential Residential Sources: McGraw-Hill Construction Dodge Research and Analytics. 217 YTD Nov. 218 YTD Nov.

40 Boulder MSA Employment Employment, in thousands 25 YoY growth: 3.2% or 6, Source: Bureau of Labor Statistics, CES (SA), November 218.

41 Boulder County Jobs Added, 5 Years Information Mining Financial Utilities Professional Services Health Care Accommodation and Food Services Manufacturing Construction Retail Wholesale Education Government Real Estate Management of Companies Arts, Entertainment, and Recreation Agriculture Transportation -1, 1, 2, 3, 4, 5, Source: Colorado Department of Labor and Employment, QCEW.

42 Employment Comparison 1% Colorado Rest of Boulder County City of Boulder 9% 8% 7% 6% 5% 4% 3% 2% 3% 6% 3% 1% 1% 6% 5% 2% 6% 8% 13% 18% 11% 1% 1% 11% 11% 9% 11% 15% 1% All Other Information Manufacturing Construction Prof., Scientific, and Tech. Accommodations & Food Retail Healthcare 1% 16% 15% 18% Government % Source: Colorado Department of Labor and Employment, QCEW.

43 City of Boulder Employment Total Employment ~93,3 Government Prof., Scientific, and Technical Manufacturing Health Care and Social Assistance Accommodation and Food Services Retail Trade Information Wholesale Trade Other Services Finance and Insurance Administrative and Waste Services Arts, Entertainment, and Recreation Educational Services Construction Real Estate and Rental and Leasing All Other 2, 4, 6, 8, 1, 12, 14, 16, 18, Source: Colorado Department of Labor and Employment, QCEW, 217.

44 Boulder County Wages Annual Rate (4Q Rolling) $ Billions Year Growth: 4.7% Q2 22 Q2 24 Q2 26 Q2 28 Q2 21 Q2 212 Q2 214 Q2 216 Q2 218 Source: Bureau of Labor Statistics, QCEW Data Series, NSA.

45 Boulder County Average Wages Annual Rate (4Q) 12-Month Average $7, 1-Year Growth: 2.8% $65, $6, $55, $5, $45, $4, Q2 23 Q3 24 Q4 25 Q1 27 Q2 28 Q3 29 Q4 21 Q1 212 Q2 213 Q3 214 Q4 215 Q1 217 Q2 218 Source: Bureau of Labor Statistics, QCEW Data Series, NSA. Based on data through Q2 218.

46 Average Annual Wages Front Range 12-Month Average $1, $9, $8, $7, $6, $5, $4, $3, $2, $1, $65,794 Colorado: $57,858 Source: Bureau of Labor Statistics, QCEW, as of Q2 218.

47 Sales and Use Tax Collections City of Boulder $ Millions, 12-Month Rolling Sum Year-to-Date: City of Boulder: 9.2% Longmont*: 11.2% Broomfield: 9.1% Colorado: 7.1% Source: City of Boulder (October 218), City of Longmont (November 218) *Includes higher tax rate, City of Broomfield (September 218), State of Colorado (November 218).

48 $ Millions 16 Sales and Use Tax Collections City of Boulder, 12-Month Rolling Sum Construction Use 53.8% YTD Consumer and Vehicle Use 27.6% YTD Sales +2.8% YTD Source: City of Boulder, October 218.

49 Venture Capital Investment City of Boulder Millions $6 $5 $4 $3 $2 Sample 218 Deals: Biodesix Backbone PLM MBio Diagnostics Section.io Bobo s Bhakti Chai Inscripta DeepGreen GreenScreens $1 $ Source: CB Insights.

50 Employment and New Entity Filings Employment, thousands 2,8 12-month total new entity filings 13, 2,7 12, 2,6 2,5 2,4 Employment New Entity Filings 11, 1, 9, 2,3 8, 2,2 7, 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.

51 Potential Headwinds for 219 International/National Interest rates Global growth Value of the dollar Trade/Tariffs State Commodity prices/cycle Drought and weather Housing affordability Talent shortage Real wage increases

52 #COBizOutlook

Will the Recovery Ever End? Certified Financial Planners

Will the Recovery Ever End? Certified Financial Planners Place cover image here Richard Wobbekind Senior Economist and Associate Dean for Business and Government Relations January 25, 219 Attention: This