Economic Forecast OUTPUT AND EMPLOYMENT WHAT THE TABLE SHOWS:

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2 Economic Forecast OUTPUT AND EMPLOYMENT United States Real GDP $ billions (fourth quarter) $14,996 $14,7 $14,4 $14,942 $1,242 $1,4 $1,97 $16,464 % change over the four quarters 1.9% -2.8% -.2% 2.8% 2.% 2.% 2.4% 3.% Nonfarm employment Job count (fourth quarter) 137,943, 13,13, ,26,667 13,283, ,286, ,462, ,729, 138,288,19 % change over the four quarters.9% -2.% -4.2%.6% 1.% 1.6% 1.7% 1.1% Average monthly change 99,7-232, ,889 63,83 166, , , ,333 Real GDP $ billions (fourth quarter) $122 $116 $1 $1 $112 $114 $116 $12 % change over the four quarters 1.2% -.1% -.3%.4% 1.7% 1.6% 2.2% 2.9% Nonfarm employment Job count (fourth quarter) 1,291,4 1,228,133 1,12,8 1,116,4 1,128,933 1,13,367 1,164,92 1,174,82 % change over the four quarters.4% -4.9% -8.3% -.8% 1.1% 2.2% 1.%.8% Average monthly change 433 -,272-8, ,44 2, WHAT THE TABLE SHOWS: s GDP forecast is derived from the national forecast by allocating output to each of the states based on employment shares. So, forecast misses reflect surprises in the aggregate forecast as well as unexpected shifts in a state s GDP share. Housing excesses have taken a severe toll on s economy, which plunged during the 28-9 recession. But the state s economy now is recovering. The state s economy is forecast to speed up slightly in 214. Note: GDP figures are based on quarterly values that are interpolated from annual GDP estimates using quarterly employment changes. Unbolded figures are reported actual values and bold figures represent forecasts. Sources: US Department of Commerce; US Department of Labor. Regional Perspectives: Economic Outlook Commercial Banking 2

3 Agriculture Mining Utilities Construction Durable manufacturing Nondudrable manufacturing Wholesale trade Retail trade Transportation Information Finance and insurance Real estate Professional and technical services Management of companies Administrative and waste management services Educational services Health care and social assistance Arts, entertainment, and recreation Hotel and food service Other services Government The Economy s Structure PERCENT OF TOTAL GDP DERIVED FROM SELECTED INDUSTRIES The figure compares the relative importance US industry mix industry mix of selected industries to the state s economy with the national footprint of each industry (state and national figures reflect the value added of each industry as a percent of aggregate state or US nominal GDP, respectively). Like newly developing economies, s economy depends heavily on real estate, construction, and retail trade. Las Vegas draw as a business conference and recreational magnet are visible in the outsized importance of the hotel economy. Excesses in the housing market remain a drag. Source: US Department of Commerce. Updated through 211. Regional Perspectives: Economic Outlook Commercial Banking 3

4 Bankruptcies RATIO OF BANKRUPTCY FILINGS TO THE 27 Q4 NUMBER The figure illustrates trends in bankruptcy 6 6 filings by businesses and persons relative to the number of filings in 27 Q4, prior to the Business bankruptcy filings Nonbusiness bankruptcy filings recession. Bankruptcy filings are falling back, but remain somewhat elevated. 4 All US bankruptcy filings (shaded area) Indicators of financial stress are a useful coincident indication of economic distress. 2 2 Easing of financial stress is paving the way to a better time. 1 1 Source: Administrative Office of the U.S. Courts; Updated through September Regional Perspectives: Economic Outlook Commercial Banking 4

5 FRB SF Business Survey REAL GDP (% CHANGE 12 MONTHS EARLIER) DIFFUSION INDEXES ( = NO CHANGE) real GDP (left scale) FRB-San Francisco tech impulse index (right scale) Forecast The San Francisco Federal Reserve Bank survey of local businesses has recovered from last summer s lull, and that is a positive omen for the economy s future. The index readings represent the net difference in the percent expecting improving conditions and those expecting worsening conditions. The tech sector has lost some momentum recently. The business outlook seems to be gradually improving. Sources: Federal Reserve Bank of San Francisco; US Department of Commerce. Updated through October 213 (surveys) and 213 Q3 (GDP). Regional Perspectives: Economic Outlook Commercial Banking

6 Initial Jobless Claims RATIO OF INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE TO THE 27 Q4 LEVEL The figure tracks layoffs in and the US (solid area) national level of claims. Weekly layoffs, both the state and national tallies, are illustrated in the figure as a ratio to the level of layoffs in the fourth quarter of 27, prior to the recession Layoffs have picked up recently, likely an echo of the federal shutdown Layoffs will signal any change in the economy s momentum and silver linings appear to be showing up for and the trends offer reason to be hopeful. The recent rise in layoffs are a dark spot in the state s economic outlook. Source: US Department of Labor. Updated through November 16, 213 (state) and November 23, 213 (US). Regional Perspectives: Economic Outlook Commercial Banking 6

7 Economic Growth REAL GDP GROWTH (PERCENT CHANGE FROM FOUR QUARTERS EARLIER) US Forecast Real GDP growth in (the line in the figure) is superimposed on top of US real GDP growth (bars in the figure). s economy is turning up gradually. s economy was at ground zero of the housing debacle and its recovery likely will lag the nation s. Source: US Department of Commerce. Updated through 212 (state) and 213 Q3 (US). Quarterly estimates for states after 212 are interpolated from employment figures, based on the historical correlation of state and national employment changes. Regional Perspectives: Economic Outlook Commercial Banking 7

8 Economic Output REAL GDP LEVEL (RATIO TO 2 Q4) The figure illustrates the evolution of real Forecast GDP of the state and the overall US economy since the fourth quarter of 2, the peak of the previous business cycle that is, at any point in time the lines trace the ratio of real GDP to its level in 2 Q4. s economy expanded an impressive 4 percent by the peak of the last decade, compared with the 2 business cycle US peak. lost a fair amount of ground in the recession, but still has expanded about 3 percent more than the national economy since the early 2s Economic conditions seem to be firming. Source: US Department of Commerce. Updated through 212 (state) and 213 Q3 (US). Quarterly estimates for states after 212 are interpolated from employment figures, based on the historical correlation of state and national employment changes. Regional Perspectives: Economic Outlook Commercial Banking 8

9 Employment Growth NONFARM PAYROLL EMPLOYMENT (PERCENT CHANGE FROM 12 MONTHS EARLIER) Job growth in the state, compared with the US Forecast nation. Job growth is moderate but that is a big improvement over earlier years. Employment trends indicate that the corrections of excesses resulting from real 1 1 estate are beginning to wind down Source: US Department of Labor. Updated through October Regional Perspectives: Economic Outlook Commercial Banking 9

10 Employment NONFARM PAYROLL EMPLOYMENT (RATIO TO THE 2 Q4 LEVEL) The figure illustrates the evolution of employment in the state compared with the nation since 2 Q4, the peak of the 1.22 previous business cycle. The lines trace out the ratio of employment at the time to US Forecast employment in 2 Q4. The booming economy drove employment up almost 2% in the 2s expansion. Much of the progress from the last decade was erased in this recession but employment still is about 11 percent above 1.7 decade-ago levels Employment is on a slow ascent Source: US Department of Labor. Updated through October 213. Regional Perspectives: Economic Outlook Commercial Banking

11 Intrastate Employment NONFARM PAYROLL EMPLOYMENT IN SELECTED COMMUNITIES (RATIO TO 2 Q4 LEVEL) Job trends in local communities within the Forecast US forecast state. Employment in most communities still is receding US Las Vegas The performance across the state is uniformly soft Reno Source: US Department of Labor. Updated through April Carson City.9.9 forecast Regional Perspectives: Economic Outlook Commercial Banking 11

12 Unemployment HOUSING STARTS (RATIO TO THE JULY 199 LEVEL) US (shaded) Forecast Unemployment rate trends in, compared with the national average. s unemployment rate rocketed up to 14 percent, but has been coming down since, to about 9½ percent most recently. The unemployment rate is the single best indicator of the relative economic performance of a region. Falling unemployment signals a significant turnaround in the economy. Source: US Department of Labor. Updated through October 213. Regional Perspectives: Economic Outlook Commercial Banking 12

13 Relative House Prices RATIO OF THE STATE S HOUSE PRICES TO THE NATIONAL AVERAGE (199 Q2 = 1.) The figure tracks the relative price of houses in the state versus the nation that is, it reflects the ratio of the state price index to the national house price index, with that ratio set to unity in the summer of 199. A drop in the line means that house prices in the state lag the national trend. States that did not suffer from speculative conditions saw a decline in the relative price of houses in this last decade. suffered from severe speculation in its real estate markets but sharp corrections in house prices have now left s house prices at very depressed levels relative to the national average s housing values are inflated no more. Source: FHFA. Updated through 213 Q3. Regional Perspectives: Economic Outlook Commercial Banking 13

14 Real Estate Markets HOUSE PRICES IN SELECTED COMMUNITIES (RATIO TO THE 199 Q2 LEVEL) The figure tracks the cumulative percentage US Las Vegas Reno Las Vegas (Case-Shiller) deviation in house prices since 199 in selected local markets and compares those with the national average. House prices are beginning to stabilize KEY MESSAGE: Trends across the state are similar. Sources: FHFA; Standard & Poor s. Updated through 213 Q Regional Perspectives: Economic Outlook Commercial Banking 14

15 New Home Building HOUSING STARTS (RATIO TO JULY 199) New home construction Home building is picking up Home building is expected to edge up 1. US Forecast 1. gradually this year. Source: Census Department. Updated through August Regional Perspectives: Nebraska Economic Outlook Commercial Banking 1

16 Office Markets PERCENT OF OFFICE SPACE THAT IS VACANT 3 3 Conditions in Las Vegas office market. Office vacancies soared during the recession, but now are reversing course. 2 2 The slumping economy is taking a toll on 2 2 commercial real estate markets. 1 Las Vegas 1 Source: CB Richard Ellis (formerly CB Commercial Property Information Systems), Office Vacancy Index of the United States. Updated through 213 Q2. All metropolitan areas (shaded area) Regional Perspectives: Economic Outlook Commercial Banking 16

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