October 2016 Dashboard for St. Croix Valley Released

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1 October 2016 Dashboard for St. Croix Valley Released The October 2016 edition of the St. Croix Valley Economic Dashboard has been released by the Center for Economic Research (CER) at UWRiver Falls, in partnership in partnership with St. Croix Economic Development Corporation (SCEDC). The dashboard is a snapshot of economic conditions in labor, consumer, agricultural and housing markets for the seven county St. Croix Valley, which includes the counties of Polk, St. Croix, Pierce, and Dunn and the counties of Chisago, Washington, and Ramsey. It presents the latest available data in one convenient package (note: most regional data is available with a one or two month delay). The full Dashboard can be viewed on the CER s website, at (select: St. Croix Valley Dashboard and then click to download the latest edition and scroll to view all four pages). Dr. Logan Kelly, Director of CER, conducts the research for the Dashboard and offered his observations: The Local Housing Market The months of housing inventory estimates how many months it would take to sell all currently listed homes if the number of homes sold remains constant at current levels. The sale to list price ratio is the median sale price as a percent of the median listing price. The closer this ratio is to 100% the closer listing and sale prices match. A high ratio is an indicator of a seller s market and a low ratio is an indicator of a buyer s market. The Sale to List Price Ratio seems to be deteriorating for Polk and Pierce counties drastically. Polk County is badly affected. Polk has reflected a huge fall in Sale to List Price Ratio with a change of 55.1%, compared to. The housing inventory continues to be low. This is because of multiple reasons such as midlevel home buyers find bigger houses unaffordable. Also, starter home buyers are unable to move up the next tier, their homes are locked up and are not reentering the market. A certain section is still recovering from the financial crisis. Addressing the widening price gap between midlevel starter homes and next levelup homes would solve the issue to an extent. The U.S. Economy Output: Overall, the economic outlook for 2016 continuous to look good. Real Gross Domestic Production (GDP) grew at an annual rate of 1.10 percent in the second quarter of 2016, which is slightly better than previous quarters. Growth has improved but it is still less than what we would want to see during an economic expansion. The increase in real consumption has contributed to the increase in GDP. The abnormal fall in real investment and real government spending has left room for concern. Employment Cost Index signals very improving labor market. At the same time this might start to cause some inflationary pressure. Initial claims, which is a measure of the number of jobless claims filed by individuals seeking to receive state jobless benefits has gone down by 19,000. This indicates that the labor market is doing well and less people are claiming unemployment benefits. Labor Market: The national job report (Bureau of Labor Statistics Employment Situation Report) states that the total nonfarm payroll employment increased by 151,000 in August, and the unemployment rate remained at 4.9 percent. According to the Current Population Survey (CPS) data, the number of unemployed persons was essentially unchanged at 7.8 million. The number of longterm unemployed (those jobless for 27 weeks or more) was essentially unchanged at 2.0 million in August and accounted for 26.1 percent of the unemployed. Current Establishment Survey (CES) data also reports that total nonfarm payroll employment rose by 151,000 in August, compared with an average monthly gain of 204,000 over the prior 12 months. Employment continued to trend up in several service providing industries. The change in total nonfarm payroll employment for June was revised down from +292,000 to +271,000, and the change for July was revised up from +255,000 to +275,000. With these revisions, employment gains in June and July combined were 1,000 less than previously reported. Over the past 3 months, job gains have averaged 232,000 per month. page 1 of 2

2 National Inflation and Interest Rates: In the month of August, the Consumer Price Index (CPI) increased at a seasonally adjusted annual rate of 1.09%. It increased 0.3% in August, as the indexes for shelter and medical care advanced. Federal Reserve Chair Janet Yellen during her September 2016 meeting indicated that U.S. growth has strengthened and a future rate hikes will be necessary to keep the economy from overheating. However, given slower Q1 and Q2 GDP growth, policymakers decided to keep Federal Funds Rate unchanged at 0.5%. and Employment: Total nonfarm employment in increased by 9,100 and increased by 11,300. While lost 2,400 jobs in Education and Health Services, gained 1,700 jobs in same sector. In, nearly all sectors saw job gains. Most significant job increment reflected in Trade, Transportation and Utilities (+2,100), Leisure and Hospitality (+3,400) and Education & Health Services (+1,700). While all the sectors gain jobs in, the manufacturing sector lost 200 jobs, considering the change from. lost 100 jobs in manufacturing, 100 jobs in finance, 600 in information. The BLS reported that the unemployment rate for Minneapolis rose 0.1 percentage points in August 2016 to 3.6%. MinneapolisSt. PaulBloomington added 3,500 jobs in August according to the Current Employment Statistics survey report. The unemployment rate changed a little in both states, 4.2% in, and 4.0% in. Housing Market: The REALTORS Association (WRA) reported that summer home sales in ended on a very strong note in August, pushing prices up at a pace well above the rate of inflation. August sales were up +9 percent over August 2015, making this the strongest August since The median price rose to $170,000 in August, which was 5.3 percent higher than August With annual inflation ranging between 0.8 percent and 1.4 percent through July of this year, housing prices are growing at more than three times the rate of inflation. This is our most active selling season, and we sold a lot of homes this summer, said Erik Sjowal, WRA s board chairman. In a typical year, the state sells 32.1 percent of its annual sales volume between June and August; and at just over 26,500 homes sold, this is the strongest summer since before This market continues to be impressive, and it is supported by a good economy in the state and low mortgage rates, said WRA President & CEO Michael Theo. Even with the strong growth in prices, housing remains affordable in the state. The Housing Affordability Index shows the portion of a medianpriced home that a household with a median family income and a 20 percent down payment can afford to buy, assuming the remaining 80 percent is financed with a 30year fixed mortgage. There are excellent opportunities for buyers, and an experienced REALTOR knows these markets and can help buyers find the right match that best suits their needs, even when the housing market is as tight as it is, said WRA President & CEO Michael Theo. Read WRA s August 2016 Home Sale Report, Housing Market in Twin Cities: According to new data from the Minneapolis Area Association of REALTORS, the metro area is continuing its trajectory of steady, moderate growth in sales and home prices. Pending sales were up +7.9 percent over August The median sales price was up +5.7 percent over last year. The average time a home was on the market was 55 days, which is 9 days shorter than last August. The supply of homes for sale is 2.8 months, indicating a continued strong sellers market. Tight inventory is expected to persist, while new listings were up +2.1 percent over last August, overall inventory dropped nearly 19 percent yearoveryear, an indicator of strong buyer demand and seller hesitance. Read Edina Realty s September 2016 Market Insights report, About the St. Croix Valley The St. Croix Valley is comprise of Polk, St. Croix, Pierce, and Dunn counties in and Chisago, Washington, and Ramsey counties in. All seven counties are located at or near the border, along the St. Croix River, a federallyprotected water resource. Five of the seven counties (St. Croix, Pierce, Chisago, Washington, and Ramsey) are included in the MinneapolisSt. PaulBloomington MNWI MSA, a 16county region with a population of slightly more than 3.5 million residents. For additional information on the St. Croix Valley Economic Dashboard, contact Dr. Logan Kelly at cer@uwrf.edu or (715) page 2 of 2

3 St. Croix Valley (in thsnds) WI and MN (in thsnds) Saint Croix Valley Economic Dashboard for October 2016 National Indicators Indicator Release Date Rate One Year Ago Unemployment Sep '16 % 0.10 Inflation 1.09% 0.87 Real GDP Growth Q2 ' % 0.65 Note: Real GDP data is released quarterly. Inflation, Real GDP and Coincident indicator are presented as a seasonally adjusted annual rate. Simple change is reported. Leading Index of economic activity is expressed as a seasonally adjusted semi annual growth rate. Source: (1) U.S. Bureau of Labor Statistics, (2) U.S. Bureau of Economic Analysis, (3) Federal Reserve Bank of Philadelphia Arrows indicate direction of annual change. State Level Indicators Release Date Unemployment 4.0% 4.2% Employment 2,901,400 2,930,700 Labor Force 3,002,727 3,127,291 Coincident Indicator 1.81% 1.64% Leading Indicator 0.85% 0.82% Average Weekly Mfg Hours Unemployment Rate Region* 3.7% MSA 3.6% % Dunn 3.8% Pierce 3.7% Polk 3.8% St. Croix 3.5% % Chisago 3.9% Ramsey 3.8% Washington 3.4% Employment Level Region* 554, % 0.89% MSA 1,970, % 0.18% 2,930, % 0.10% Dunn 22, % 0.22% Pierce 24, % 0.13% Polk 24, % 0.78% St. Croix 48, % 0.01% 2,901, % 0.05% Chisago 27, % 1.03% Ramsey 272, % 1.10% Washington 134, % 1.05% 5% 4% 3% 2% 1% 0% St. Croix Valley St. Croix Valley Note: Data for and is seasonally adjusted. Other data is not seasonally adjusted and simple change is reported. Source: U.S. Bureau of Labor Statistics Note: Data for and is seasonally adjusted. Other data is not seasonally adjusted and percentage change is reported. Source: U.S. Bureau of Labor Statistics Throughout this publication, "MSA" refers to the MinneapolisSt. PaulBloomington metro area

4 St. Croix Valley (in thsnds) WI and MN (in thsnds) UWRF Center for Economic Research Labor Force Region* 575, % 0.85% MSA 1,948, % 0.40% 3,127, % 0.06% Dunn 23, % 0.64% Pierce 25, % 0.18% Polk 25, % 0.88% St. Croix 50, % 0.09% 3,002, % 0.63% Chisago 29, % 1.03% Ramsey 283, % 1.00% Washington 138, % 0.95% Employment by Sector Sector Aug 2016 Total Nonfarm 2,930,700 Mining and Logging 3,600 Construction 115,600 Manufacturing 467,400 Last Month 2, ,600 4, St. Croix Valley Note: Data for and is seasonally adjusted. Other data is not seasonally adjusted and percentage change is reported. Source: U.S. Bureau of Labor Statistics Employment by Sector Sector Aug 2016 Total Nonfarm 2,901,400 Mining and Logging 5,600 Construction 119,700 Manufacturing 316,100 Last Month 1, ,900 1,000 Trade, Transportation & Utilities 544,900 Information 49,200 Financial Activities 155,000 Professional and Business Services 318,000 1, Trade, Transportation & Utilities 532,200 Information 51,000 Financial Activities 183,600 Professional and Business Services 357,200 2, Education and Health Services 438,800 Leisure and Hospitality 272,600 Other Services 150,400 Government 415, , ,300 Education and Health Services 533,100 Leisure and Hospitality 265,100 Other Services 115,300 Government 422, , Note: All data is seasonally adjusted and percentage change is reported Source : U.S. Bureau of Labor Statistics Note: All data is seasonally adjusted and percentage change is reported Source : U.S. Bureau of Labor Statistics Selected Interest Rates Interest Rate Release date Level Bank Prime Rate Sep ' % Year Fixed Rate Mortgages Oct ' % 0.00 Average Rate for SBA Backed Loans Q2 ' % % Treasury Security Yield Curve 3.0% 2.0% 1.0% 0.0% (Adjusted for Constant Maturity) Source: Federal Reserve Board of Governor. Sep '16 Sep '15 Throughout this publication, "MSA" refers to the MinneapolisSt. PaulBloomington metro area

5 Millions of Lbs. Millions of Lbs. UWRF Center for Economic Research Agricultural Commodity Prices Corn 1 Jul '16 Last Month One Year Ago $ % 5.1% $ % 7.1% Soybeans 2 $ 1.1% 2.6% $ % 5.1% Alfalfa 3 $ % 27.4% $ % 9.5% Milk 4 $ % 3.5% $ % 5.8% Milk Cow 5 Avg. Price as of First of Qtr Annual Change Q3 '16 $1, % Q3 '16 $1, % Note: (1) Wholesale price received per bushel of corn. (2) Wholesale price received per bushel of soybeans. (3) Price received per ton. (4) Wholesale price received per hudredweight of milk. (5) Price received per head. Source: USDA,National Agricultural Statistics Service Corn Price per Bushel Soybean Price per Bushel Milk Alfalfa Price per Ton ,800 2,600 2,400 2, Quantity Price Milk Milk Cow Price per Head Quantity Price Throughout this publication, "MSA" refers to the MinneapolisSt. PaulBloomington metro area

6 UWRF Center for Economic Research Home Price Index Release Date National 1 Jul '16 4.9% 0.1% Minneapolis 1 Jul '16 5.0% 3.8% Chicago 1 Jul '16 3.7% 6.1% 2 Q2 '16 4.9% 29.5% 2 Q2 '16 3.8% 19.5% Note: Data is seasonally adjusted and percent change is reported in the table. (1) Case Shiller Home Price Index. (2) St. Louis Federal Reserve House Price Index. Source: (1) Standard & Poor's (2) Federal Reserve Bank of St. Louis Months of Housing Inventory Dunn Pierce Polk St. Croix Sale to List Price Ratio Dunn 105.4% Pierce 97.6% Polk 50.2% St. Croix 96.6% Note: Data is not seasonally adjusted and simple change is reported in the table. Source: Realtors Association and Median Home Listing Price $270,000 $260,000 $250,000 $240,000 $230,000 $220,000 $210,000 $200,000 Region* $ 255, % 1.59% Dunn $ 147, % 7.64% Pierce $ 195, % 2.10% Polk $ 307, % 53.51% St. Croix $ 235, % 5.74% Chisago $ 226, % 2.19% Ramsey $ 213, % 3.22% Washington $ 312, % 0.48% Regional Home Listing Price Number of Homes Listed Region* % % Dunn % 96.43% Pierce % % Polk % % St. Croix % % Chisago % % Ramsey % % Washington % % Number of Regional Home Listings Note: Data is not seasonally adjusted. Percent change is reported. Source: Note: Data is not seasonally adjusted. Percent change is reported. Source: Throughout this publication, "MSA" refers to the MinneapolisSt. PaulBloomington metro area