ECONOMIC OUTLOOK GROWING BUT SLOWING. Chris Akers State Demography Office November 4, 2016

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1 z ECONOMIC OUTLOOK GROWING BUT SLOWING Chris Akers State Demography Office November 4, 2016

2 OVERVIEW Global Economic Outlook Better in 2017 U.S. Economic Overview Slowing Job Growth Colorado 2015 Economic Review Colorado 2016 Mid-year Update Projections highlights Colorado and Counties

3 GLOBAL ECONOMY HEADLINES Subdued Demand IMF October Years of Economic Disappointments IMF Oct 2016 Still Weak and precarious nature of the global recovery IMF Oct 2016 Slow Growth & Populist Pushback Journal of Applied Research in Econ Dev. Vol 13, Oct 16 Global Economic Growth Sliding back into the morass Financial Times October 2, 2016 A low growth environment characterized by weak investment, stagnant productivity, and tepid private sector confidence. Brookings Institute Economists, October 2, 2016

4 IMF OCTOBER 2016 GLOBAL OUTLOOK Global Growth Slowing to 3.1% in 2016, Faster growth in % Faster growth in 2017 due to U.S momentum increasing GDP Annual % Change from Prior Year U.S. vs. World % United States World Source: International Monetary Fund World Economic Outlook

5 EMERGING MARKET AND DEVELOPING ECONOMIES ~ 5% Source: International Monetary Fund World Economic Outlook

6 ADVANCED ECONOMIES: SUB 2% GDP GROWTH Source: International Monetary Fund World Economic Outlook

7 3 U.S. Real GDP % Change from Prior Year % F 2017F 2018F 2019F

8 6 consecutive years of employment growth Accommodative Monetary Policy has stimulated economic growth, but tightening projected to continue albeit slowly Low oil & natural gas prices led to a decline in mining employment & capital expenditures by oil & gas firms This has hurt energy producing states, but has saved the average household thousands of dollars helping to boost consumption Stronger Dollar & weak global demand hurting manufacturing (exporters) Inflation returning as energy prices rise

9 145, , , ,000 U.S. Nonfarm Payrolls (Seasonally Adjusted) 53 months 72 months & Counting Jobs in 000s 137, , , , , , ,000 Recession Total Nonfarm Employment

10 Components of Change in Monthly Change in Nonfarm Payrolls (Seasonally Adjusted) 350 Goods Producing Service Providing Average Monthly Gain Jobs in 000s

11 U.S. Mining Employment (Seasonally Adjusted) Mining Jobs in 000s Coal Mining Jobs in 000s Mining Employment Coal Mining Jobs

12 Consumer Price Index 1/2 year % change Over the Year Denver Boudler Greeley US All Urban 4.0% 3.5% 3.0% 3.0% 2.5% 2.0% 1.5% 1.0% 1.1% 0.5% 0.0% 0.5% 1st Half nd Half st Half nd Half st Half nd Half st Half nd Half st Half nd Half st Half nd Half st Half 2016 Source: Bureau of Labor Statistics

13 COLORADO LOSING SOME MOMENTUM

14 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Apr 12 Jul 12 Oct 12 Jan 13 Apr 13 Jul 13 Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul U.S. vs. Colorado Total Nonfarm Employment Index Jan 2008 = 1 Recession U.S. Colorado Source: U.S. Bureau of Labor Statistics Current Employment Statistics

15 Over the Year % Change in Employment Current Employment Statistics 4.0% 3.0% 2.0% 1.0% 0.8% 1.6% 1.2% 2.4% 3.0% 1.7% 1.6% 3.5% 1.9% 3.1% 2.1% 2.8% 1.8% 0.0% 1.0% 2.0% 0.5% 0.7% 1.0% 3.0% 4.0% 5.0% 4.3% 4.5% Colorado U.S. Source: U.S. Bureau of Labor Statistics - CES

16 4.0% Colorado Wage Gains vs. Inflation 3.7% 3.0% 2.8% 2.0% 1.6% 1.0% 0.9% 0.0% 1.0% 2.0% 3.0% CO Wage Growth (QCEW) Denver Inflation Real Wage Source: U.S. Bureau of Labor Statistics

17 SDO TOTAL ESTIMATED JOBS SERIES Comprehensive in Scope combines various data sources to provide full picture How they re computed: Wage & Salary employment from BEA from 2014 x QCEW growth rates from Proprietors from Census Non-Employer Stats (NES) + Ag Workers 150+ days/year (Census of Agriculture) + Railroad (USRR Retirement Board) = Total Estimated Jobs

18 SDO Total Estimated Jobs ,400 3,300 3,299 3,200 3,236 Total Jobs in 000s 3,100 3,000 2,900 2,800 2,700 2,928 2,787 2,835 2,893 2,969 3,165 3,068 2,600 2,667 2, P2017F Recession Annual Employment Level

19 Colorado Job Change and Net Migration ,000 75,000 25,000 25,000 75,000 Total Est Job Change Net Migration , , , , , F 2017F 2018F

21 2015 Jobs vs. Pre-Recession Peak Education Management of companies Health Services Mining Agriculture Arts Professional & Technical services Accommodation & food Government Other services Transportation & warehousing Total Admin & waste Utilities Wholesale trade Retail Trade Real estate Finance activities Manufacturing Information Construction -10% -5% 0% 5% 10% 15% 20% 25% 30% 35%

22 2015 VS INDUSTRY GROWTH Total Government Other services Accommodation and food Arts Health Services Education Admin & waste Management of companies Professional & Technical services Real estate Finance activities Information Transportation & warehousing Retail Trade Wholesale trade Manufacturing Construction Goods Producing Utilities Mining Agriculture 8.2% 1.7% 3.1% 3.3% 3.1% 4.8% 9.3% 9.9% 8.0% 6.0% 4.0% 2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 2015 % Growth 2014 % Growth

23 40,000 2,469 Colorado Mining Employment 2,500 36,099 35,000 2,150 Mining Jobs 30,000 25,000 20,000 15,000 23,569 1,068 1,800 1,450 1, # of CO Coal Miners 10, Mining Coal Miners Source: Bureau of Labor Statistics & Department of Natural Resources

24 Colorado Annual Oil Produciton Barrels in Millions F Source: Colorado Oil & Gas Conservation Commission & SDO forecast

27 2016 UPDATE Employment Growth Rate will Continue to Slow 2016 Projected at 2.3% Over the Year CO is likely at Full Employment Unemployment Rate unchanged from September 2015 at 3.6% Labor Force up 74,800 from September 2015 # of Unemployed up 1,700 to 104, ,300 of Online Job Postings = S/D Rate of 0.89 CO Unemployment rate 1.4 percentage points lower than U.S. -> Bodes well for continued in-migration

29 EMPLOYMENT FORECAST

30 ECONOMIC FORECAST APPROACH Base Industries (Economic Drivers) Traditional Basic Agriculture, Mining, Manufacturing, Government Regional & National Services Professional & Business Services, Education & Health, Finance/Real Estate Tourism Accommodations & Restaurants, 2 nd Homes, Retail, Transportation Household Jobs Retiree-Generated, Federal Transfers, Investment Income, Commuting Base Industry Jobs Create Local Resident Service Jobs Combined, the two classifications constitute the economic forecast model

31 Forecast - Trends Slower job growth through 2021 as U.S. growth rate slows and # of leavers (retirees) increases. Continued slowing in Goods-Production Traditional Basic: Agriculture, Mining, and Manufacturing Increase in Household Jobs Growth Retiree-Generated, Investment Income & Wealth, and Commuting jobs Front-Range driver of employment growth due to diversified Economic Base Local Resident Services jobs will expand to meet the needs of a growing population

32 COLORADO VS. UNITED STATES ANNUAL JOB CHANGE % 4% Colorado United States Percent Change from Prior Year 2% 0% 2% 4% 6%

33 NEED TO CREATE JOBS TO ABSORB NEW ENTRANTS DIMINISHES OVER NEXT 15 YEARS 40,000 Difference Between # of 16 year olds and 65 year olds in Colorado 35,000 30,000 25,000 20,000 15,000 10,000 5,

38 REGIONAL JOB GROWTH THROUGH 2020 Region Total Job Growth , ,773 38,298 2, ,638 1,141 4,888 4,039 5,905 12,288 2, Annualized Growth Rate Fastest Growing County Total Job Growth % Morgan % 1.5% Larimer 14, % 1.9% N/A N/A N/A 2.0% Park % 3.4% Elbert 2, % 0.2% Prowers % 1.3% Pueblo 4, % 1.0% Alamosa % 1.8% San Juan % 1.5% San Miguel 1, % 0.8% Garfield 2, % 2.4% Eagle 5, % 1.5% Custer % 0.2% Huerfano % Annualized Growth Rate

39 LONG-TERM GROWTH BY REGION

40 GROWTH BY REGION AND FASTEST COUNTIES Region Total Jobs Growth Annualized Growth Rate Fastest Growing County Total Jobs Annualized Growth Rate 1 4, % Morgan 3, % 2 173, % Weld 89, % 3 762, % N/A N/A N/A 4 158, % Park 2, % 5 12, % Elbert 11, % % Prowers % 7 19, % Pueblo 19, % 8 2, % Alamosa 2, % 9 23, % Archuleta 3, % 10 22, % Montrose 11, % 11 52, % Garfield 20, % 12 45, % Eagle 24, % 13 6, % Chaffee 2, % % Huerfano %

SDO Projected Growth vs. Actual 120.0 Over the Year change in SDO Total Estimated Jobs Forecast vs. Actual 100.0 95.

41 SDO Projected Growth vs. Actual Over the Year change in SDO Total Estimated Jobs Forecast vs. Actual Forecast Actual Source: DOLA State Demography Office

A summary of regional economic indicators for the state of Colorado

THE ECONOMIC DATABOOK A summary of regional economic indicators for the state of JULY 24, 217 FEDERAL RESERVE BANK of KANSAS CITY SUMMARY OF CURRENT COLORADO ECONOMIC CONDITIONS In, the unemployment rate