More of the Same? Southwest Business Forum

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2 More of the Same? Southwest Business Forum Place cover image here Richard Wobbekind Senior Associate Dean, Leeds School of Business Executive Director, Business Research Division January 4, 2017

3 Colorado Population, Employment, and Prices

4 Change in Population Change in Colorado Population Thousands 120, ,000 80,000 60,000 Net Migration 2nd-fastest state for percentage growth 7th-fastest state for absolute growth 5th-most net migration 96% of growth along Front Range 40,000 20, Natural Increase Denver now the most populous county Continued net migration into the state Source: Colorado Demography Office.

5 Colorado Employment Growth Jobs Added Thousands , Sources: Colorado Department of Labor and Employment, BEOF Committee Members.

6 Employment Recovery National, State, and Local Percent 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% Greeley Ft. Collins-Loveland Denver Colorado Boulder Colorado Springs Pueblo National Grand Junction Number of Months Since Peak Source: Bureau of Labor Statistics (Seasonally Adjusted).

7 State Employment Growth Year-over-Year November 2016 Sources: Bureau of Labor Statistics (Seasonally Adjusted).

8 Employment Change Forecast Leisure and Hospitality Education and Health Services Professional and Business Services Construction Trade, Transportation, and Utilities Financial Activities Government Other Services Manufacturing Information Natural Resources and Mining Source: Bureau of Labor Statistics (Seasonally Adjusted). Thousands of Jobs

9 Agriculture Photo courtesy of Ryan Kanode.

10 Gross Farm Revenue and Net Income $ Millions 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 Net Income Farm Production Expenses $7.1B 1,000 Photo courtesy of Sandy Wilt Source: Colorado Business Economic Outlook Committee.

11 Livestock Cash Receipts $ Millions 6,000 5,000 65% of total value of production in Colorado 4,000 3,000 2,000 $4.1B Rebuilding herds in favorable low cost environment Fed cattle numbers rebounding from the 2015 record low Number of cattle sales anticipated to drop to lowest level since , Source: Colorado Business Economic Outlook Committee.

12 Commodity Prices Wheat and Corn Dollars Wheat 4.0 Corn Sources: Bloomberg (USDA Toledo No.2 Yellow Corn Not on the River Spot Price, USDA No. 1 Hard Red Winter Wheat Spot Price/Kansas City Missouri). As of November 2016.

13 Crops Cash Receipts $ Millions 3,000 2,500 Corn prices remain low as yield is projected to reach record highs 2,000 1,500 1,000 $1.9B Major crops: wheat, corn, and hay Cash receipts expected to fall in 2017 to $321MM Government payments expected to increase in Innovation will play an increasing role for agriculture Source: Colorado Business Economic Outlook Committee.

14 Net Farm Income $ Millions 2,000 1,800 1,600 1,400 1,200 1, $ Source: Colorado Business Economic Outlook Agriculture Committee.

15 Natural Resources and Mining

16 WTI Oil Price Dollars per Barrel June 3, 2008: $ December 27, 2013: $99.94 Average December 26, 2014: $ December 28, 2015: 20.0 $36.36 December 27, 2016: 0.0 $ Source: EIA, Cushing, OK WTI Spot Price FOB (Dollars per Barrel).

17 Value of Natural Resources $ Millions $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $13.3 Coal Minerals CO2 Natural Gas Crude Oil $ Sources: Colorado Geological Survey Mineral and Minerals Fuel Activity Reports, Colorado Oil and Gas Conservation Commission, Department of Minerals and Geology, and Colorado Business Economic Outlook Committee.

18 Crude Oil Production Largest Producers 1. Texas 2. North Dakota 3. California 4. Alaska 5. Oklahoma 6. New Mexico 7. Colorado 8. Wyoming 9. Louisiana 10. Kansas Millions of Barrels Sources: Rankings from the Energy Information Administration. Production data from Colorado Geological Survey Mineral and Mineral Fuel Activity Reports, Colorado Oil and Gas Conservation Commission, Department of Minerals and Geology, and Colorado Business Economic Outlook Committee.

19 Natural Gas Production Billions of Cubic Feet 1,800 1,600 1,400 1,200 1, ,641 Sixth-largest producing state Projected price higher due to expected colder temperatures Average residential gas prices in Colorado for 2016 were the 10 th lowest in the country Total production stagnant due to low prices Value of production to increase slightly Sources: Colorado Geological Survey Mineral and Mineral Fuel Activity Reports, Colorado Oil and Gas Conservation Commission, Department of Minerals and Geology, and Colorado Business Economic Outlook Committee.

20 Coal Production Lowest production levels since the mid-1990s State ranking slipped to 10 th in 2016 Short Tons (Millions) Government mandates for renewables limiting production Decreasing demand from TVA Power plants divesting from coal Sources: Colorado Geological Survey Mineral and Mineral Fuel Activity Reports, Colorado Oil and Gas Conservation Commission, Department of Minerals and Geology, and Colorado Business Economic Outlook Committee.

21 Renewables First renewable portfolio standard in the country Includes wind, solar, hydro, geothermal, and biomass 17.2% of net generation in 2015 Most of Colorado s renewable energy comes from wind resources Colorado ranks 10 th nationally for total megawatts installed for wind energy Photo courtesy of Xcel Energy.

22 Natural Resources and Mining Workers Added, Thousands Sources: Colorado Geological Survey Mineral and Mineral Fuel Activity Reports, Colorado Oil and Gas Conservation Commission, Department of Minerals and Geology, and Colorado Business Economic Outlook Committee.

23 Construction Value of Construction Nonbuilding 17% Nonresidential 30% Residential 53% Photo Courtesy

24 Housing Units vs. Households Annual Change 70,000 60,000 50,000 40,000 Housing Units ,895 more housing units than households ,817 more households than housing units 30,000 20,000 10,000 Households Source: Colorado State Demography Office.

25 National FHFA Home Price Growth Year over Year Q Source: Federal Housing Finance Agency Home Price Index, All Transactions Index.

26 Federal Housing Finance Agency (FHFA) House Price Index by MSA Q Q Colorado 9.7% Fort Collins Greeley Boulder Denver-Aurora-Lakewood Pueblo Colorado Springs Grand Junction Percent CAGR Q Q Colorado 3.2% Fort Collins Greeley Boulder Denver-Aurora-Lakewood Pueblo Colorado Springs Grand Junction Percent Source: Federal Housing Finance Agency, All Transactions Indexes.

27 Residential Building Permits ,000 35,000 36,700 Residential Housing: 30,000 25,000 20,000 15,000 Multifamily Home appreciation among the fastest nationally Mostly single family permits in 2016 Decrease in multifamily 10,000 5,000 0 Single Family Sources: U.S. Census Bureau and Colorado Business Economic Outlook Committee.

28 Value of Construction $ Millions 20,000 18,000 $17.9 B 16,000 14,000 12,000 Nonbuilding 10,000 8,000 6,000 Nonresidential 4,000 2,000 0 Residential Sources: McGraw-Hill Construction Dodge Research and Analytics and Colorado Business Economic Outlook Committee.

29 Construction Employment, Thousands Photo Courtesy of Breckenridge Brewery Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.

30 Manufacturing

31 Manufacturing Year-over-Year Growth 2015 Source: Bureau of Labor Statistics.

32 Manufacturing Jobs Added Colorado, Thousands Source: Bureau of Labor Statistics.

33 Trade, Transportation, and Utilities Photo courtesy of Denver International Airport. Photo courtesy of Macerich.

34 Retail Trade Sales Colorado Taxable Retail Sales 12-Month Rolling Sum 12-Month Rolling Sum, $ Millions Percent Change Colorado Retail Trade Sales Nominal Growth Months Real Growth Sources: Colorado Department of Revenue and Colorado Business Economic Outlook Committee.

35 Electricity and Natural Gas Consumption Million kwh 70,000 Electricity Consumption Billion Cubic Feet 600 Natural Gas Consumption ,000 54, , , ,000 20, , Sources: Edison Electrical Institute Statistical Yearbook, Xcel Energy, and Colorado Business Economic Outlook Committee.

36 DIA Enplanements and Deplanements Millions Sources: Denver International Airport and Colorado Business Economic Outlook Committee.

37 Financial Activities Financial Activities Employment Real Estate, Rental, and Leasing 31% Finance and Insurance 69% Source: Colorado Department of Labor and Employment.

38 Colorado Bank Deposits Deposits, Millions $140,000 Percent Change 12% $120,000 $100,000 Percent Change (R Axis) 10% 8% $80,000 $60,000 $40,000 $20,000 Deposits (L-Axis) 6% 4% 2% $ Note: Includes Inside of Market deposits. Source: FDIC, Deposit Market Share Report. 0%

39 Federal Housing Finance Agency (FHFA) House Price Index by MSA Q Q Colorado 9.7% Fort Collins Greeley Boulder Denver-Aurora-Lakewood Pueblo Colorado Springs Grand Junction Percent CAGR Q Q Colorado 3.2% Fort Collins Greeley Boulder Denver-Aurora-Lakewood Pueblo Colorado Springs Grand Junction Percent Source: Federal Housing Finance Agency, All Transactions Indexes.

40 Professional and Business Services Administrative and Support and Waste Management Services 40% Professional, Scientific, and Technical Services 51% Management of Companies and Enterprises 9%

41 Professional, Scientific, and Technical Services Other 30% PST Employment Legal Services 9% Architectural and Engineering Services % Thousands 12.0 PST Workers Added Manageme nt, Scientific, and Technical Consulting Services 13% Computer Systems Design Services 26% Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.

42 Leisure and Hospitality

43 Colorado Public Lands Visits Millions 60,000 Public Lands Visits ,000 40,000 30,000 20,000 10, Photo courtesy of Colorado State Parks. Sources: National Park Service and Colorado Business Economic Outlook Committee.

44 National Skier Visits Millions / / / / / / /16 Source: NSAA, National Skier/Snowboarder Visits,

45 Colorado Gasoline Prices Dollars per Gallon $4.50 July 7, 2008: $4.00 US $4.17 CO $4.03 $3.50 December 26, 2016: US $2.42 CO $2.26 $3.00 $2.50 Average $2.00 $1.50 $1.00 $0.50 December 28, 2015: US $2.14 CO $1.95 $ Source: Weekly Colorado All Grades All Formulations Retail Gasoline Prices (Dollars per Gallon).

46 Leisure and Hospitality Workers Added Thousands in-8 Colorado jobs Industry among the first to add workers after the recession Stronger household balance sheets and increased income Increase in consumer spending in restaurants Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.

47 Education and Health Services

48 Health Care Services Health Care Services Employment Growth, Annualized, Ambulatory Care 4.2% Accounts 11% of Colorado jobs Nursing Care 2.0% Consistent employment growth Growing senior population Hospitals 2.5% Record number of Coloradans have health insurance Social Assistance 4.4% Health care spending expected to outpace GDP growth through 2025 CAGR 1.0% 2.0% 3.0% 4.0% 5.0% Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.

49 Health Care Services Colorado Population by Age by Reference Year People 100,000 90,000 80, ,000 60, ,000 40,000 30, ,000 10, Age Source: Colorado State Demography Office.

50 Education and Health Services Employment, Thousands Education Health Care and Social Assistance Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.

51 Government Employment State (General) 10% State (Education) 17% Federal 13% Local (General) 28% Local (Education) 32%

52 Government Employment, , Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.

53 Education Public School Enrollment Student Enrollment 1,000, , , , , , , , , ,000 0 Charter Schools Traditional PK Source: Colorado Department of Education.

54 Colorado General Fund $ Millions $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 Excise Individual and Corporate Income $2,000 Sales, Use, and Other Excise $ Fiscal Years Source: Colorado Office of the State Controller and the Colorado Office of State Planning and Budgeting. Note: Excludes revenue transferred to the State Education Fund.

55 Colorado O&G Severance Taxes Severance Taxes, 12-Mo. Rolling Sum $350 WTI, 12-Mo. Ave. $/Barrel $120 $300 $250 Severance Taxes (L Axis) WTI Spot Price (R Axis) $110 $100 $90 $200 $80 $150 $70 $100 $50 $60 $50 $40 $ $30 Sources: Energy Information Administration (EIA), Cushing, OK WTI Spot Price FOB; Colorado Department of Revenue.

56 Services-Producing Employment Services-Producing Employment Government 16% Goods- Producing 13% Trade, Transportation, and Utilities 17% Services-Producing Workers Thousands Added Other 4% Leisure and Hospitality 13% Private Education and Health 13% Information 3% Financial Activities 6% Professional and Business Services 15% Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.

57 Colorado Employment Growth Jobs Added, Thousands Years of Growth 7 Years of Growth Sources: Bureau of Economic Analysis, NIPA Table 3.18B, Consensus Forecasts.

58 External Concerns Interest rates Global growth Commodity prices Value of the dollar Drought and weather Policy

59 Employment and New Entity Filings Employment, thousands 2, month total new entity filings 120,000 2, ,000 2,500 Employment 100,000 2,400 90,000 2,300 80,000 2,200 New Entity Filings 70,000 2, ,000 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.

60 U.S. and Colorado Economies Q Q Index (50=Neutral) 75 National and State Expectations Colorado United States Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q2 2017

61 Colorado Ranking Among Other States Metric 1-Year 3-Year 5-Year 10-Year Real GDP Growth Employment Growth Population Growth Personal Income Growth PCPI Growth PCPI Average Annual Pay % Growth Average Annual Pay Unemployment Rate Labor Force % Growth FHFA Home Price Index Data Sources: Bureau of Economic Analysis (2015), Bureau of Labor Statistics (10/16), U.S. Census Bureau (2015), Bureau of Labor Statistics (2015), Bureau Federal Housing Finance Agency All Transactions Index (Q3 2016), BRD calculations. Note: 1-year, 3-year, and 5-year are based on the compound annual growth rate.

62 Thank you!