Local Economic Outlook

Transcription

1 Local Economic Outlook Grant D. Forsyth, Ph.D. Department of Economics & Institute for Public Policy and Economic Analysis Eastern Washington University

2 Outlook Outline Regional Indicators and Forecasts Population Unemployment and Employment Incomes Taxable Retail Sales Regional Home and Company Values Hospital Revenues Industries of Interest Construction Sector

3 Indicators and Forecasts

4 OFM Population Growth Estimates for Spokane & Vicinity, % 6% 6.2% 5.6% 5% 4% 3% 2.2% 1.8% 2% 1.3% 1.0% 1.1% 1% 0.7% 0.5% 0.0% 0% Spokane County Liberty Lake Medical Lake Cheney Deer Park Spokane Valley Airway Heights City of Spokane Newport Millwood Source: Office of Financial Management and author s calculations.

5 Census Population Growth Estimates for Kootenai & Vicinity, % 7% 6.6% 6.4% Holy Cow! 6% 5.5% 5% 4% 3% 2% 1% 0% 4.0% 3.5% 3.0% 1.7% 1.2% -1.0% Kootenai County Bonner County Post Falls Hayden Rathdrum Sandpoint Coeur d'alene Priest River St. Maries -1% -2% Source: U.S. Census and author s calculations.

6 Population Growth Patterns for the Inland Northwest, % 12% Annual Population Growth 10% 8% 6% 4% 2% 0% % -4% City of Spokane Distance from City of Spokane Source: U.S. Census and author s calculations.

7 Employment Growth and Forecasts 5% Non-Farm Employ. Growth, 1/00 to 9/05 8.0% Unemployment Rate, 2001-Sep % 7.5% 3% 7.0% Annualized Growth 2% 1% 0% -1% -2% -3% Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Spokane+Kootenai Nation GI Forecast Jan-06 Jan % 6.0% 5.5% 5.0% 4.5% 4.0% 4.4% 5.8% Sep Spokane Kootenai Nation 5.2% Source: Bureau of Labor Statistics, the Forecast Council, and author s calculations.

8 Relative Costs of Energy: Oil and Natural Gas Prices, Hours of Work/Barrel of Oil Domestic and Imported Oil (2005 Estimated) Region = $75-$80 Nation = $85-$ Minutes of Work/1000 Cubic Feet Residential Natural Gas (2005 Estimated) Spokane + Kootenai Nation Spokane + Kootenai Nation Source: Energy Information Admin., Bureau of Economic Analysis, and author s calculations.

9 Real Per Capita Personal Income Growth and Forecasts 3.5% Microsoft Dividend Spokane Kootenai 3.0% 2.5% Range % High 2.3% 3.5% 2.5% 3.6% 1.5% 1.0% 0.5% Point 0.8% (1.2) 1.3% 0.7% (1.3) 1.2% 0.0% -0.5% E 2005F 2006F Nation Spokane Kootenai Low -0.7% -0.8% -1.0% -1.1% Source: Bureau of Economic Analysis, Bureau of Labor Statistics, the Forecast Council and Global Insights, and author s calculations.

10 Spokane County Taxable Retail Sales Growth and Forecasts 12% Consumer Confidence? City of Spokane County w/o City 10% 8% Range % High 6.0% 7.1% 10.5% 11.5% 4% 2% Point 4.4% (1.7) 2.3% 8.4% (5.2) 5.2% 0% H2004-1H F 2006F Low 2.7% -2.6% 6.4% -1.0% City of Spokane County w/o City Source: Department of Revenue and author s calculations.

11 Retail Sales Breakdown for the Large Cities, 2004 City of Spokane Spokane Valley Constr., Real Estate, & Related Retail Constr., Real Estate, & Related Retail 18% Vehicles & Parts Sales 17% Vehicles & Parts Sales 61% 10% 10% Accomodation & Food 52% 23% Accomodation & Food All Else 8% All Else Blue + Red + Yellow = 38% Blue + Red + Yellow = 48% Source: Department of Revenue and author s calculations.

12 Retail Sales Breakdown for the Small Cities and Unincorp. Areas, 2004 County Small Cities (n = 11) Unincorporated County 25% Constr., Real Estate, & Related Retail Constr., Real Estate, & Related Retail 43% Vehicles & Parts Sales 41% 51% Vehicles & Parts Sales 23% Accomodation & Food 3% Accom odation & Food 9% All Else 5% All Else Blue + Red + Yellow = 57% Blue + Red + Yellow = 59% Source: Department of Revenue and author s calculations.

13 Regional MSA Existing Home Price Growth and Forecasts 30% Spokane Spokane 25% Range Annual Growth 20% 15% 10% High 16.7% 11.3% 5% Point 15.5% 8.0% 0% (5.9) Coeur d'alene Spokane Wenatchee Tri-Cities H2004-1H2005 Yakima Low 14.3% 4.7% Source: Office of Federal Housing Enterprise Oversight and author's calculations.

14 Westside MSA Existing Home Price Growth 30% 25% You are here. 20% 15% 10% 5% 0% Coeur d'alene Bellingham Bremerton-Silver. Anacortes-Mt. Vern. Tacoma Olympia Spokane S-B-E P-V-B Longview H2004-1H2005 Source: Office of Federal Housing Enterprise Oversight and author's calculations. Annual Growth

15 National City Study of Metropolitan Housing Markets, 1Q MSAs Overvalued by 30% or More (18% of MSAs) Bellingham 80% 70% 60% 50% 40% 30% % Overvalued Other 32% California 47% 20% 10% Santa Barb., Salinas,CA Naples, FL 0% Riverside, CA Merced, CA Port St. Lucie, FL Stockton, CA Madera, CA Napa, CA Medford, OR Florida 21% Source: National City and author s calculations.

16 National City Study of Metropolitan Housing Markets, 1Q 2005 Idaho Falls 76 MSAs Undervalued (25% of MSAs) Texas 25% Source: National City and author s calculations. 20% 18% 16% 14% 12% 10% 8% 6% % Undervalued 4% 2% 0% College Sta., TX El Paso, TX Montgomery, AL Odessa, TX Killeen, TX Beaumont,TX Dallas, TX Elkhart, IN Huntsville, AL Memphis, TN Other 64% Indiana 11%

17 National City Study of Metropolitan Housing Markets, 1Q % 30% 35% You are here. 29% 20% 10% 0% -10% -20% 20% 18% 18% 17% 17% 15% 7% 6% 6% 4% 3% Source: National City -4% Bellingham P-V-B S-B-E Olympia Tacoma Bremerton-Silver. Longview Anacortes-Mt. Vern. Spokane Wenatchee Yakima Boise Tri-Cities % Over/Undervalued Idaho Falls

18 Operating Margins of Major Regional Hospitals, 4Q Q 2005 $ $5 $0 -$5 -$10 -$15 -$20 Operating Margin in Millions $25 -$30 Source: Washington State Department of Health and Patrick Jones, Ph.D.

19 Regional Market Values by Firm Company % Change-Market Value 1/04-12/04 % Change-Market Value 1/05-9/05 Russell 3000 Index +6% +5% Regional Market Value +25% +13% Avista -3% +13% Potlach +34% +18% Sterling Financial +33% +3% American West Bancorp. +2% +21% Northwest Bancorp. +6% +13% Coeur d Alene Mines -25% +10% Hecla Mining -28% -28% Itron +23% +121% Key Tronics +24% +49% West Coast Hospitality +5% +16% Coldwater Creek +452% -1% Source: Russell Co., SEC, Economagic.com, NASDAQ, and author's calculations.

20 Construction Sector

21 Construction Employment as a Percent of Non-Farm Employment 6.2% Spokane, 12-month MA: 1/94 to 9/05 (includes mining) 9.5% Kootenai, 12-Month MA: 1/94 to 9/05 6.0% 9.0% 5.8% 8.5% 5.6% 5.4% 8.0% 5.2% 5.0% 7.5% Overall = 6.5%-7% of Non-Farm Employment 7.0% Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Source: Bureau of Labor Statistics and author s calculations.

22 Construction s Contribution to Non- Farm Employment Growth since % Spokane, 1/01 to 9/05 (includes mining) 3.0% Kootenai, 1/01 to 9/05 0.6% 2.0% 0.4% 0.2% 1.0% 0.0% -0.2% -0.4% -0.6% Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul % -1.0% -2.0% Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Source: Bureau of Labor Statistics and author s calculations.

23 Construction s Relative Importance and Employment Distribution, % Number of Firms % Number of Firms % 60% 10% 50% 8% 40% 6% 30% 4% 20% 2% 10% 0% % of All Non-Farm Firms % of Total Non- Farm Earnings 0% 0.1% Number of Employees Source: U.S. Census, Bureau of Labor Statistics, Bureau of Economic Analysis and author s calculations.

24 Construction Firms by Type, 2003 Number of Firms % 5% 10% 15% 20% 25% Residential Building Building Finishing Contractors Other Specialty Trade Contractors Foundation, Structure, and Exterior Contract. Building Equipment Contractors Nonresidential Building Land Subdivision Utility System Construction Other Heavy and Civil Engineering Construction Highway, Street, and Bridge Construction Source: U.S. Census and author s calculations.

25 Outlook Summary for 2006 A cooling regional economy heading into 2006 A cooling housing market. Working through higher energy prices. Risk factors for a significant slowdown in 2006 Additional energy price spikes. A bursting real estate bubble in one or more of the major California markets. A rapid interest rate increase by the Fed to keep inflation under control. A major budget realignment in Olympia.