More of the Same? Southwest Business Forum

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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

Colorado Population, Employment, and Prices

Change in Population Change in Colorado Population 2001-2017 Thousands 120,000 100,000 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 20,000 0 2001 2005 2009 2013 2017 Natural Increase Denver now the most populous county Continued net migration into the state Source: Colorado Demography Office.

Colorado Employment Growth Jobs Added Thousands 100 80 60 40 20 0-20 -40-60 -80-100 -120 63,400 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sources: Colorado Department of Labor and Employment, BEOF Committee Members.

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 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 110 115 120 Number of Months Since Peak Source: Bureau of Labor Statistics (Seasonally Adjusted).

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

Employment Change 2016-2017 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 -2 0 2 4 6 8 10 12 Source: Bureau of Labor Statistics (Seasonally Adjusted). Thousands of Jobs

Agriculture Photo courtesy of Ryan Kanode.

Gross Farm Revenue and Net Income 2007-2017 $ 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. 0 2007 2009 2011 2013 2015 2017 Source: Colorado Business Economic Outlook Committee.

Livestock Cash Receipts 2007-2017 $ 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 1986 1,000 2007 2009 2011 2013 2015 2017 Source: Colorado Business Economic Outlook Committee.

Commodity Prices Wheat and Corn Dollars 14.0 12.0 10.0 8.0 6.0 Wheat 4.0 Corn 2.0 0.0 2000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2011 2012 2013 2014 2015 2016 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.

Crops Cash Receipts 2007-2017 $ 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 2017 500 Innovation will play an increasing role for agriculture 0 2007 2009 2011 2013 2015 2017 Source: Colorado Business Economic Outlook Committee.

Net Farm Income $ Millions 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 $391 200 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Colorado Business Economic Outlook Agriculture Committee.

Natural Resources and Mining

WTI Oil Price 2006-2016 Dollars per Barrel 160.0 140.0 June 3, 2008: $145.31 120.0 100.0 80.0 60.0 December 27, 2013: $99.94 Average 2006-2016 December 26, 2014: $54.59 40.0 December 28, 2015: 20.0 $36.36 December 27, 2016: 0.0 $52.82 2006 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: EIA, Cushing, OK WTI Spot Price FOB (Dollars per Barrel).

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 $0 2005 2006 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 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.

Crude Oil Production 2007-2017 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 140 120 100 80 60 109.1 40 20 0 2007 2009 2011 2013 2015 2017 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.

Natural Gas Production 2007-2017 Billions of Cubic Feet 1,800 1,600 1,400 1,200 1,000 800 600 400 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 200 0 2007 2009 2011 2013 2015 2017 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.

Coal Production 2007-2017 Lowest production levels since the mid-1990s State ranking slipped to 10 th in 2016 Short Tons (Millions) 40 35 30 Government mandates for renewables limiting production Decreasing demand from TVA Power plants divesting from coal 25 20 15 10 5 0 12.0 2007 2009 2011 2013 2015 2017 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.

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.

Natural Resources and Mining Workers Added, 2007-2017 Thousands 6 4 2 0-2 -0.2-4 -6-8 -10 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 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.

Construction Value of Construction Nonbuilding 17% Nonresidential 30% Residential 53% Photo Courtesy www.rtd-fastracks.com

Housing Units vs. Households Annual Change 70,000 60,000 50,000 40,000 Housing Units 2001-2007 119,895 more housing units than households 2008-2015 109,817 more households than housing units 30,000 20,000 10,000 Households 0 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Source: Colorado State Demography Office.

National FHFA Home Price Growth Year over Year Q3 2016 Source: Federal Housing Finance Agency Home Price Index, All Transactions Index.

Federal Housing Finance Agency (FHFA) House Price Index by MSA Q3 2015 Q3 2016 Colorado 9.7% Fort Collins Greeley Boulder Denver-Aurora-Lakewood Pueblo Colorado Springs Grand Junction 0.0 3.0 6.0 9.0 12.0 15.0 Percent CAGR Q3 2006 Q3 2016 Colorado 3.2% Fort Collins Greeley Boulder Denver-Aurora-Lakewood Pueblo Colorado Springs Grand Junction 0.0 1.0 2.0 3.0 4.0 5.0 Percent Source: Federal Housing Finance Agency, All Transactions Indexes.

Residential Building Permits 2007-2017 40,000 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 2007 2009 2011 2013 2015 2017 Sources: U.S. Census Bureau and Colorado Business Economic Outlook Committee.

Value of Construction 2007-2017 $ 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 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sources: McGraw-Hill Construction Dodge Research and Analytics and Colorado Business Economic Outlook Committee.

Construction Employment, 2007-2017 Thousands 180 160 166 140 120 100 80 60 40 Photo Courtesy of Breckenridge Brewery. 20 0 2007 2009 2011 2013 2015 2017 Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.

Manufacturing

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

Manufacturing Jobs Added Colorado, 1991-2017 Thousands 9 4 2.3-1 -6-11 -16 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Source: Bureau of Labor Statistics.

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

Retail Trade Sales Colorado Taxable Retail Sales 12-Month Rolling Sum 12-Month Rolling Sum, $ Millions 95 90 85 Percent Change 10.0 5.0 Colorado Retail Trade Sales 2007-2017 Nominal Growth 4.4 80 75 70 65 70 Months 0.0-5.0 Real Growth 60-10.0 55 50 2002 2004 2006 2008 2010 2012 2014 2016-15.0 2007 2009 2011 2013 2015 2017 Sources: Colorado Department of Revenue and Colorado Business Economic Outlook Committee.

Electricity and Natural Gas Consumption Million kwh 70,000 Electricity Consumption 2007-2017 Billion Cubic Feet 600 Natural Gas Consumption 2007-2017 60,000 54,116 500 481.8 50,000 400 40,000 300 30,000 20,000 200 10,000 100 0 2007 2009 2011 2013 2015 2017 0 2007 2009 2011 2013 2015 2017 Sources: Edison Electrical Institute Statistical Yearbook, Xcel Energy, and Colorado Business Economic Outlook Committee.

DIA Enplanements and Deplanements 2006-2016 Millions 70 60 58 50 40 30 20 10 0 2006 2008 2010 2012 2014 2016 Sources: Denver International Airport and Colorado Business Economic Outlook Committee.

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

Colorado Bank Deposits 1995-2016 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% $0 1995 1998 2001 2004 2007 2010 2013 2016 Note: Includes Inside of Market deposits. Source: FDIC, Deposit Market Share Report. 0%

Federal Housing Finance Agency (FHFA) House Price Index by MSA Q3 2015 Q3 2016 Colorado 9.7% Fort Collins Greeley Boulder Denver-Aurora-Lakewood Pueblo Colorado Springs Grand Junction 0.0 3.0 6.0 9.0 12.0 15.0 Percent CAGR Q3 2006 Q3 2016 Colorado 3.2% Fort Collins Greeley Boulder Denver-Aurora-Lakewood Pueblo Colorado Springs Grand Junction 0.0 1.0 2.0 3.0 4.0 5.0 Percent Source: Federal Housing Finance Agency, All Transactions Indexes.

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

Professional, Scientific, and Technical Services Other 30% PST Employment Legal Services 9% Architectural and Engineering Services 7.0 22% Thousands 12.0 PST Workers Added 2007-2017 6.0 2.0 Manageme nt, Scientific, and Technical Consulting Services 13% Computer Systems Design Services 26% -3.0-8.0 2007 2009 2011 2013 2015 2017 Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.

Leisure and Hospitality

Colorado Public Lands Visits Millions 60,000 Public Lands Visits 2009-2017 57 50,000 40,000 30,000 20,000 10,000 0 2009 2011 2013 2015 2017 Photo courtesy of Colorado State Parks. Sources: National Park Service and Colorado Business Economic Outlook Committee.

National Skier Visits 1980-2016 Millions 70 60 52.8 50 40 30 20 10 0 1979/80 1985/86 1991/92 1997/98 2003/04 2009/10 2015/16 Source: NSAA, National Skier/Snowboarder Visits, 1979-2016.

Colorado Gasoline Prices 2006-2016 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 2006-2016 $2.00 $1.50 $1.00 $0.50 December 28, 2015: US $2.14 CO $1.95 $0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Weekly Colorado All Grades All Formulations Retail Gasoline Prices (Dollars per Gallon).

Leisure and Hospitality Workers Added 2007-2017 Thousands 16 14 12 10 8 6 4 2 0-2 -4-6 -8-10 -12 2007 2009 2011 2013 2015 2017 12 1-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.

Education and Health Services

Health Care Services Health Care Services Employment Growth, Annualized, 2007-2017 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.

Health Care Services Colorado Population by Age by Reference Year People 100,000 90,000 80,000 2030 70,000 60,000 2010 50,000 40,000 30,000 1990 20,000 10,000 0 0 9 18 27 36 45 54 63 72 81 90 Age Source: Colorado State Demography Office.

Education and Health Services Employment, 2007-2017 Thousands 400 350 300 250 200 150 100 50 Education Health Care and Social Assistance 335.6 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.

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

Government Employment, 2007-2017 440 430 428,400 420 410 400 390 380 370 360 350 340 2007 2009 2011 2013 2015 2017 Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.

Education Public School Enrollment Student Enrollment 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Charter Schools Traditional PK-12 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Source: Colorado Department of Education.

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 $0 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 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.

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 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $30 Sources: Energy Information Administration (EIA), Cushing, OK WTI Spot Price FOB; Colorado Department of Revenue.

Services-Producing Employment Services-Producing Employment Government 16% Goods- Producing 13% Trade, Transportation, and Utilities 17% Services-Producing Workers Thousands Added 2007-2017 80 60 40 20 52.4 Other 4% Leisure and Hospitality 13% Private Education and Health 13% Information 3% Financial Activities 6% Professional and Business Services 15% 0-20 -40-60 -80 2007 2009 2011 2013 2015 2017 Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.

Colorado Employment Growth Jobs Added, 1992-2017 Thousands 100 63.4 50 0-50 5 Years of Growth 7 Years of Growth -100-150 1992 1997 2002 2007 2012 2017 Sources: Bureau of Economic Analysis, NIPA Table 3.18B, Consensus Forecasts.

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

Employment and New Entity Filings Employment, thousands 2,700 12-month total new entity filings 120,000 2,600 110,000 2,500 Employment 100,000 2,400 90,000 2,300 80,000 2,200 New Entity Filings 70,000 2,100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 60,000 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.

U.S. and Colorado Economies Q2 2003 Q2 2017 Index (50=Neutral) 75 National and State Expectations 70 65 60 55 Colorado 50 45 40 35 United States 30 25 Q2 2003 Q2 2004 Q2 2005 Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 2017

Colorado Ranking Among Other States Metric 1-Year 3-Year 5-Year 10-Year Real GDP Growth 4 3 5 11 Employment Growth 6 5 3 4 Population Growth 2 3 3 4 Personal Income Growth 23 1 2 7 PCPI Growth 43 1 2 30 PCPI 13 18 22 13 Average Annual Pay % Growth 28 26 18 23 Average Annual Pay 12 13 12 10 Unemployment Rate 9 18 29 18 Labor Force % Growth 6 11 7 4 FHFA Home Price Index 3 2 4 3 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.

Thank you!