Growth with Uncertainty
Boulder Economic Forecast
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Richard Wobbekind Senior Economist and Associate Dean for Business and Government Relations January 30, 2020
#COBizOutlook
#COBizOutlook
Real GDP Growth 2.1
Quarterly Real GDP
2.0
10 8
Percent Change, SAAR
6 4 2 0 -2 -4
Average 1990-1999
Average 2000-2009
Average 2010-2019
-6 -8
-10 1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Sources: Bureau of Economic Analysis and Consensus Forecasts.
2012
2014
2016
2018
2020
Economic Growth Government Spending
Personal Consumption Expenditures 5 Year-over-Year
4
Quarterly SAAR
3
5 4
Year-over-Year Quarterly SAAR
3 2
2
1
1
0
0
-1 Net Exports
Fixed Business Investment 10 8 6
Year-over-Year Quarterly SAAR
4 2 0 -2 -4
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021
7 6 5 4 3 2 1 0 -1 -2 -3
Imports YoY
Exports YoY
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021
Sources: Bureau of Economic Analysis, the National Bureau of Economic Research, Moody’s Analytics, and Consensus Forecasts
National Employment
176
Month-over-Month Change, 12-Month Average 60 300 200
-100 -200 -300 -400
Recession 18 Months
0 Recession 8 Months
Thousands
100
-500 -600 2000
2002
2004
2006
2008
2010
2012
2014
2016
Sources: Bureau of Labor Statistics (Seasonally Adjusted), Moody’s Analytics, and the National Bureau of Economic Research.
2018
2020
State Employment Growth Year-over-Year December 2019
Sources: Bureau of Economic Analysis (Seasonally Adjusted).
Labor Underutilization Percentage of Labor Force 18 16 14 12
U-6
Average U-6
10 8 6
6.7%
Average U-3 U-3
4
3.5%
2 0 1995
1997
1999
2001
2003
2005
2007
2009
2011
Sources: Bureau of Labor Statistics (Seasonally Adjusted).
2013
2015
2017
2019
Labor Force Participation Rate Percent of Population, 16 and Over 68 67 66 65 64
63.2
63 62 1980
1984
1988
1992
1996
2000
2004
Sources: Bureau of Labor Statistics (Seasonally Adjusted).
2008
2012
2016
2020
U.S. Income and Consumption Percent Change 4
Real Disposable Income
Percent Change
Real Personal Consumption
4
3 2.1%
2
3 2.4%
1
2
0 1 -1 -2
2010
2012
2014
2016
2018
2020
0
2010
Source: Consensus Forecasts
2012
2014
2016
2018
2020
Household Wealth $ Trillions 140 120 100
Other Assets
80 60
Mutual Funds
40
Corporate Equities
20
Real Estate
0
2000
2002
2004
2006
2008
2010
2012
2014
2016
Source: Federal Reserve Board, Balance Sheet of Households and Nonprofit Organizations (B.101) (Not Seasonally Adjusted).
2018
Household Debt Burden Percent of Disposable Income DSR
FOR 18.5
13.5 13
18
Financial Obligations Ratio (Right Axis)
17.5
12.5
17
12
16.5
11.5
16
11 10.5
Debt Service Ratio (Left Axis)
15.5
10
15
9.5
14.5
9 1994
1999
2004
2009
Source: Federal Reserve, Household Debt Service and Obligations Ratios.
2014
2019
14
Index of Consumer Confidence 160
Mountain Region
140
1985=100
120
United States
100 80 60 40 20 0 1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Sources: The Conference Board and National Bureau of Economic Research.
2013
2015
2017
2019
Consumer Confidence Plans to Buy within Six Months
70 62.3%
61.6%
60 Vacation
Percent
50
49.0%
48.6%
Major Appliance
40
30 Automobile
20 13.1% 10
0
12.9% Home
5.9%
Dec 2018
Jan 2019
Feb 2019
Mar 2019
Apr 2019
May 2019
Jun 2019
6.0%
Jul 2019
Aug 2019
Sep 2019
Oct 2019
Nov 2019
Dec 2019
Vehicle Sales and Retail Sales Vehicle Sales 20,000
10
18,000
Annual Percent Change
16,000 14,000
Thousands, SAAR
Retail and Food Services Sales
12,000 10,000 8,000 6,000 4,000
5
0
-5
-10
2,000 0 2004 2006 2008 2010 2012 2014 2016 2018 2020
-15 2004
2006
2008
2010
2012
Sources: Bureau of Economic Analysis, Moody’s Analytics, U.S. Census Bureau (Seasonally Adjusted Annual Rate).
2014
2017
2019
Nominal Corporate Profits and Business Fixed Investment Nominal Pre-Tax Corporate Profits
Percent Change
Business Fixed Investment
Percent Change
30
10
25 8
20 15
6
10 5
3.4%
0
4 2
1.2%
-5 -10
2010
2012
2014
2016
2018
2020
0
2010
2012
Sources: Bureau of Economic Analysis, Moody’s Analytics, Consensus Forecasts.
2014
2016
2018
2020
ISM Manufacturing Index 90
Steel Strike End of Peace Korean War Time Monetary Policy
Monetary Policy OPEC
Oil Interest Embargo Rates
Savings and Loan
Tech
Financial
Diffusion index, SA
80 70 60 50 40 30 20 10 0 1949
1954
1959
1964
1969
1974
1979
1984
1989
Source: Institute for Supply Management (ISM).
1994
1999
2004
2009
2014
2019
Expectations for the U.S. and Colorado Economies Q2 2005 – Q2 2020 Index (50=Neutral) 75 70 65
Colorado
60 55 50 45
United States
40 35 30 25
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 Q2 2018 Q2 2019 Q2 2020 Source: Business Research Division.
Federal Budget Balance 2000 to 2020 $ Billions 400 200 0 -200 -400 -600 -800 -1,000
-$984 -$1,053
-1,200 -1,400 -1,600
2000
2002
2004
2006
2008
2010
2012
Sources: Office of Management and Budget and Consensus Forecasts.
2014
2016
2018
2020
Committee for A Responsible Federal Budget On the C.B.O. Budget Projections released Tuesday The budget deficit will total $1.02 trillion (4.6 percent of GDP) this year – the first trillion-dollar deficit in history not caused by the Great Recession. Deficits will further rise under current law to $1.7 trillion (5.4 percent of GDP) by 2030. Under current law, debt held by the public will rise from a post-war record 80 percent of GDP today to above 98 percent by 2030. That represents a $14.3 trillion increase, from $17.2 trillion today to $31.4 trillion in 2030. Deficits are $160 billion higher though 2029 than in CBO’s prior baseline. This is the net effect of roughly $500 billion in new debt from tax cuts in December’s appropriations package, partially offset by economic and technical changes. The fiscal situation will continue to deteriorate over the long term. CBO projects budget deficits to average more than 10 percent of GDP in the 2040s and debt to reach 180 percent of GDP by 2050. CBO did not include an Alternative Fiscal Scenario, we estimate that extending expiring tax cuts and maintaining discretionary spending as a share of GDP would lift debt to 107 percent of GDP by 2030 – an all-time record. CBO projects real economic growth of 2.2 percent this year and an average of 1.7 percent in future years. CBO’s latest budget projections confirm our country is on an unsustainable fiscal path due to the rising and underfinanced cost of Social Security, health, and interest spending as well as the passage of multiple rounds of unpaidfor tax cuts and spending increases.
International Trade Export Destinations
Index Jan. 1997=100
Trade Weighted U.S. Dollar, 2000-2020
135 Canada 18%
Rest of World 32%
130 125 120
Mexico 13%
South Korea 7% China 6%
Taiwan 3% United Kingdom 3% Germany Netherlands 3% 4%
Japan Malaysia 5% 6%
115 110 105 100 95 90 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Sources: World Institute for Strategic Economic Research, Board of Governors of the Federal Reserve System, Broad Dollar Index, and National Bureau of Economic Research. Data through January 1, 2020.
Global GDP Growth Forecasts China ASEAN Sub-Saharan Africa World
Forecast 2021 Forecast 2020
Middle East Eastern Europe Latin America United States Euro Area 0
1
2
3
4 Percent
Source: International Monetary Fund, World Economic Outlook, January 2020.
5
6
7
Money, Interest Rates, and Prices
Interest Rates 9 8 7
Percent
6 30-Year Conventional
5 4 3 2
10-Year T-Note
1 0 2000
3-Month T-Bill 2002
2004
2006
2008
2010
2012
2014
Sources: Federal Reserve and Moody’s Analytics.
2016
2018
2020
Federal Funds Rate Outlook 4
3
2
Current Target Range
1
0
2020
2021
2022
Source: Federal Reserve, December 2019 Meeting
Longer Run
Loan Delinquency Percent of Balance 90+ Days Delinquent by Loan Type 16 Mortgage
HELOC
Auto
Credit Card
Student Loan
Other
All
14 12
Percent
10 8 6 4 2 0 2003 Q1
2005 Q1
2007 Q1
2009 Q1
2011 Q1
2013 Q1
Source: FRBNY Consumer Credit Panel (Q3 2019).
2015 Q1
2017 Q1
2019 Q1
Inflation 3
Denver-Aurora-Lakewood MSA United States
2 1 0
2013
2014
2015
2016
2017
All Items Less Shelter
3 Percent Change
Percent Change
4
All Items
2018
2019
2 1 0 -1
2013
2014
Percent Change
Percent Change
4 2
2014
2015
2016
2017
2018
2019
2017
2018
2019
Medical Care
6
2013
2016
-2
Shelter
0
2015
2017
2018
2019
6 4 2 0
2013
2014
Source: Bureau of Labor Statistics (Not Seasonally Adjusted).
2015
2016
Colorado Employment and Wages
Colorado Employment Growth 100 80
Jobs Added, Thousands
60
51.1
40
40.1
20 0 -20 -40 -60 -80
-100 -120
2000
2002
2004
2006
2008
2010
2012
2014
2016
Sources: Colorado Department of Labor and Employment and the Colorado Business Economic Outlook Committee.
2018
2020
Colorado 2020 Employment Change Percent Change
Jobs Added Professional and Business Services Trade, Transportation, and Utilities Education and Health Services Government Leisure and Hospitality Construction Financial Activities Other Services Manufacturing Natural Resources and Mining Information -2
0
2
4
6
8
10
12
14
-1
0
Sources: Colorado Department of Labor and Employment and Colorado Business Economic Outlook Committee.
1
2
3
Employment In Current Decade Percent Change from January 2010 50
Greeley
40 Ft. Collins Denver Boulder Colorado Colorado Springs
30 20
National Grand Junction Pueblo
10 0 -10 2010
2011
2012
2013
2014
2015
2016
2017
Source: Bureau of Labor Statistics (Seasonally Adjusted).
2018
2019
Regional Growth and Unemployment Employment Growth Rate, December 2019 YoY
Unemployment Rate December 2019 Colorado 2.4%
Colorado 2.1%
Greeley
Greeley
Colorado Springs
Colorado Springs
Boulder
Boulder
Denver-Aurora-Lakewood
Denver-Aurora-Lakewood
Fort Collins-Loveland
Fort Collins-Loveland
Grand Junction
Grand Junction
Pueblo
Pueblo 0
1
2 Percentage
3
4
0
Sources: Bureau of Labor Statistics CES (Seasonally Adjusted) and LAUS (Not Seasonally Adjusted).
1
2 Percentage
3
4
•
LFPR on the rise:
•
4th-highest nationally
•
Colorado peak = 74.5% (1998)
3,500
76
3,000
74
2,500
72
2,000
70
1,500
68
1,000
66
500
64
0 1977
1984
1991
Sources: Bureau of Labor Statistics, Current Population Survey.
1998
2005
2012
2019
62
LFPR (Percent)
• 66.6% November 2015 • 69.1% November 2019
Labor Force (Thousands)
Colorado Labor Force
Colorado Wages 2019 Q2 (4Q Rolling Average) Sector Above Average Total Management of companies and enterprises Utilities Information Professional and technical services Finance and insurance Natural Resources and Mining Wholesale trade Federal Government Manufacturing State Government Construction All Industries Real estate and rental and leasing Transportation and warehousing Health care and social assistance Local Government Administrative and waste services Educational services Other services, except public administration Arts, entertainment, and recreation Retail trade Accommodation and food services Below Average Total
Total Employment Year-over-Year (Thousands) Employment Growth 1,106 3.0% 42 4.3% 8 0.7% 76 3.0% 230 4.4% 113 0.7% 48 4.8% 109 1.5% 53 -0.3% 149 2.2% 105 3.2% 176 4.2% 2,704 2.3% 53 3.2% 80 7.1% 301 1.5% 265 1.9% 160 0.8% 37 3.0% 83 2.6% 58 2.4% 273 0.3% 284 1.1% Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages. 1,594 1.7%
Average Wages $86,709 $140,400 $108,005 $107,040 $99,634 $98,137 $89,789 $87,930 $84,627 $72,647 $66,121 $63,295 $60,341 $60,267 $58,125 $52,001 $49,223 $45,413 $42,019 $41,804 $38,887 $33,088 $24,125 $42,021
Sources: Colorado Business Economic Outlook Committee and Bureau of Labor Statistics, Quarterly Census of Employment and Wages.
Year-over-Year Wage Growth 3.7% -1.6% 6.0% 5.7% 4.2% 3.3% 3.7% 4.3% 4.8% 3.7% 2.8% 4.2% 4.3% 3.5% 3.5% 3.1% 3.5% 8.2% 2.7% 4.1% 4.3% 3.8% 6.2% 4.5%
Boulder County Wages 2018 Annual Figures Sector Above Average Total Information Utilities Finance and insurance Professional and technical services Management of companies and enterprises Federal Government Wholesale trade Manufacturing State Government All Industries Construction Real estate and rental and leasing Health care and social assistance Local Government Natural Resources and Mining Administrative and waste services Transportation and warehousing Other services, except public administration Educational services Retail trade Arts, entertainment, and recreation Accommodation and food services Below Average Total
Total Employment 80,181
Year-Over-Year Employment Growth 0.0%
Average Wages $100,913
Year-Over-Year Wage Growth 4.8%
8,234 180 4,031 28,063 1,565 2,005 6,533 19,057 10,513
$122,282 $117,194 $115,626 $114,501 $111,043 $110,822 $101,545 $82,301 $71,932 $67,669
-2.0% 7.6% 2.8% 6.5% 3.5% 7.3% 9.0% 3.2% 5.4%
183,518
2.3% -15.9% -0.8% 3.1% 8.5% -2.6% 3.9% 3.4% -2.0% 2.1%
5,646 2,670 22,797 16,554 782 6,199
2.8% 0.0% 1.6% 1.5% 11.2% 5.9%
$57,546 $56,295 $52,203 $49,743 $47,450 $45,054
5.1% -1.5% 2.7% 3.0% 6.3% 2.6%
1,366 5,377 2,909 17,583 3,271 18,183 103,337
5.8% 2.0% 7.5% 0.5% 3.9% 1.3% 3.7%
$44,048 $40,998 $39,318 $35,556 $27,215 $22,702 $41,874
4.5% 3.2% 8.4% 6.0% 0.0% 5.9% 3.9%
Sources: Colorado Business Economic Outlook Committee and Bureau of Labor Statistics, Quarterly Census of Employment and Wages.
4.3%
Construction & Real Estate
Photo courtesy of Denver International Airport.
National FHFA Home Price Growth Year over Year Q3 2019
Source: Federal Housing Finance Agency Home Price Index, All Transactions Index.
Colorado Residential Building Permits 39k
33%
60,000
Multifamily Single Family
Permits
50,000
66%
40,000 30,000 20,000 10,000 0
40k
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Sources: U.S. Census Bureau and the Colorado Business Economic Outlook Committee.
2018
2020
Colorado Value of Construction $25
$19.1B
Value in Billions
$20 Non-Building Non-Residential Residential
$15
$17B
$10
$5
$0
1996
1998
2000
2002
2004
2006
2008
2010
2012
Source: McGraw-Hill Construction Dodge Research and Analytics.
2014
2016
2018
2020
Colorado Ranking Among Other States Metric 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 LFPR FHFA Home Price Index Growth
1-Year 7 10 7 9 26 11 5 9 5 24 4
3-Year 4 8 7 2 3 14 5 11 4 2 2
5-Year 5 8 8 9 18 13 8 13 7 3 9
10-Year 6 5 3 2 NA NA 13 11 29 3 11
16
5
2
2
Data Sources: Bureau of Economic Analysis (2019), Bureau of Labor Statistics (11/19), U.S. Census Bureau (2018), Bureau of Labor Statistics (2019), Bureau Federal Housing Finance Agency All Transactions Index (Q2 2019), BRD calculations. Note: 3-year, 5-year, and 10-year are based on the compounded annual growth rate.
Photo courtesy of the University of Colorado.
Boulder
Real Gross Domestic Product Boulder MSA 8%
25,000 4%
20,000 15,000
0%
10,000 5,000 0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: Bureau of Economic Analysis.
2013
2014
2015
2016
2017
2018
-4%
Percentage Change
Millions of Chained 2012 Dollars
30,000
Employment Boulder MSA 250 YoY growth: 2.8% or 5,500
Employment, in thousands
200
150
100
50
0 2009
2010
2011
2012
2013
2014
2015
2016
Source: Bureau of Labor Statistics, CES (SA), November 2019.
2017
2018
2019
City of Boulder Employment Total Employment ~93,300 Professional and Technical Services Government Manufacturing Accommodation and Food Services Health Care and Social Assistance Retail Trade Information Wholesale Trade Other Services Administrative and Waste Services Finance and Insurance All Other Educational Services Arts, Entertainment and Recreation Construction Real Estate and Rental and Leasing
0
2,000
4,000
6,000
8,000
10,000
Source: Colorado Department of Labor and Employment, QCEW, 2018.
12,000
14,000
16,000
18,000
Boulder County Employment Total Employment ~183,466 Government Professional and Technical Services Health Care and Social Assistance Manufacturing Accommodation and Food Services Retail Trade Information Wholesale Trade Administrative and Waste Services Construction Other Services Finance and Insurance All Other Arts, Entertainment and Recreation Educational Services Real Estate and Rental and Leasing
0
5,000
10,000
15,000
Source: Colorado Department of Labor and Employment, QCEW, 2018.
20,000
25,000
30,000
Government
0 Source: Bureau of Labor Statistics.
Mining
Transportation and Warehouse
Utilities
Agriculture
Management of Companies
Admin and Waste
Finance
Construction
Education
Retail
Wholesale
Healthcare
Other
Real Estate
Accomm. and Food
1 Manufacturing
2 Arts and Ent.
3 Information
4
Professional
Location Quotient
Industry Location Quotients Boulder County compared to the U.S., 2018 Annual
Boulder County Wages Total Wages, 4-Quarter Average $ Billions 14
1-Year Growth: 8.7%
13 12 11 10 9 8 7 6
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: Bureau of Labor Statistics, QCEW Data Series, NSA.
2014
2015
2016
2017
2018
2019
Boulder County Average Wages Trailing 4-Quarter Average 1-Year Growth: 6.3%
Annual Wage in Thousands
$70
$66
$62
$58
$54
$50
2010
2011
2012
2013
2014
2015
2016
Source: Bureau of Labor Statistics, QCEW Data Series, NSA. Based on data through Q2 2019.
2017
2018
2019
Average Annual Wages Front Range Counties $100,000 $90,000 $80,000 $70,000 $60,000
Colorado: $57,937
$50,000 $40,000 $30,000 $20,000 $10,000
Source: Bureau of Labor Statistics, QCEW, as of Q2 2019.
Median Price of Single Family Detached Homes Sold City of Boulder $1,000,000
1,100
$900,000
1,000 900
Dollars
$700,000
800
$600,000
700
$500,000
600
$400,000
500
$300,000
400
$200,000
300
$100,000 $0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Boulder Area Realtor Association. *YoY through Aug 2019. Excludes condos and townhomes.
200
Number of Homes Sold
$800,000
Commercial Vacancy Rates: City of Boulder 21
Office Warehouse
18
Flex Retail
Percent
15 12 9 6 3 0
2006
2007
2009
2010
2011
2012
2013
2014
Source: Newmark Grubb Knight Frank.
2015
2016
2017
2018
2019
Boulder County Value of Construction 1,600 1,400 1,200
Nonbuilding Nonresidential Residential
$ Millions
1,000 800 600 400 200 0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sources: McGraw-Hill Construction Dodge Research and Analytics.
2018 YTD Nov.
2019 YTD Nov.
Sales Tax Collections City of Boulder $ Millions, 12-Month Rolling Sum 120
100
Year to Date Growth Figures
80
60
City of Boulder
4.3%
Longmont*
3.6%
Broomfield
3.8%
Colorado
4.9%
40
20
0 2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Source: City of Boulder (October 2019), City of Longmont (October 2019) *Includes higher tax rate, City of Broomfield (September 2019), State of Colorado (December 2019).
Sales and Use Tax Collections City of Boulder, 12-Month Rolling Sum 160
Construction Use -14.8% YTD Consumer and Vehicle Use -8.4% YTD Sales +4.3% YTD
140
$ Millions
120 100 80 60 40 20 0 2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: City of Boulder, October 2018.
2014
2015
2016
2017
2018
2019
Venture Capital Investment City of Boulder $300 Sample 2019 Deals
$200 Millions
Inscripta ArcherDx JumpCloud PanTheryx Edgewise Therapeutics Techstars Stedi Anonos
$250
$150 $100 $50 $0
2007
2008
2009
2010
2011
2012
Source: CB Insights.
2013
2014
2015
2016
2017
2018
2019
Potential Headwinds International/National •
Global growth
•
Value of the dollar
•
Trade/tariffs
•
Election year
State and Local •
Talent shortage
•
Housing affordability
•
Commodity prices/cycle
•
Drought and weather
•
Real wage increases