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Business Research Division | Leeds School of Business | University of Colorado Boulder

Richard Wobbekind

Executive Director

Business Research Division

Leeds School of Business

2016 Outlook: Headwinds or Tailwinds?Boulder Economic Forecast

January 13, 2016


Real GDP GrowthQuarterly Real GDP

Source: Bureau of Economic Analysis and Consensus Forecasts.

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Percent Change, SAAR


Long Term Real GDP Growth Trend

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Q2 1967 Q2 1973 Q2 1979 Q2 1985 Q2 1991 Q2 1997 Q2 2003 Q2 2009 Q2 2015

Percent Change 20-Year Quarterly Moving Average

Source: Bureau of Economic Analysis, Real GDP.


National Employment

Sources: Bureau of Labor Statistics (Seasonally Adjusted), National Bureau of Economic Research, and the Business Research Division.

-900

-700

-500

-300

-100

100

300

500

2000 2002 2004 2006 2008 2010 2012 2014 2016

Thousands, Month-over-Month

Rec

essi

on 1

8 M

onth

s

Rec

essi

on 8

Mon

ths


State Employment GrowthPre-Recession Peak to November 2015

Source: Bureau of Labor Statistics (Seasonally Adjusted).


Labor Underutilization


0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

1994 1997 2000 2003 2006 2009 2012 2015

U-6

U-5U-4U-3

U-2

U-1

Percentage of Labor Force


9.6%

5.5%

3.9%3.3%

3.6%

0%

2%

4%

6%

8%

10%

12%

20-24 25-34 35-44 45-54 55-64

Unemployment Rate

Labor Force and Unemployment RateNational, by Age Cohort, November 2015

70.5%

80.7% 82.2%79.7%

64.3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

20-24 25-34 35-44 45-54 55-64

Labor Force Participation Rate

Source: Bureau of Labor Statistics, all data seasonally adjusted except for ages 55-64.


U.S. Income and Consumption

Source: Consensus Forecasts.

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

2006 2008 2010 2012 2014 2016

Percent Change

Real Personal Consumption

2.9%

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

2006 2008 2010 2012 2014 2016

Percent Change

Real Disposable Income

2.9%


Household WealthQ2 2000-Q2 2015

-20

0

20

40

60

80

100

Q1 2000 Q1 2003 Q1 2006 Q1 2009 Q1 2012 Q1 2015

$ Trillions

Mutual

Funds

Corporate

Equities

Real

Estate

Other

Assets

Total

Liabilities

Source: Federal Reserve Board, Balance Sheet of Households and Nonprofit Organizations (B100) (Not Seasonally Adjusted).


Household Debt BurdenPercent of Disposable Income

Source: Federal Reserve, Household Debt Service and Obligations Ratios.

13.0

14.0

15.0

16.0

17.0

18.0

19.0

20.0

8.0

9.0

10.0

11.0

12.0

13.0

14.0

15.0

1980Q1 1983Q3 1987Q1 1990Q3 1994Q1 1997Q3 2001Q1 2004Q3 2008Q1 2011Q3 2015Q1

FORDSR

Financial Obligations RatioDebt Service Ratio


0

20

40

60

80

100

120

140

160

1990 1992 1995 1997 2000 2002 2005 2007 2010 2012 2015

1985=100Recession

8 months

United States

Mountain Region

Index of Consumer Confidence

Recession

18 months

Source: The Conference Board and National Bureau of Economic Research.


Vehicle Sales and Retail Sales

0

5,000

10,000

15,000

20,000

25,000

2005 2007 2009 2011 2013 2015

Vehicle SalesThousands, SAAR

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

2005 2007 2009 2011 2013 2015

Retail and Food Services SalesYOY, Percentage Change

Source: Seasonally Adjusted Annual Rate, Autodata Corp., Motor Intelligence, U.S. Census Bureau.


Nominal Corporate Profits and U.S. Business Fixed Investment

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2006 2008 2010 2012 2014 2016

Percent Change

Nominal Pre-Tax Corporate Profits

Source: Bureau of Economic Analysis, Consensus Forecasts.

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

2006 2008 2010 2012 2014 2016

Percent Change

Business Fixed Investment

4.3%

3.3%


ISM Indices

Source: Institute for Supply Management (ISM).

30

35

40

45

50

55

60

65

70

2003 2005 2007 2009 2011 2013 2015

ISM Manufacturing Index

30

35

40

45

50

55

60

65

70

2003 2005 2007 2009 2011 2013 2015

ISM Non-Manufacturing Index


National FHFA Home Price GrowthYear over Year Q3 2015

Source: Federal Housing Finance Agency Home Price Index, All Transactions Index.


National Housing Starts

Sources: U.S. Census Bureau and Consensus Forecasts.

1.3

0.0

0.5

1.0

1.5

2.0

2.5

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Millions


Money, Interest Rates, and Prices


Interest Rates

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2000 2002 2004 2006 2008 2010 2012 2014 2016

Percent Interest Rates, 2000-2017 (Forecast)

10-Year Treasury

3-Month Treasury

Source: Moody’s


The FEDBalance Sheet, 2007-2015

• QE 1, QE 2, QE 3

• Fed promises near zero interest rates until mid-2013, 2014, 2015, 2016

• Operation Twist

• Swaps

• Tapering

• Tapering Complete

• Federal Funds Rate Increase?

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015

Other Assets

Mortgage BackedSecurities

Federal Agency DebtSecurities

Treasury Securities

$ Millions

Source: Federal Reserve Balance Sheet.


National Inflation

-0.03

-0.02

-0.01

0

0.01

0.02

0.03

0.04

0.05

0.06

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

All Items

All Items Less Food and Energy

Shelter

Percent

Source: Moody’s


International and National Summary

Global output and trade growth

Value of the dollar strengthening

GDP growth nearing potential

Balance sheets getting stronger

Rising (but low) interest rates

Subdued inflation


Colorado Economy


Change in Population

4th-fastest state for percentage growth

8th-fastest state for absolute growth

22nd-most populated state in nation

Continued net migration into the state

83% of population along Front Range

Source: Colorado Demography Office.

0

20

40

60

80

100

120

2004 2009 2014 2019 2024 2029 2034 2039

Thousands

Change in Colorado Population 2004-2040

Na

tura

l Incre

ase

Net M

igra

tion


Colorado Employment GrowthJobs Added, 1991-2016

-150

-100

-50

0

50

100

1991 1996 2001 2006 2011 2016

Thousands

65,100

Best years

since 2000

Source: Bureau of Economic Analysis, NIPA Table 3.18B, Consensus Forecasts.


Employment RecoveryNational, State, and Local

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

Percent

Number of Months Since Peak

National

Colorado

Colorado

Springs

Greeley

Ft. Collins-

Loveland

Pueblo

Grand

Junction

Boulder

Denver



Employment Change2015-2016

Natural Resources and Mining

Information

Other Services

Manufacturing

Financial Activities

Government

Leisure and Hospitality

Construction

Trade, Transportation, and Utilities

Education and Health Services

Professional and Business Services

-4.0 0.0 4.0 8.0 12.0 16.0Thousands of Jobs

Source: Boulder Economic Outlook Forum (BEOF).


0 2 4 6

Grand Junction

Colorado Springs

Pueblo

Boulder

Denver-Aurora-Lakewood

Greeley

Fort Collins

Percentage

Unemployment RateNovember 2015

Colorado 3.5% NSA,

3.6% SA

0 1 2 3 4 5

Grand Junction

Colorado Springs

Pueblo

Boulder


Greeley

Fort Collins

Percentage

Employment Growth Rate, November YoY

Colorado 1.8%

Regional Employment Growth and Unemployment

Sources: CES (Seasonally Adjusted) and LAUS (Not Seasonally Adjusted).


Construction

Value of Construction

Nonresidential

30%

Nonbuilding

14%

Residential

55%

Photo Courtesy www.rtd-fastracks.com


Housing Units vs. HouseholdsAnnual Change

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Housing Units

Households

Sources: Colorado State Demography Office.


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2003 2005 2007 2009 2011 2013 2015 YTD

Total State Foreclosures Over Time

Filings

Sales

Colorado Foreclosures2004-2015

Source: Colorado Division of Housing. 2015 data available through September.


Federal Housing Finance Agency (FHFA)House Price Index by MSA

Source: Federal Housing Finance Agency, All Transactions Indexes.

0.0 3.0 6.0 9.0 12.0 15.0

Grand Junction

Colorado Springs

Pueblo

Greeley

Fort Collins

Boulder


Percent

Q3 2014 – Q3 2015

0.0 1.0 2.0 3.0 4.0

Grand Junction

Colorado Springs

Pueblo

Greeley

Fort Collins

Boulder


Percent

CAGR Q3 2005 – Q3 2015

Colorado 12.7% Colorado 2.5%


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

36,750

Residential Building Permits2006-2016

Sources: U.S. Census Bureau and Colorado Business Economic Outlook Committee.

Multifamily

Single

Family

Residential Housing:

• Home appreciation among the fastest nationally

• Mostly single family permits in 2016

• Lowest foreclosure rate in two decades


Value of Construction2006-2016

Sources: McGraw-Hill Construction Dodge Research and Analytics and Colorado Business Economic Outlook Committee.

$16.8 B

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$ Millions

Nonbuilding

Residential

Nonresidential


Colorado Manufacturing Real GDP

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

5,000

10,000

15,000

20,000

25,000

2000 2002 2004 2006 2008 2010 2012 2014

Annual Percentage Change

Current US Dollars (Billions)

$19.8

Source: Bureau of Economic Analysis.


Electricity and Natural Gas Consumption

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2006 2008 2010 2012 2014 2016

Million kWhElectricity Consumption

2006-2016

54,262

0

100

200

300

400

500

600

2006 2008 2010 2012 2014 2016

Billion Cubic Feet

Natural Gas Consumption 2006-2016

481.8

Sources: Edison Electrical Institute Statistical Yearbook, Xcel Energy, and Colorado Business Economic Outlook Committee.


Retail Trade Sales

Sources: Colorado Department of Revenue and Colorado Business Economic Outlook Committee.

5.6

-15.0

-10.0

-5.0

0.0

5.0

10.0

2006 2008 2010 2012 2014 2016

Percent Change

Nominal Growth

Real Growth

Colorado Retail Trade Sales

2006-2016

50

55

60

65

70

75

80

85

90

95

2001 2003 2005 2007 2009 2011 2013 2015

Colorado Taxable Retail Sales12-Month Rolling Sum

12-Month Rolling Sum,

$ Millions

70 Months


Colorado General FundGross Revenue (excluding reserves, diversions, and transfers)

Source: Colorado Office of State Planning and Budgeting, excluding reserves, diversions, and transfers, December 2014.

6,000

6,600

7,200

7,800

8,400

9,000

9,600

10,200

10,800

11,400

12,000

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

$ Millions


Employment and New Entity Filings

60,000

65,000

70,000

75,000

80,000

85,000

90,000

95,000

100,000

105,000

110,000

2,100

2,150

2,200

2,250

2,300

2,350

2,400

2,450

2,500

2,550

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Employment, thousands 12-month total new entity filings

New Entity Filings

Employment

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.


Colorado Economic Indicators

Colorado Economic Indicators

Year

Consumer

Price

Inflation

Percent

Change

Retail Sales

Percent Change

Personal Income

Unemployment

Rate

Percent

Change

Employment

2013a 2.77 4.76 2.88 6.53 2.99

2014a 2.78 6.62 6.04 4.94 3.32

2015 0.22 5.38 5.07 4.08 2.94

2016 1.20 5.44 5.81 3.35 2.17

2017 2.29 7.00 6.92 3.71 2.55

2018 2.48 6.38 6.68 3.88 2.48

2019 2.55 4.50 5.08 3.95 1.85

2020 2.42 3.46 3.98 4.15 1.12

2021 2.38 3.42 3.86 4.37 1.16aHistorical data. Note: Represents annual averages of the month-to-month growth rate.


U.S. and Colorado Economies

25

30

35

40

45

50

55

60

65

70

75

Q12004

Q12005

Q12006

Q12007

Q12008

Q12009

Q12010

Q12011

Q12012

Q12013

Q12014

Q12015

Q12016

National and State Expectations

Colorado

United States

Index (50=Neutral)

Q1 2004 – Q1 2016


State Summary

Colorado outperforms nation in

employment growth

Energy Impact

Falling unemployment

Labor force pressures

Full employment

Growing population

Strong in-migration


Concerns

Fed funds target rate

Cost of housing

Availability of labor

Price of oil

El Niño

Median family income


Boulder County

Courtesy of the Regents of the University of Colorado.


Real Gross Domestic ProductBoulder MSA

-12.0%

-8.0%

-4.0%

0.0%

4.0%

8.0%

$0

$5,000

$10,000

$15,000

$20,000

$25,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Percentage ChangeMillions of Chained 2009 Dollars

Source: Bureau of Economic Analysis.


Boulder County

Educational Attainment

Adults over age 25 with a bachelor’s degree or higher

U.S. 30.1%

Colorado 38.3%

Boulder 58.0%

Adults over age 25 with a high school diploma or higher

U.S. 86.9%

Colorado 90.5%

Boulder 94.3%

Employment and Education, 2014

Management5% Business and

Financial7%

Computer and Mathematical

7%

Architecture and

Engineering 4%

Life Physical and Social

Science 4%

Education Training and

Library 7%

Arts Design Entertainment

Sports and Media

2%Healthcare Practitioners

and Technical 5%

Other59%

Employment by occupation

Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages; Census, 2014 American Community Survey 1-Year Estimates.


Boulder County

Manufacturing14%

Retail trade5%

Health Care & Social

Assistance10%

Information9%

Government15%

Professional & Technical

Services25%

Other24%

Wages by Industry

Employment and Wages, 2014

Manufacturing10.3%

Retail trade9.8%

Health Care & Social

Assistance11.8%

Information4.9%

Government16.1%

Professional & Technical

Services14.9%

Other32.1%

Employment by Industry

Sources: Bureau of Labor Statistics, Quarterly Census of Employment and Wages.


Non-Ag EmploymentBoulder MSA

145.0

150.0

155.0

160.0

165.0

170.0

175.0

180.0

185.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Thousands

55 Months

+10,300 jobs, 6.1%146 Months

Source: Bureau of Labor Statistics, CES (SA).


Boulder County Wages

$6,500

$7,000

$7,500

$8,000

$8,500

$9,000

$9,500

$10,000

$10,500

Q2 2003 Q4 2004 Q2 2006 Q4 2007 Q2 2009 Q4 2010 Q2 2012 Q4 2013 Q2 2015

$ Millions

Annual Rate (4Q Rolling)

Source: Bureau of Labor Statistics, QCEW Data Series, NSA.

+$1.7 B


Boulder County Average Wages

$40,000

$42,000

$44,000

$46,000

$48,000

$50,000

$52,000

$54,000

$56,000

$58,000

$60,000

Q2 2002 Q2 2004 Q2 2006 Q2 2008 Q2 2010 Q2 2012 Q2 2014

$ Millions

Annual Rate (4Q)

Source: Bureau of Labor Statistics, QCEW Data Series, NSA.

+13.1%


2014 Average Annual Wages

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

Dollars

Colorado: $52,724

Front Range

$59,858

Source: Bureau of Labor Statistics, QCEW.


Boulder MSA Employment Change1-Year Change, November 2015


Manufacturing


Information


Other Services

Mining, Logging, Construction



Government

-2,000 -1,500 -1,000 -500 0 500 1,000 1,500 2,000 2,500Jobs

1-Year Employment Growth

Source: Bureau of Labor Statistics, CES (NSA).


Boulder MSA Employment Change10-Year Change, November 2015

Manufacturing

Mining, Logging, Construction

Information


Other Services





Government

-2,000 0 2,000 4,000 6,000 8,000 10,000Jobs

Source: Bureau of Labor Statistics, CES (NSA).


Single Family v. Multifamily PermitsBoulder MSA, Year-to-Date through November 2015

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Permits

MultifamilySingle Family

Source: U.S. Census Bureau.

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2014YTD

2015YTD

Permits


Boulder

300

400

500

600

700

800

900

1,000

1,100

300,000

350,000

400,000

450,000

500,000

550,000

600,000

650,000

700,000

750,000

800,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*

Dollars Number of Homes Sold

Median Price of Single Family Homes Sold, Number of SF Homes Sold

Source: Boulder Area Realtor Association. *YoY through November 2014.


Commercial Vacancy Rates: City of Boulder

0

3

6

9

12

15

18

Q2

06

Q2

08

Q3

09

Q3

10

Q3

11

Q3

12

Q3

13

Q3

14

Q3

15

Office Warehouse

Flex Retail

Percent

Source: Newmark Grubb Knight Frank.


Boulder County Value of Construction

0

200

400

600

800

1,000

1,200

1,400

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$ Thousands

Value of Construction, Colorado 2003-2013

Nonbuilding

ResidentialNonresidential

0

200

400

600

800

1,000

1,200

1,400

2014 YTD 2015

November YTD2014-2015

$ Thousands

Sources: McGraw-Hill Construction Dodge Research and Analytics.


Retail Sales – State Collections

3.2

3.4

3.6

3.8

4.0

4.2

4.4

4.6

4.8

5.0

5.2

2005 2007 2009 2011 2013 2015

Boulder County Retail Sales,12-Month Rolling Sum$ Billions

Boulder County v. Colorado

Source: Colorado Department of Revenue.

100

105

110

115

120

125

130

135

140

145

150

155

2005 2007 2009 2011 2013 2015

Taxable Retail Sales

Colorado

Boulder County

Indexed


Venture Capital Investment

$0

$50

$100

$150

$200

$250

Q1

07Q

3 07

Q1

08Q

3 08

Q1

09Q

3 09

Q1

10Q

3 10

Q1

11Q

3 11

Q1

12Q

3 12

Q1

13Q

3 13

Q1

14Q

3 14

Q1

15Q

3 15

Boulder Quarterly VC FundingMillions

City of Boulder

Source: PwC/NVCA MoneyTree, Boulder County Business Report.

Software, 41.1%

Biotechnology, 39.3%

Consumer Products and

Services, 11.0%

Semiconductors, 8.6%

Boulder VC Industry Allocation


Thank You!

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