ECONOMIC FORECAST BREAKFAST

LEADERSHIP IN A STARTUP ECONOMY

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2016 Outlook: Headwinds or Tailwinds?• South Metro Denver Economic Forecast

January 15, 2016

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

Natu

ral Increase

Net M

igration

State Employment Growth• Pre-Recession Peak to November 2015

Sources: Bureau of Labor Statistics (Seasonally Adjusted).

Colorado Employment Growth• Jobs Added, 1991-2016

-150

-100

-50

0

50

100

1991 1996 2001 2006 2011 2016

Thousands

65,100

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

Best years since 2000

Employment Recovery• National, 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

Source: Bureau of Labor Statistics (Seasonally Adjusted).

Employment Change• 2015-2016

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).

Construction

Value of Construction

Nonresidential

30%

Nonbuilding

14%

Residential

55%

Photo Courtesy www.rtd-fastracks.com

Housing Units vs. Households• Annual 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

Households Housing Units

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 Foreclosures• 2004-2015

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

Denver-Aurora-Lakewood

Percent

Colorado 12.7%

Q3 2014 – Q3 2015

0.0 1.0 2.0 3.0 4.0

Grand Junction

Colorado Springs

Pueblo

Greeley

Fort Collins

Boulder

Denver-Aurora-Lakewood

Percent

Colorado 2.5%

CAGR Q3 2005 – Q3 2015

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 Permits• 2006-2016

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 Construction• 2006-2016

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 General Fund• Gross 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.

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

Colorado Ranking Among Other StatesMetric 1-Year 3-Year 5-Year 10-Year

Real GDP Growth 5 3 9 9

Employment Growth 21 6 5 5

Population Growth 4 3 4 6

Personal Income Growth 7 1 3 9

PCPI Growth 9 12 23 29

PCPI 14 16 13 12

Average Annual Pay Growth 8 16 20 20

Average Annual Pay 13 12 12 12

Unemployment Rate 13 27 29 22

Labor Force 38 17 12 7

FHFA Home Price Index 1 5 6 4

Data Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, U.S. Census Bureau, Federal Housing Finance Agency, and the Colorado State Demography Office. BRD calculations. Note: 1-year, 3-year, and 5-year are based on the compound annual growth rate.

Colorado Economic IndicatorsColorado 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.

State Summary

• Colorado outperforms nation in employment growth

• 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

Thank You!

Startup Trends

Trends-Follow the Money

Trends-Health Care

Trends- International

Trends-CoWorking

Trends-Sharing Economy

Startup

Community

High Supply of Quality Companies

Incubators

Top 10 Metro Areas for High-Tech Startup Density

1. Boulder, Colo.

2. Fort Collins-Loveland, Colo.

3. San Jose-Sunnyvale-Santa Clara, Calif.

4. Cambridge-Newton-Framingham, Mass.

5. Seattle, Wash.

6. Denver, Colo.

7. San Francisco, Calif.

8. Washington-Arlington-Alexandria, DC-Va.-Md.

9. Colorado Springs, Colo.

10. Cheyenne, Wyo.

P2BInvestor – Colorado Success Story

P2BInvestor

Tax Incentives

Qualified Small Business Stock (QSBS), also known as “IRC Section 1202”

Internal Revenue Code (IRC) “Section 1244” of the federal tax code. This is the most important tip for most angel investors because IRC Section 1244 gives investors the ability to take an ordinary income deduction on losses rather than the standard capital loss deductions.

Trends - Investing

Crowdfunding

High Supply of Quality Companies Lots of out of State VC Investment

Newly Mobilizing Angels

Wall Street Journal Headlines: Bleak outlook for stocks in 2016

RVC Mission

Mission

The Rockies Venture Club is an angel investing

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Two Ways to Invest in Colorado Startups

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