UTAH’S CURRENT ECONOMIC OVERVIEW April 2014 Mark Knold Supervising Economist Utah Department of...

UTAH’S CURRENT ECONOMIC OVERVIEW

April 2014

Mark Knold

Supervising Economist

Utah Department of Workforce Services

Eco

no

my

Anatomy of a Business Cycle

Time

Peak

Trough

Contraction Expansion

Recovery Prosperity

-14.5%-11.5%-11.4%

-9.9%-8.8%

-8.6%-8.6%-8.5%

-8.2%-8.0%-8.0%

-7.8%-7.8%-7.7%-7.7%-7.6%

-7.4%-7.4%

-6.9%-6.9%-6.8%-6.7%-6.6%-6.5%-6.4%-6.4%

-6.2%-6.0%-6.0%

-5.5%-5.5%

-5.0%-5.0%-4.9%-4.8%-4.8%

-4.6%-4.5%-4.4%-4.4%-4.3%-4.2%

-4.0%-3.6%-3.6%

-3.4%-3.2%

-3.0%-2.0%

-1.0%

NevadaFloridaArizonaMichiganCaliforniaIdahoSouth CarolinaOregonGeorgiaNorth CarolinaIndianaOhioDelawareTennesseeAlabamaRhode IslandHawaiiUtahIllinoisConnecticutWashingtonWyomingMississippiKentuckyColoradoNew JerseyMissouriWisconsinNew MexicoMinnesotaMarylandKansasArkansasVirginiaOklahomaNewMaineMontanaVermontPennsylvaniaMassachusettsIowaTexasLouisianaNew YorkNebraskaWest VirginiaSouth DakotaDCAlaskaNorth Dakota

State by State Employment Decline

Source: U.S. Bureau of Labor Statistics.

Peak to Trough Decline

Utah Employment % Change*1960 – 2013

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Source: U.S. Bureau of Labor Statistics, QCEW. Through December 2013. * Based on O-T-Y Not Seasonally Adjusted.

60 70 80 90 00 10

Average per year: 3.1%

Employment Change

Eco

no

my


Time

Peak

Trough


Recovery Prosperity

1.6%2.4%2.4%

2.8%2.8%

3.5%3.6%3.7%3.7%

4.0%4.0%4.0%4.2%4.2%4.3%4.4%4.4%4.4%4.6%4.8%4.9%4.9%5.0%

5.4%5.6%5.6%5.8%5.9%6.0%

6.4%6.4%

6.7%6.8%7.0%7.0%7.1%7.1%7.1%7.2%

7.5%7.6%7.8%7.9%7.9%

8.4%8.9%

9.6%10.8%

11.6%11.7%

New MexicoNew Jersey

MaineAlabama

MississippiPennsylvania

ArkansasConnecticut

West VirginiaNew

MissouriMarylandVermont

IllinoisRhode Island

LouisianaKansas

KentuckyWyoming

VirginiaWisconsin

AlaskaSouth Dakota

IowaHawaii

OhioNew YorkNebraska

North CarolinaGeorgia

DelawareMontana

South CarolinaIdaho

OregonDC

MassachusettsTennesseeMinnesota

ArizonaMichigan

IndianaNevadaFlorida

OklahomaWashington

ColoradoCalifornia

UtahTexas

North Dakota

State by State Employment Recovery

Source: U.S. Bureau of Labor Statistics; February 2014 Current Employment Statistics estimates.

From Recession Trough to Current

Eco

no

my


Time

Peak

Trough


Recovery Prosperity

-7.3%-5.1%-5.1%

-4.5%-4.4%-4.1%-4.0%-4.0%

-3.4%-3.0%-2.9%-2.7%-2.5%-2.5%-2.4%-2.4%-2.3%-2.3%-2.3%-2.1%-2.0%-1.9%-1.6%-1.4%-1.3%-1.1%-1.1%-1.0%-1.0%-0.9%

-0.5%-0.4%-0.3%

0.3%0.8%0.8%0.9%1.0%1.2%1.5%1.8%1.9%

2.3%2.5%2.6%

3.2%3.5%3.8%

4.9%7.2%

NevadaAlabamaArizona

New MexicoFlorida

New JerseyMississippi

Rhode IslandConnecticut

IllinoisMichigan

OhioMaineNorth

WyomingSouth

KentuckyIdaho

GeorgiaOregon

MissouriDelawareArkansas

HawaiiWisconsinTennessee

KansasNew

PennsylvaniaIndiana

VermontMaryland

VirginiaWest Virginia

LouisianaCalifornia

IowaMontana

MinnesotaWashington

New YorkSouth

NebraskaMassachuset

ColoradoOklahoma

UtahAlaska

DCTexas

North Dakota

State by State Recession Employment Rebound

Source: U.S. Bureau of Labor Statistics; February 2014 Current Employment Statistics estimates.

From Pre-Recession Peak Employment to Current Employment

1,020

1,070

1,120

1,170

1,220

1,270

1,320

00 01 02 03 04 05 06 07 08 09 10 11 12 13

Source: U.S. Bureau of Labor Statistics; March 2014

Thousands

Utah Employment2000 – 2013

Utah 16+ Population Estimate

1,900

1,920

1,940

1,960

1,980

2,000

2,020

2,040

2,060

2,080

Source: U.S. Bureau of Labor Statistics; January 2013, CPS Population Estimates

Thousands

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

1,400

1,450

00 01 02 03 04 05 06 07 08 09 10 11 12 13

Employment

Labor Force Growth

Source: U.S. Bureau of Labor Statistics; March 2014

66,000

Utah Employment2000 – 2013

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

UtahUS

UnemploymentU.S. and Utah

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 20130.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

WagesRate

Utah Avg. Wage Growth and Unemployment Rate1991 - 2013

Source: Utah Department of Workforce Services

Inverse Relationship

66

67

68

69

70

71

72

73

74

90 95 00 05 10

Utah Labor Force Percent Participation1990 – 2014

Percent

Source: U.S. Bureau of Labor Statistics; Local Area Unemployment Statistics

65

66

67

68

69

70

71

72

73

08 09 10 11 12 13 14

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Utah LFP and UnRate2008 – 2014

% LFP


Un Rate

Unemployment rate drops while LFP declines; Implies “discouragement” or missing opportunities

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

08 09 10 11 12 13 14

Labor Force Participation That Left*2008 – 2014

Source: U.S. Bureau of Labor Statistics; Local Area Unemployment Statistics* Diff between pre-recession level and recession

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

08 09 10 11 12 13 14

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Labor Force Participation That Left2008 – 2014


Unemployment rate drops while “discouragement” or missing opportunities increase

55

57

59

61

63

65

67

69

71

73

90 95 00 05 10

Utah Employment-to-Population Ratio1990 – 2014

Percent


60

62

64

66

68

70

72

08 09 10 11 12 13 14

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Utah Employment-to-Population Ratio2008 – 2014

% E-Pop


Un Rate

Unemployment rate decline not driven by employment gains

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

04 05 06 07 08 09 10 11 12 13 14

UnemploymentU.S. and Utah

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

04 05 06 07 08 09 10 11 12 13 14

Official Rate

Rate Holding Pre-Recession Variables

Unemployment Rate2004 - 2014

Note: Pre-recession variables is holding the labor force participation rate at pre-recession levels.

1,200,000

1,250,000

1,300,000

1,350,000

1,400,000

1,450,000

1,500,000

1,550,000

04 05 06 07 08 09 10 11 12 13 14

Actual CLF Potential CLF

Labor Force 2004 – 2014


92,000

66,000

20%

30%

40%

50%

60%

70%

80%

90%

16-19 20-24 25-34 35-44 45-54 55-64

2007

2011

2013

Source: U.S. Bureau of Labor Statistics

Change in Labor Force Participation Rate2007 – 2011

2007 - 2013

-20,000

-15,000

-10,000

-5,000

0

16-19 20-24 25-34 35-44 45-54 55-64

Change in Labor Force Participation2007 – 2011(blue)

2007 – 2013(gray)


3,186

38,817

17,088

19,259

1,696

6,751

15,388

0

3,812

2,402

0

1,969

7,803

8,078

18,096

3,195

5,997

30,460

23,555

13,461

2,844

13,447

Natural Resources

Construction

Manufacturing

Trade, Trans., Utilities

Information

Financial Activities

Education and Health

Government

Utah Nonfarm Industry Profile (Numeric Change)2007 - 2013

Prof., and Business

Leisure and Hospitality

Other Services

Source: U.S. Bureau of Labor Statistics, QCEW

Employment loss from pre-recession peak to recession low

Employment gain from recession low to September 2013

400,000

420,000

440,000

460,000

480,000

500,000

520,000

540,000

560,000

580,000

600,000

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Recession High Wage Industries Low Wage Industries

Source: Utah Dept. of Workforce Services; March 2014

The average wage for all industries is the dividing line between high-wage and low-wage.

Private Sector Employment in High Wage and Low Wage Industries 2000 - 2013

Employment

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

Recession High Wage Industries Low Wage Industries

Source: Utah Dept of Workforce Services; March 2014

The average wage for all industries is the dividing line between high-wage and low-wage.

Private Sector Employment % Chg. in High Wage and Low Wage Industries 2000 - 2012

Employment Change

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Utah

U.S.


Part-Time Employment in Utah1997 - 2012

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Utah

U.S.

Source: U.S. Bureau of Labor Statistics *% of part-time who would rather work full-time.

Would Rather Have Full-Time Employment in Utah*1997 - 2012

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 120.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

MenWomen

Women Have A Higher Propensity for Part-Time Employment1997 - 2012


Utah Data

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 120.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

MenWomen

Would Rather Have Full-Time Employment in Utah*1997 - 2012

Source: U.S. Bureau of Labor Statistics *% of part-time who would rather work full-time.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

MetroNon-Metro

Metro Areas Rebounding Faster Than the Non-Metro Areas2004 - 2013


2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

SLProvoOgden

Strong Rebound in the Provo Area2004 - 2013


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

0-19 20-49 50-249 250-499 500+

Source: U.S. Census Bureau, Local Employment Dynamics

Utah Employment by Establishment Employment Size

2000 – 2012 Avg.

Various Comments of United States Economic Forecast

U.S. Economic fundamentals continue to improve.U.S GDP growth of 2.5% - 2.7%.Unemployment lowering to around 6.5%.Employment growth of around 1.7%.Job gains frequently over 200,000 a month.Mortgage rates climbing toward 5.5%.Federal government fights less economically disruptive.FED stimulus of the economy easing (tapering), but not difficult to crank it back up.

Utah Commercial Real Estate experts are looking for a strong 2014

Sold $1.4 B in industrial investment in 2013. Expect to repeat in 2014.

Office absorption up, vacancies down, rents up, new construction.

Retail added 1M sq. ft. in 2013; looking for continued levels of activity.

Distribution looking for 1.9M new sq. ft. in 2014

Utah Expectation for 2014

Job growth from 3.5% to 3.8%.I expect 4.0% to 4.2% in 2015.I am an optimist.Base this on improved U.S. performance for 2014 and 2015.Unemployment will be low, but still masking the underutilization of Utah labor.Therefore, wage growth could still be below average.Normally in-migration would be a contributing factor, but could still be weak.

1,020

1,070

1,120

1,170

1,220

1,270

1,320

1,370

1,420

1,470

03 04 05 06 07 08 09 10 11 12 13 14 15

Source: Utah Department of Workforce Services; April 2014 f = forecast

Employment (000)

Utah Employment2003 – 2014f

Monthly

Forecast

8.0% Employment Growth Over Next Two Years

Where employment would need to be to keep up with labor force growth (assumes no in-migration).

Two-Year Forecast

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

0-19 20-49 50-249 250-499 500+

Utah Employment Growth by Establishment Employment Size

2010 – 2012 Avg.


0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

0-1 2-3 4-5 6-10 11+

Utah Employment by Establishment Age

2000 – 2012 Avg.


-5,000

0

5,000

10,000

15,000

20,000

0-1 2-3 4-5 6-10 11+

Utah Employment Growth by Establishment Age

2010 – 2012 Avg.


-29.7%

-16.9%

-16.3%

-13.7%

-9.5%

-8.4%

-8.2%

-7.9%

-7.0%

-6.8%

-4.5%

-3.9%

-3.4%

-3.3%

-3.0%

-2.0%

-2.0%

-1.8%

-1.3%

-0.9%

2.6%

2.8%

3.0%

3.5%

4.4%

6.7%

7.1%

8.4%

9.8%

Piute

Box Elder

Wayne

Rich

Emery

Carbon

Iron

Garfield

Sanpete

Daggett

Uintah

Washington

Tooele

Kane

San Juan

Juab

Sevier

Morgan

Weber

Millard

Cache

Wasatch

Summit

Salt Lake

Grand

Beaver

Davis

Utah

Duchesne

County by County Recession Employment Rebound

Source: U.S. Bureau of Labor Statistics, QCEW employment


Salt LakeWeber

WashingtonDavis

IronUtah

TooeleCache

WasatchJuab

Box ElderSanpete

WayneRich

KaneGrand

MorganSevier

CarbonGarfieldSummit

San JuanPiute

DaggettMillardBeaverEmeryUintah

Duchesne

Utah County-Level Hachman Indices2012

Source: Utah Dept. of Workforce Services

Diminishing Diversity

0.2 0.4 0.6 1.00.8

-20% -10% 0% 10% 20% 30% 40% 50% 60%0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

2003 – 2012 Employment Change

20

12

Ha

ch

ma

n I

nd

ex

Daggett

Beaver

Duchesne (0.1, 80%)

Carbon

Box Elder

Davis

Cache

Emery

Garfield

Grand

Iron

Juab

Sevier

Millard

Morgan

Piute

Rich

Salt Lake

San Juan

Sanpete

Kane

Summit

Tooele

Uintah

Utah

Wasatch

Washington

Weber

Wayne

2003 – 2012 County Employment Growth and Hachman Indices

-29.7%

-16.9%

-16.3%

-13.7%

-9.5%

-8.4%

-8.2%

-7.9%

-7.0%

-6.8%

-4.5%

-3.9%

-3.4%

-3.3%

-3.0%

-2.0%

-2.0%

-1.8%

-1.3%

-0.9%

2.6%

2.8%

3.0%

3.5%

4.4%

6.7%

7.1%

8.4%

9.8%

Piute

Box Elder

Wayne

Rich

Emery

Carbon

Iron

Garfield

Sanpete

Daggett

Uintah

Washington

Tooele

Kane

San Juan

Juab

Sevier

Morgan

Weber

Millard

Cache

Wasatch

Summit

Salt Lake

Grand

Beaver

Davis

Utah

Duchesne

County by County Recession Employment Rebound

Source: U.S. Bureau of Labor Statistics, QCEW employment


Low

High

High

Low

Low

High

Low

High

High

High

High

High

High

High

High

Source: U.S. Bureau of the Census

FemaleMale

Utah’s Population by Age and Sex: 2010

FemaleMale

U.S. Population by Age and Sex: 2010

Millions

Dominating the Labor Force

Stretching the economy to accommodate new workers

Stretching the economy to accommodate new workers

Worker Vacuum

Worker Vacuum

150,000 100,000 50,000 0 50,000 100,000 150,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85+

Population

15 10 5 0 5 10 15

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85+

Population

UTAH’S CURRENT ECONOMIC OVERVIEW April 2014 Mark Knold Supervising Economist Utah Department of...

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