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Slide 1: Washington County Economic Summit 2009
Slide 2: “In economics, the majority is always wrong.” “The conventional view serves to protect us from the painful job of thinking.” John Kenneth Galbraith
Slide 3: Consumer Confidence
Slide 4: U.S. Annual Percent Change in Real GDP 20% 15% 10% 5% * 0% -5% -10% -15% 1930 1937 1944 1951 1958 1965 1972 1979 1986 1993 2000 2007 Fourth Qtr 2007-Third Qtr 2008 compared to the previous four quarters. Source: U.S. Bureau of Economic Analysis.
Slide 5: U.S. Quarterly Percent Change in Real GDP 8% 7% 6% 5% 4% 3% 2% 1% 0% -1% -2% 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: U.S. Bureau of Economic Analysis. Most current four quarters compared Comparative year-ago quarters—up 1.9%
Slide 6: “It's a recession when your neighbor loses his job; it's a depression when you lose yours.” Harry Truman
Slide 7: My Not-So-Secret Formula  Year-Over Percent Change in Nonfarm Jobs.      “Year-over” change between one month and the same month the previous year. (March 2008 employment compared to March 2007 employment). Employment data is current and some of the best data around. It’s easy. Available for small areas. Not what the Bureau of Labor publishes in their press release—not seasonally adjusted.
Slide 8: Most Importantly. . .  It works!  Nationally, when year-over growth rates trend down and eventually result in job loss, there has always a recession as defined by NBER.
Slide 9: Employment Change During the Great Depression 50,000 45,000 40,000 35,000 30,000 25,000 20,000 27% Loss Peak to Trough 21% Loss Peak to Trough Total Employment Nonfarm Jobs 1929 1931 1933 1935 1937 Source: U.S. Bureau of Labor Statistics.
Slide 10: U.S. Year-Over Change in Nonfarm Jobs 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 Recessionary period as determined by the National Bureau of Economic Research. Source: U.S. Bureau of Labor Statistics.
Slide 11: U.S. Year-Over Change in Nonfarm Jobs 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 Recessionary period as determined by the National Bureau of Economic Research. Source: U.S. Bureau of Labor Statistics.
Slide 12: U.S. Year-Over Change in Nonfarm Jobs 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Recessionary period as determined by the National Bureau of Economic Research. Source: U.S. Bureau of Labor Statistics.
Slide 13: U.S. Year-Over Change in Nonfarm Jobs 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 19881990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Recessionary period as determined by the National Bureau of Economic Research. Source: U.S. Bureau of Labor Statistics.
Slide 14: Recessionary Employment Losses Using Annual Data -0.4% -2.4% -2.9% -4.8% -1.7% -1.8% -1.0% -1.4% -21.0% Source: U.S. Bureau of Labor Statistics. 19 29 -1 93 19 2 44 -1 94 19 5 53 -1 95 19 4 57 -1 95 8 19 60 -1 96 19 1 74 -1 97 19 5 81 -1 98 19 2 91 -1 99 20 2 02 -2 00 3
Slide 15: U.S. Unemployment Rates 25% 20% 15% 10% 5% 0% 1929 1936 1943 1950 1957 1964 1971 1978 1985 1992 1999 2006 Source: U.S. Bureau of Labor Statistics.
Slide 16: Other National Indicators
Slide 17: Other Indicators
Slide 18: Year-over Change in Real Manufacturing Sales 15% 10% 5% 0% 1993 1995 1997 1999 2001 2003 2005 2007 -5% -10% -15% Source: U.S. Bureau of Economic Analysis.
Slide 19: Year-over Change in Real Retail Sales 15% 13% 11% 9% 7% 5% 3% 1% -1% -3% -5% 1993 1995 1997 1999 Source: U.S. Bureau of Economic Analysis. Most of the decline in durable goods—particularly motor vehicles. 2001 2003 2005 2007
Slide 20: 10,000 15,000 20,000 25,000 30,000 5,000 0 1/3/1987 1/3/1988 1/3/1989 1/3/1990 1/3/1991 1/3/1992 1/3/1993 1/3/1994 1/3/1995 1/3/1996 1/3/1997 1/3/1998 1/3/1999 1/3/2000 1/3/2001 1/3/2002 1/3/2003 1/3/2004 1/3/2005 1/3/2006 1/3/2007 1/3/2008 Source: Utah Department of Workforce Services. Utah Unemployment Insurance Weeks Claimed
Slide 21: Utah Insured Unemployment Rate 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 1/3/1987 1/3/1989 1/3/1991 1/3/1993 1/3/1995 1/3/1997 1/3/1999 1/3/2001 1/3/2003 1/3/2005 1/3/2007 Source: Utah Department of Workforce Services.
Slide 22: Year-over Change in Consumer Price Index (All Urban Consumers) 6% 5% 4% 3% 2% 1% 0% Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008 Source: U.S. Bureau of Labor Statistics.
Slide 23: Year-over Change in Consumer Price Index for Gasoline (All Urban Consumers) 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008 Source: U.S. Bureau of Labor Statistics.
Slide 24: Population by Age and Sex: 2005 Utah 8 5+ 8 0 -8 4 75-79 70 -74 6 5-6 9 6 0 -6 4 55-59 50 -54 4 5-4 9 4 0 -4 4 3 5-3 9 3 0 -3 4 2 5-2 9 2 0 -2 4 15 - 19 10 - 14 5-9 0 -4 ( 15 0 , 0 0 0 ) ( 10 0 , 0 0 0 ) (5 0 ,0 0 0 ) 0 5 0 ,0 0 0 10 0 , 0 0 0 15 0 , 0 0 0 U.S. Female Stretching the economy to accommodate new workers 8 5+ 8 0 -8 4 75-79 70 -74 6 5 -6 9 6 0 -6 4 55-59 50 -54 4 5 -4 9 4 0 -4 4 3 5 -3 9 3 0 -3 4 2 5 -2 9 2 0 -2 4 15 - 19 10 - 14 5-9 0 -4 ( 15 ) ( 10 ) (5) 0 5 10 15 Male Stretching the economy to accommodate new workers Male Female Worker Vacuum Worker Vacuum Population Population Millions Dominating the Labor Force Source: U.S. Bureau of the Census
Slide 25: Other Indicators
Slide 26: Other Indicators
Slide 27: Why are we so gloomy about the economy?  Well, we are in a recession. . .  Financial Crisis  Political/Economic Leaders  Spin and TMI  Economics that hit our everyday lives:  High food/gasoline prices.  401ks have taken a hit.  Problems in the housing market.
Slide 28: Remember this. . .  Our brains have a negative bias.  We pay more attention to negative information than positive information.  Laws of supply and demand cause the media to play into that bias.
Slide 29: Behavioral Economics  Classic herd behaviors are can come into play, leading to many, many people taking measures like dumping stock, and lining up outside banks when they don't need to. (Or investing in a bubble housing market.)  These behaviors can actually exacerbate the problems for everyone, causing tornado-like spirals that suck in even wider swaths of people.  We think the “herd” knows more than we do. . .when they really don’t.
Slide 30: Listen to Mom. . . If everyone else jumped off a cliff, would you jump off it too?
Slide 31: “We have always known that heedless self-interest was bad morals; we now know that it is bad economics.” Franklin Delano Roosevelt
Slide 32: Reality Check. . .  We are in a recession.  Job losses aren’t over.  Housing prices must adjust to a true market equilibrium—this will take time. Housing bubbles collapse slowly.    Foreclosures Overbuilding Credit problems  The market will make us atone for the excesses of the past few years.  The government cannot save us from economic pain.
Slide 33: “Men have been swindled by other men on many occasions. The autumn of 1929 was, perhaps, the first occasion when men succeeded on a large scale in swindling themselves.” John Kenneth Galbraith
Slide 34: HOWEVER. . .  There is nothing in the data to suggest we’re headed for a great depression.  Our economy is different; government safety-nets have evolved —we understand the economy somewhat better.  Gasoline prices have dropped; food prices should follow— increase in purchasing power.  Out-migration of undocumented workers may provide a buffer.  Demographics mean we don’t need as many new jobs nationally; more workers per family.  Banks freeing up credit to each other and the public.  Housing is now more affordable.  The economy will recover.  Stock prices will come back.
Slide 35: The Self-Fulfilling Prophecy  If we believe we’re headed for a “great depression” and act accordingly, we can exacerbate the current recession. . .  Currently, the economy is being driven by panic and fear rather than reality.  Remember that to work properly, markets must present both the possibility of profit and LOSS.
Slide 36: Expectations and the Jobless Recovery 3% March 19, 2003 2% 1% 0% -1% -2% 1999 Year-over Growth in U.S. Nonfarm Jobs 2000 2001 2002 2003 2004 2005 2006 2007 Source: U.S. Bureau of Labor Statistics.
Slide 37: “The stock market and economy are two different things.” Milton Friedman
Slide 38: Annual Population Change 12% 10% 8% 6% 4% 2% 0% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Utah Washington County Source: Utah Population Estimates Committee.
Slide 39: Population Change 2007-2008 Uintah Rich Piute Morgan Wasatch Summit Juab Duchesne Utah Garfield Kane Iron Tooele Washington San Juan Cache Box Elder Grand State of Utah Davis Sanpete Weber Emery Salt Lake Millard Beaver Sevier Carbon Wayne Daggett 5.7% 5.4% 4.5% 4.1% 4.1% 4.0% 4.0% 3.7% 3.6% 3.5% 3.5% 3.4% 3.0% 2.7% 2.7% 2.6% 2.6% 2.2% 2.2% 2.0% 1.9% 1.7% 1.4% 1.1% 1.0% 0.9% 0.9% 0.6% 0.1% -0.5% In 2007, Washington County was the second-fastest growing county in Utah. Source: Utah Population Estimates Committee.
Slide 40: Washington County Net Migration 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 1980 1985 1990 1995 2000 2005 Source: Utah Population Estimates Committee.
Slide 41: Migration of Washington County Residents 85,500 90,436 103,028 Did Not Move Moved Within Washington County Moved from Other Utah Counties Moved from Other States Moved From Abroad 18,100 14,796 16369 4,900 9,180 3458 2004-2005 2005-2006 2006-2007 5,600 6,937 7866 1,300 1,546 366 Source: U.S. Census Bureau, American Community Survey.
Slide 42: Year-Over Change in Nonfarm Jobs 12% 11% 10% 8% 7% 6% 5% 4% 2% 1% 0% -1% -2% -4% -5% -6% -7% Jul Washington County Jan 2006 Jul Jan 2007 Jul Jan 2008 Jul Source: Utah Department of Workforce Services.
Slide 43: Year-Over Change in Nonfarm Jobs 12% Washington County 11% 10% 9% 8% 7% 6% 5% 4% Utah 3% United States 2% 1% 0% -1% -2% -3% -4% -5% -6% -7% Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 2006 2007 2008 Source: Utah Department of Workforce Services; U.S. Bureau of Labor Statistics.
Slide 44: Nonfarm Job Growth 20% Washington County 15% 10% 5% 0% -5% Source: Utah Department of Workforce Services; U.S. Bureau of Labor Statistics. Utah U.S. 19 90 19 91 19 92 19 9 19 3 9 19 4 95 19 96 19 97 19 98 19 99 20 0 20 0 0 20 1 02 20 03 20 04 20 05 20 06 20 0 20 7 08 f
Slide 45: Washington County Nonfarm Job Growth 20% Down roughly 1,900 jobs in 2008—3.5% 15% 10% 5% 0% -5% 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 Source: Utah Department of Workforce Services.
Slide 46: Washington County Construction Employment 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2001 2002 2003 2004 2005 2006 2007 2008 Source: Utah Department of Workforce Services.
Slide 47: Washington County Year-Over Change in Construction Employment 30% 20% 10% 0% -10% -20% -30% -40% 2002 2003 2004 2005 2006 2007 2008 Source: Utah Department of Workforce Services.
Slide 48: Washington Industry Year-Over Job Change September 2007 Mining Construction Manufacturing Wholesale Trade Retail Trade Transportation Utilities Information Financial Activities Prof/Business Svcs Education/Health/Social Svcs Leisure/Hospitality Other Services Government Source: Utah Dept of Workforce Services. 65 -7 39 97 293 -33 12 -62 -24 354 326 79 26 264
Slide 49: Washington Industry Year-Over Job Change September 2008 Mining Construction Manufacturing Wholesale Trade Retail Trade Transportation Utilities Information Financial Activities Prof/Business Svcs Education/Health/Social Svcs Leisure/Hospitality Other Services Government Source: Utah Dept of Workforce Services. -46 -2,832 -163 -15 -284 -17 7 26 -165 -286 343 -153 -71 439 Down 3,200 jobs total
Slide 50: Percent Change in Washington County Nonfarm Jobs by Industry; September 2007 – September 2008 Total -6% -15% -33% -5% -1% -4% -1% 8% 3% -7% -7% 5% -2% -5% 7% Mining Construction Manufacturing Wholesale Trade Retail Trade Transportation/Warehousing Utilities Information Financial Activities Prof/Business Svcs Ed/Health/Social Svcs Leisure/Hospitality Other Services Government Source: Utah Department of Workforce Services.
Slide 51: Washington County New Hires and Separations—Four-Qtr Moving Average 14,000 13,000 12,000 11,000 10,000 9,000 8,000 2001 New Hires Separations 2002 2003 2004 2005 2006 2007 Source: U.S. Census Bureau; Local Employment Dynamics Program.
Slide 52: Seasonally Adjusted Unemployment Rates 7% 6% 5% 4% 3% 2% Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov 2005 2006 2007 2008 Washington Source: Utah Department of Workforce Services. Utah U.S.
Slide 53: Annual Unemployment Rates 8% 7% 6% 5% 4% 3% 2% 1990 U.S Utah Washington 1992 1994 1996 1998 2000 2002 2004 2006 2008 Source: Utah Department of Workforce Services; U.S. Bureau of Labor Statistics.
Slide 54: Washington County Private Sector Unemployment Insurance Weeks Claimed with No Earnings – November 2008 Covered Agriculture Mining Construction Manufacturing Wholesale Trade Retail Trade Transportation/Warehousing Utilities Information Financial Activities Prof/Business Svcs Ed/Health/Social Svcs Leisure/Hospitality Other Services 13 57 96 2 9 61 194 46 23 175 144 5 1 319 Total up 250% from November 2007 Source: Utah Department of Workforce Services.
Slide 55: Growth in Washington County Average Monthly Wage 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% *First two quarters of 2008. Source: Utah Department of Workforce Services. 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 0 20 7 08 *
Slide 56: Washington County Average Monthly Wage As a Percent of State 75% 75% 74% 76% 79% 80% 79% 78% 78% 78% 77% 78% 78% 76% 76% 76% 77% 77% 1990 1992 1994 1996 1998 2000 2002 2004 2006 Source: Utah Department of Workforce Services.
Slide 57: “Unfortunately, the hangover may prove to be proportional to the binge.” Warren Buffet
Slide 58: Percentage of Residential Mortgage Loans Delinquent for 90–plus Days; 2nd Quarter 2008 2.00% or higher Box Elder 1.35% Cache Rich 1.45% 1.50% to 1.99% 1.00% to 1.49% Tooele 1.87% Less than 1.00% Weber 1.78% State Average = 3.2% Davis Morgan 1.13% Daggett Summit Salt Lake 0.58% 1.57% Wasatch 1.99% Duchesne Uintah Utah 1.05% 0.99% 1.62% Juab 2.2% Sanpete 1.35% Sevier 1.55% Beaver 1.34% Iron 2.37% Piute Carbon 1.08% Millard 1.08% Emery 1.18% Grand 1.53% Wayne Garfield San Juan 3.19% Kane Source: NY Federal Reserve Bank; Trans Union, LLC. Washington 2.75%
Slide 59: Foreclosure Rate Estimates; June 2008 Box Elder 2.5% Cache Rich 1.5% 0.4% 3.50% or higher 3.00% to 3.49% 2.00% to 2.99% 1.00% to 1.99% Tooele 3.7% Weber 3.3% Less than 1.00% Davis Morgan 2.2% 1.3% Summit Daggett 1.7% 0.9% Salt Lake 2.8% Wasatch Duchesne 2.2% Uintah Utah 3.0% 3.5% 2.5% Carbon 3.1% Sanpete 3.5% Sevier 2.7% Juab 3.5% Millard 3.0% Emery 2.7% Grand 1.5% Beaver 3.3% Iron 2.6% Piute 1.1% Garfield 3.0% Wayne 0.5% Source: U.S. Department of Housing and Urban Development. San Juan 3.4% Washington 3.5% Kane 1.6%
Slide 60: Year-over Change in MSA Area Housing Price Index (HPI) 50 40 30 Percent Change St. George Salt Lake Las Vegas 20 10 0 -10 -20 -30 1988 1991 1994 1997 2000 2003 2006 Source: Office of Federal Housing Enterprise Oversight, http://www.ofheo.gov/hpi.aspx.
Slide 61: Year-over Change in Housing Price Index (HPI) Compared to Annual Change in Average Monthly Wage 30% 25% 20% 15% 10% 5% 0% -5% Avg Monthly Wage HPI 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Source: Office of Federal Housing Enterprise Oversight, Utah Department of Workforce Services.
Slide 62: “There are two times in a man's life when he should not speculate: when he can't afford it, and when he can.” Mark Twain
Slide 63: Housing Affordability is Improving 60 50 40 30 20 10 0 1st 2nd Qtr Qtr 2006 3rd Qtr 4th Qtr 1st 2nd Qtr Qtr 2007 3rd Qtr 4th Qtr 1st 2nd Qtr Qtr 2008 3rd Qtr Housing Opportunity Index—% of homes which are affordable to families with the median income. Washington County Source: National Association of Homebuilders; Wells Fargo Bank. U.S.
Slide 64: Washington County Dwelling Unit Permits 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 * 19 94 Lowest number since 1989. . . *Forecast based on January-November data. Source: U of U; Utah Bureau of Economic and Business Research.
Slide 65: Annual Change in Washington County New Dwelling Unit Permits 80% 60% 40% 20% 0% -20% -40% -60% -80% 92 00 02 04 *January-November 2007 compared to January-November 2008. Source: Utah Department of Workforce Services. 20 0 20 7 08 * 93 94 95 96 97 98 99 01 03 05 19 19 19 19 19 20 20 20 20 20 20 20 19 19 19 06
Slide 66: Percent Change in Washington County Total Permit Authorized Construction Values 100% 80% 60% 40% 20% 0% -20% -40% -60% 1992 1994 1996 1998 2000 2002 2004 2006 2008* *January–November 2007 compared to January-November 2008 Source: Utah Bureau of Business and Economic Research.
Slide 67: Change in Number of Washington County Homes Sold 50% 40% 30% 20% 10% 0% -10% -20% -30% *Third Qtr 2008 compared to Third Qtr 2007. Source: Utah Association of Realtors. Inventory of homes for sale is slowly shrinking 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08
Slide 68: Washington County New Residential Building Permit Valuation $604.1 Lowest number since 1989. . . $458.2 Millions of $ $316.4 $235.4 $157.0 $164.5 $178.7 $188.6 $411.8 $351.2 $136.3 $125.0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008* *Forecast based on January – November data. Source: Utah Bureau of Business and Economic Research.
Slide 69: 2007-2008* Washington County Change in Permitted New Dwelling Units by Community Enterprise Hurricane Ivins LaVerkin Leeds Santa Clara Springdale St. George Virgin Washington City Other Total -69% -78% -68% -46% -66% -92% 160% -83% 67% -75% -63% -49% *January-November. Source: Utah Bureau of Business and Economic Research.
Slide 70: Washington County New Nonresidential Building Permit Valuation $176.9 Millions of $ $118.2 $109.6 $107.5 $143.4 $120.0 $84.8 $75.2 $51.7 $32.0 $16.1 $30.7 $37.4 $39.6 $43.6 $68.9 $44.3 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008* *Forecast based on January - November. Source: Utah Bureau of Business and Economic Research.
Slide 71: Washington County Change in Gross Taxable Sales 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% 3rd Qtr 2005 4th Qtr 1st Qtr 2006 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2007 2nd Qtr 3rd Qtr 1st Qtr 2008 2nd Qtr 25% 21% 21% 13% 7% Big declines in building/garden, furniture and auto sales. 3% 0% -4% -3% -3% -14% -17% 3rd Qtr Source: Utah State Tax Commission.
Slide 72: Washington County Change in Car/Light Truck Sales 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% 1st Qtr 2002 1st Qtr 2003 1st Qtr 2004 1st Qtr 2005 1st Qtr 2006 1st Qtr 2007 1st Qtr 2008 Source: Utah State Tax Commission.
Slide 73: When will the recession end?
Slide 74: Economists are pessimists: they've predicted eight of the last three recessions. Isn't it strange? The same people who laugh at gypsy fortune tellers take economists seriously. The only function of economic forecasting is to make astrology look respectable. John Kenneth Galbraith
Slide 75: In Washington County. . . Job losses should bottom-out in 1st Qtr 2009. Higher unemployment likely in 2009. Housing market adjustment will take longer. Market correction related to U.S. recovery.
Slide 76: Softening Effects . . . Out-migration of undocumented workers Lower prices boosts disposable income. Economic Stimulus Package; confidence. Different economy; different demographics.
Slide 77: Cautionary Tales . . . Panic could continue to drive economy. Housing bubbles collapse slowly. Stimulus package may be timed poorly.
Slide 78: Watch the Indicators for a turnaround!!!
Slide 79: Check out our Website:  jobs.utah.gov  Click on “Economic Information”  Click on “County Info”
Slide 80: What’s Available? Quarterly Newsletters Wage Data Economic/Demographic Profile Fact Sheets Economic Events Largest Employers Links to Other Data Sources Unemployment Rates
Slide 81: This presentation. . .  Will be available for download on our website.  jobs.utah.gov   Click on “Economic Information” Then. . . “Publications”  Lecia Parks Langston  lecialangston@utah.gov  688-3115