Utah Economic Outlook

1
Utah Economic Outlook

• Beyond the Hype. . .

2
tsunami
Fears
Dives
GREAT DEPRESSION
Woes
Crater
Hammered
Slashes
Plummets
3
What is a Recession?

• The financial press says
• Two consecutive quarters of declining Gross
  Domestic Product.

4
It's a recession when your neighbor loses his
job it's a depression when you lose yours.

• Harry Truman

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U.S. Quarterly Percent Change in Real GDP
Source U.S. Bureau of Economic Analysis.
6
U.S. Annual Percent Change in GDP
Source U.S. Bureau of Economic Analysis.
7
U.S. Annual Percent Change in GDP
Source U.S. Bureau of Economic Analysis.
8
The Official Arbiter of Recessionary Periods. . .

• National Bureau of Economic Research
• Its a recession when they say it is.
• Primarily look at GDP.
• Real (inflation-adjusted) Personal Income less
  Transfer Payments
• Employment
• Industrial Production
• Volume of Sales of Manufacturing and
  Wholesale/Retail Sectors (adjusted for price
  changes)
• Monthly Estimates of GDP
• Usually decide 6-18 months after the beginning of
  a recessionoften when it is already over!

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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 compared to
  March 2007).
• Employment data is current and some of the best
  data around.
• Its easy.
• Available for small areas.
• Not what the Bureau of Labor publishes in their
  press release.

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Most Importantly. . .

• It works!
• When year-over growth rates trend down and
  eventually result in job loss, theres always a
  recession as defined by NBER.

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U.S. Year-Over Change in Nonfarm Jobs
Recessionary period as determined by the National
Bureau of Economic Research.
Source U.S. Bureau of Labor Statistics.
12
U.S. Year-Over Change in Nonfarm Jobs
Recessionary period as determined by the National
Bureau of Economic Research.
Source U.S. Bureau of Labor Statistics.
13
U.S. Year-Over Change in Nonfarm Jobs
Recessionary period as determined by the National
Bureau of Economic Research.
Source U.S. Bureau of Labor Statistics.
14
U.S. Year-Over Change in Nonfarm Jobs
Recessionary period as determined by the National
Bureau of Economic Research.
Source U.S. Bureau of Labor Statistics.
15
Recession Facts

• The last two U.S. recessions lasted eight months
  each.
• The two longest recessions in the Post World War
  II time period lasted 16 months each (November
  1973- March 1975 and July 1981-November 1982).
• The shortest Post World War II recession lasted
  only six months during 1980.
• The Great Depression lasted 43 months.
• The longest U.S. expansionary period in the
  NBERs dating history (back to 1854) lasted 120
  months from March 1991 to March 2001a full ten
  years.
• Since 1945, recessions have average 10 months
  expansions have averaged 57 months.
• In general recessions have moderated in the
  post-war period.
• The previous recession ended in November 2001.

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Year-Over Change In Nonfarm Jobs
Utah
U.S.
Source Utah Dept. of Workforce Services U.S.
Bureau of Labor Statistics.
17
Change in Nonfarm Jobs
Utah
U.S.
Source Utah Department of Workforce Services.
18
Why are we so gloomy about the economy?

• Financial Crisis
• Political Leaders
• Media Hype
• TMI
• Economics that hit our everyday lives
• High food prices.
• High gasoline prices.
• Problems in the housing market.

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Behavioral Economics. . .

• 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.

20
Behavioral Economics.

• Classic herd behaviors are at play, leading to
  many, many people taking measures like dumping
  stock, and lining up outside banks when they
  don't need to.
• 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 dont.

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Look at market fluctuations as your friend
rather than your enemy profit from folly rather
than participate in it.

• Warren Buffet

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Listen to Mom. . .

• If everyone else jumped off a cliff, would you
  jump off it too?

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When the masses get greedy, I get scared.

• Warren Buffet

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Reality Check. . .

• We are probably in a recession.
• Job losses arent over.
• Housing prices must adjust to a true market
  equilibriumthis will take time.
• Foreclosures
• Overbuilding
• Credit problems
• The market must atone for the excesses of the
  past few years.
• The government cannot save us from economic pain.

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"The world went mad. What we learn from history
is that people dont learn from history."

• Warren Buffet

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Unfortunately, the hangover may prove to be
proportional to the binge.

• Warren Buffet

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Theres no free lunch.

• Milton Friedman

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HOWEVER. . .Stop the Madness!

• There is nothing to suggest were headed for a
  depression.
• Gasoline prices are dropping.
• Food prices should follow.
• The economy will recover.
• Stock prices will come back.
• Illegal immigration?

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The Self-Fulfilling Prophecy

• If we believe were headed for a depression and
  act accordingly, we can exacerbate the current
  recession. . .

32
Utah Percent Change in Nonfarm JobsSeptember
2007-September 2008
Source Utah Department of Workforce Services.
33
Utah Numeric Change in Nonfarm JobsSeptember
2007-September 2008
Source Utah Department of Workforce Services.
34
Utah State Employment Growth Rates
3.3 average since 1960
Source Utah Department of Workforce Services
August 2008 f forecast
35
September 2007-September 2008(f)Change in
Nonfarm Jobs
(f) Forecast Source Utah Department of Workforce
Services U.S Bureau of Labor Statistics.
36
Utah New Hires Four-Qtr Moving Average
Source U.S. Census Bureau Local Employment
Dynamics Program.
37
Seasonally Adjusted Unemployment Rates
U.S.
Utah
Source U.S. Bureau of Labor Statistics.
38
September 2008Seasonally Adjusted Unemployment
Rates
Source Utah Department of Workforce Services
U.S Bureau of Labor Statistics.
39
Utah Permitted New Dwelling Units
Permits down 55 percent January to August 2008
compared with same period in 2007.Source Utah
Bureau of Business and Economic Research.
40
Utah New Residential Building Permit Valuation
Billions of
Residential values down 57 percent January to
August 2008 compared with same period in 2007.
Source Utah Bureau of Business and Economic
Research.
41
Utah New Nonresidential Building Permit Valuation
Billions of
Nonresidential values down 16 percent January
to August 2008 compared with same period in
2007. Source Utah Bureau of Business and
Economic Research.
42
Percent Change in Utah Total Permit Authorized
Construction Values
JanuaryAugust 2007 compared to January-August
2008 Source Utah Bureau of Business and Economic
Research.
43
Year-over Change in Housing Price Index (HPI)
Source Office of Federal Housing Enterprise
Oversight, http//www.ofheo.gov/hpi.aspx.
44
Year-over Change in Housing Price Index (HPI)
Source Office of Federal Housing Enterprise
Oversight, http//www.ofheo.gov/hpi.aspx.
45
Utah is in the Center of the Fastest Growing
Region in the Country
Percent Change in Population for States 2006 to
2007 U.S. Rate 1.0
NH 0.6
WA 1.7
ME 0.3
VT 0.2
MA 0.1
ND 0.2
MT 1.1
MN 0.8
NY 0.0
OR 1.7
RI -0.6
WI 0.5
SD 0.9
ID 2.6
MI -0.1
PA 0.3
WY 1.2
CT 0.1
IA 0.6
NE 0.6
OH 0.1
NJ 0.2
IL 0.5
IN 0.8
UT 2.4
NV 3.5
WV 0.2
VA 1.0
CO 1.9
MO 0.8
DE 1.4
KS 0.6
KY 0.8
CA 0.8
NC 2.1
TN 1.4
OK 1.0
AR 1.3
SC 1.7
MD 0.5
AZ 3.6
NM 1.5
GA 2.5
MS 0.1
AL 1.1
LA -4.9
TX 2.5
FL 1.8
AK 1.0
2.0 or more (More than Double the U.S. Rate)
HI 1.0
1.5 to 1.9
0.9 to 1.4 (At or Above the U.S. Rate)
lt 0.9
Source U.S Census Bureau
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Utah is in the Center of the Fastest Growing
Region in the Country
Percent Change in Population for States 1990 to
2006 U.S. Rate 20.4
NH
ME
WA
VT
MA
MT
ND
MN
OR
NY
RI
WI
ID
MI
SD
WY
CT
PA
IA
OH
NE
NJ
IN
NV
IL
UT
WV
VA
CO
DE
MO
CA
KS
KY
NC
TN
MD
SC
OK
AR
AZ
NM
GA
MS
AL
TX
LA
FL
AK
gt 40
HI
20 to lt40
10 to lt20
lt 10
Source U.S Census Bureau
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Employment Growth is Strongest In the Rocky
Mountain Region
Percent Change in Employment for States 1990 to
2006 U.S. Rate 24.4
NH
ME
WA
VT
MA
MT
ND
MN
OR
NY
RI
WI
ID
MI
SD
WY
CT
PA
IA
OH
NE
NJ
IN
NV
IL
UT
WV
VA
CO
DE
MO
CA
KS
KY
NC
TN
MD
SC
OK
AR
AZ
NM
GA
MS
AL
TX
LA
FL
AK
gt 40
HI
30 to lt40
20 to lt30
0 to lt20
Source U.S Census Bureau
48
For MOST states, the highest employment growth
occurred in the 70s.

• As Baby Boomers moved into the labor market. . .

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U.S. Population by Age and Sex 1960
Female
Male
Millions
Baby Boom Generation
Source U.S. Bureau of the Census
50
U.S. Population by Age and Sex 1970
Female
Male
Millions
Baby Boom Generation
Source U.S. Bureau of the Census
51
U.S. Population by Age and Sex 1980
Female
Male
Millions
Baby Boom Generation
Source U.S. Bureau of the Census
52
U.S. Population by Age and Sex 1990
Female
Male
Millions
Baby Boom Generation
Source U.S. Bureau of the Census
53
U.S. Population by Age and Sex 1960
Female
Male
Millions
Baby Boom Generation
Source U.S. Bureau of the Census
54
U.S. Population by Age and Sex 2005
Female
Male
Millions
Baby Boom Generation
Source U.S. Bureau of the Census
55
Population by Age and Sex 1960
U.S.
Utah
Female
Male
Female
Male
Millions
Baby Boom Generation
Source U.S. Bureau of the Census
56
Population by Age and Sex 1970
U.S.
Utah
Female
Male
Female
Male
Millions
Baby Boom Generation
Source U.S. Bureau of the Census
57
Population by Age and Sex 1980
U.S.
Utah
Female
Male
Female
Male
Millions
Baby Boom Generation
Source U.S. Bureau of the Census
58
Population by Age and Sex 1990
U.S.
Utah
Female
Male
Female
Male
Millions
Baby Boom Generation
Source U.S. Bureau of the Census
59
Population by Age and Sex 2000
U.S.
Utah
Female
Male
Female
Male
Millions
Baby Boom Generation
Source U.S. Bureau of the Census
60
Population by Age and Sex 2005
U.S.
Utah
Female
Male
Female
Male
Millions
Baby Boom Generation
Source U.S. Bureau of the Census
61
Population by Age and Sex 2005
U.S.
Utah
Female
Male
Female
Male
Worker Vacuum
Worker Vacuum
Millions
Dominating the Labor Force
Source U.S. Bureau of the Census
62
Net Domestic Migration 2000 - 2005
40,861
3,530
80,974
36,804
-236,415
18,933
-18,568
-16,768
77,821
14,595
-1,001,100
-165,084
-735
61,273
1,771
-34,273
-28,012
-41,140
-177,150
-26,206
-194,901
270,946
-391,031
-17,000
10,518
-33,822
47,740
103,521
27,912
26,979
-57,763
-64,460
32,169
232,448
109,707
115,084
9,752
-15,418
35,664
408,160
9,527
-10,578
232,666
10,521
218,722
-89,547
1,057,619
-4,619
Net Out Migration
-13,112
0 to 20,000 Net In Migration
20,000 to 100,000 Net In Migration
Over 100,000 Net In Migration
Source U.S Census Bureau
63
Net Migration Domestic and International 2000 -
2005
51,968
7,889
215,216
41,808
-73,741
21,074
-14,881
54,032
150,084
60,701
-334,093
3,222
-42,183
75,795
4,035
41,718
74,458
-11,754
-102,008
-4,007
95,293
337,043
-63,011
38,656
14,209
16,173
243,498
159,957
69,669
-19,541
59,604
751,419
390,672
159,680
151,485
118,724
21,128
57,611
576,238
37,501
75
425,510
36,457
881,883
-69,373
1,585,704
1,181
Net Out Migration
16,956
0 to 20,000 Net In Migration
20,000 to 100,000 Net In Migration
Over 100,000 Net In Migration
Source U.S Census Bureau
64
State of Utah Components of Population Change
Source Utah Population Estimates Committee
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Reality Check. . .

• We are probably in a recession.
• Job losses arent over.
• Unemployment will get higher.
• Construction will be particularly hard hit.
• Housing prices must adjust to a true market
  equilibriumthis will take time.
• Foreclosures
• Overbuilding
• Credit problems
• The market must atone for the excesses of the
  past few years.
• The government cannot save us from economic pain.

66
HOWEVER. . .

• There is nothing to suggest were headed for a
  depression.
• Gasoline prices are dropping.
• Food prices should follow.
• The economy will recover.
• Stock prices will come back.
• Utahs demographics give it an advantage for
  increased growth.

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Lets Talk Occupational Trends
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Economics 101

• Projections represent only DEMAND.
• Supply information is almost difficult to obtain.

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Utah Occupations with the Highest Employment 2006
Source Utah Department of Workforce Services.
70
Utah Occupations with Most Openings 2006-2016
Source Utah Department of Workforce Services.
71
Utah Major Occupational Groups with the
Highest Annual Average Openings, 2006 - 2016
Source Utah Department of Workforce Services.
72
OPENINGS come from two sources

• Growth
• Replacementindividuals leaving the occupation.

73
Utah Major Occupational Groups Annual Average
Growth, 2006-2016
Source Utah Department of Workforce Services.
74
Utah Fastest Growing Utah Occupations with 100 or
More Annual Openings, 2006 - 2016
Source Utah Department of Workforce Services.
75
Highest Paying Utah Occupations with 100 or More
Annual Openings, 2006 - 2016
Number of Annual Openings
Source Utah Department of Workforce Services.
76
Here and Across the Nation

• Medical/Healthcare
• Technical/Computer-Related

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The Baby Boomer Effect

• Boomers are getting older and will require more
  healthcare.
• Boomers are starting to retireincreasing demand
  for workers.

78
Computers and Technology

• Computers do more and more.
• Workers are needed to program, repair and design
  them.

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Bigger and Bigger. . .

• The share of jobs that require a Bachelors
  degree or higher is growing.

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And, Education Pays. . .
Usual Median Wage of U.S. Full-Time Workers 25
Years and Older
Source U.S. Bureau of Labor Statistics.
81
For more information

• jobs.utah.gov
• This presentationclick on Workforce
  Information then Publications
• Should be available within the next week.
• Lecia Parks Langston
• Regional Economist
• Utah Department of Workforce Services
• lecialangston_at_utah.gov
• 435-688-3115