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Report on the State of the Economy at the beginning of 2009 presented to the Washington County (Utah) Economic Summit.
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Washington CountyEconomic Summit 2009
“In economics, the majority is always wrong.”
“The conventional view serves to protect us from the painful job of
thinking.” John Kenneth Galbraith
Consumer Confidence
U.S. Annual Percent Change in Real GDP
-15%
-10%
-5%
0%
5%
10%
15%
20%
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.
*
U.S. Quarterly Percent Change in Real GDP
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
2000 2001 2002 2003 2004 2005 2006 2007 2008Source: U.S. Bureau of Economic Analysis.
Most current four quarters comparedComparative year-ago quarters—up 1.9%
“It's a recession when your neighbor loses his job; it's a depression when
you lose yours.”
Harry Truman
My Not-So-Secret Formula
Year-Over Percent Change in Nonfarm Jobs.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.
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.
Source: U.S. Bureau of Labor Statistics.
20,000
25,000
30,000
35,000
40,000
45,000
50,000
1929 1931 1933 1935 1937
Total Employment Nonfarm Jobs
Employment Change During the Great Depression
21% Loss Peak to Trough
27% Loss Peak to Trough
U.S. Year-Over Change in Nonfarm Jobs
Source: U.S. Bureau of Labor Statistics.
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
1950 1952 1954 1956 1958 1960 1962 1964 1966 1968
Recessionary period as determined by the National Bureau of Economic Research.
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988
U.S. Year-Over Change in Nonfarm Jobs
Source: U.S. Bureau of Labor Statistics.
Recessionary period as determined by the National Bureau of Economic Research.
U.S. Year-Over Change in Nonfarm Jobs
Source: U.S. Bureau of Labor Statistics.
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Recessionary period as determined by the National Bureau of Economic Research.
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 20101970 1972 1974 1976 1978 1980 1982 1984 1986 1988-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
1950 1952 1954 1956 1958 1960 1962 1964 1966 1968
U.S. Year-Over Change in Nonfarm Jobs
Source: U.S. Bureau of Labor Statistics.
Recessionary period as determined by the National Bureau of Economic Research.
Recessionary Employment Losses Using Annual Data
-21.0%
-4.8%
-2.4% -2.9%-0.4%
-1.7% -1.8% -1.0% -1.4%
Source: U.S. Bureau of Labor Statistics.
U.S. Unemployment Rates
0%
5%
10%
15%
20%
25%
1929 1936 1943 1950 1957 1964 1971 1978 1985 1992 1999 2006
Source: U.S. Bureau of Labor Statistics.
Other National Indicators
Other Indicators
Year-over Change in Real Manufacturing Sales
-15%
-10%
-5%
0%
5%
10%
15%
1993 1995 1997 1999 2001 2003 2005 2007
Source: U.S. Bureau of Economic Analysis.
Year-over Change in Real Retail Sales
-5%-3%
-1%1%
3%5%7%
9%11%
13%15%
1993 1995 1997 1999 2001 2003 2005 2007
Source: U.S. Bureau of Economic Analysis.
Most of the decline in durablegoods—particularly motor vehicles.
Utah Unemployment Insurance Weeks Claimed
0
5,000
10,000
15,000
20,000
25,000
30,000
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 Insured Unemployment Rate
0
0.5
1
1.5
2
2.5
3
3.5
4
4.51/3
/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.
Year-over Change in Consumer Price Index (All Urban Consumers)
0%
1%
2%
3%
4%
5%
6%
Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008
Source: U.S. Bureau of Labor Statistics.
Year-over Change in Consumer Price Index for Gasoline (All Urban Consumers)
-40%-30%
-20%-10%
0%10%20%
30%40%
50%60%
Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008
Source: U.S. Bureau of Labor Statistics.
Stretching the economy to accommodate new workers
Stretching the economy to accommodate new workers
(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
Source: U.S. Bureau of the Census
(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
FemaleMale FemaleMale
Millions
Dominating the Labor Force
Worker Vacuum
Worker Vacuum
Population by Age and Sex: 2005
U.S.Utah
Other Indicators
Other Indicators
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.
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.
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.
Listen to Mom. . .
If everyone else jumped off a cliff, would you jump off it too?
“We have always known that heedless self-interest was bad morals; we now know that it is
bad economics.”
Franklin Delano Roosevelt
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.
“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
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.
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.
Expectations and the Jobless Recovery
-2%
-1%
0%
1%
2%
3%
1999 2000 2001 2002 2003 2004 2005 2006 2007
Year-over Growth in U.S.Nonfarm Jobs
Source: U.S. Bureau of Labor Statistics.
March 19, 2003
“The stock market and economy are two different
things.”
Milton Friedman
Source: Utah Population Estimates Committee.
0%
2%
4%
6%
8%
10%
12%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Annual Population Change
Washington County
Utah
Population Change 2007-2008
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%
UintahRichPiute
MorganWasatchSummit
JuabDuchesne
UtahGarfield
KaneIron
TooeleWashington
San JuanCache
Box ElderGrand
State of UtahDavis
SanpeteWeberEmery
Salt LakeMillardBeaverSevier
CarbonWayne
DaggettSource: Utah Population Estimates Committee.
In 2007, Washington Countywas the second-fastest growingcounty in Utah.
Washington County Net Migration
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1980 1985 1990 1995 2000 2005
Source: Utah Population Estimates Committee.
85,500
18,100
4,900
5,600
1,300
90,436
14,796
6,937
1,546
16369
3458
7866
366
9,180
103,028
Did Not Move
Moved WithinWashington
County
Moved from OtherUtah Counties
Moved from OtherStates
Moved FromAbroad
2004-2005
2005-2006
2006-2007
Source: U.S. Census Bureau, American Community Survey.
Migration of Washington County Residents
-7%-6%-5%-4%-2%-1%0%1%2%4%5%6%7%8%
10%11%12%
Jul Jan 2006 Jul Jan 2007 Jul Jan 2008 Jul
Year-Over Change in Nonfarm Jobs
Washington County
Source: Utah Department of Workforce Services.
-7%-6%-5%-4%-3%-2%-1%0%1%2%3%4%5%6%7%8%9%
10%11%12%
Jul Oct Jan2006
Apr Jul Oct Jan2007
Apr Jul Oct Jan2008
Apr Jul Oct
Year-Over Change in Nonfarm Jobs
Washington County
Source: Utah Department of Workforce Services; U.S. Bureau of Labor Statistics.
UtahUnited States
Nonfarm Job Growth
Source: Utah Department of Workforce Services; U.S. Bureau of Labor Statistics.
-5%
0%
5%
10%
15%
20%
Washington County
Utah
U.S.
Washington County Nonfarm Job Growth
Source: Utah Department of Workforce Services.
-5%
0%
5%
10%
15%
20%
1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008
Down roughly 1,900 jobs in 2008—3.5%
Washington County Construction Employment
Source: Utah Department of Workforce Services.
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2001 2002 2003 2004 2005 2006 2007 2008
Washington County Year-Over Change in Construction Employment
Source: Utah Department of Workforce Services.
-40%
-30%
-20%
-10%
0%
10%
20%
30%
2002 2003 2004 2005 2006 2007 2008
Washington Industry Year-Over Job ChangeSeptember 2007
65
-7
97
293
-33
12
-62
354
326
79
26
264
-24
39
Mining
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation
Utilities
Information
Financial Activities
Prof/Business SvcsEducation/Health/Social
SvcsLeisure/Hospitality
Other Services
Government
Source: Utah Dept of Workforce Services.
Washington Industry Year-Over Job ChangeSeptember 2008
-46
-2,832
-15
-284
-17
7
26
-286
343
-153
-71
439
-165
-163
Mining
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation
Utilities
Information
Financial Activities
Prof/Business SvcsEducation/Health/Social
SvcsLeisure/Hospitality
Other Services
Government
Source: Utah Dept of Workforce Services.
Down 3,200 jobs total
Percent Change in Washington County Nonfarm Jobs by Industry;
September 2007 – September 2008
Source: Utah Department of Workforce Services.
7%
-5%
-2%
5%
-7%
-7%
3%
8%
-1%
-4%
-1%
-5%
-33%
-15%
-6%
Government
Other Services
Leisure/Hospitality
Ed/Health/Social Svcs
Prof/Business Svcs
Financial Activities
Information
Utilities
Transportation/Warehousing
Retail Trade
Wholesale Trade
Manufacturing
Construction
Mining
Total
Washington County New Hires and Separations—Four-Qtr Moving Average
8,000
9,000
10,000
11,000
12,000
13,000
14,000
2001 2002 2003 2004 2005 2006 2007
New Hires Separations
Source: U.S. Census Bureau; Local Employment Dynamics Program.
2%
3%
4%
5%
6%
7%
Nov Feb2005
MayAugNov Feb2006
MayAugNov Feb2007
MayAugNov Feb2008
MayAugNov
Washington Utah U.S.
Seasonally Adjusted Unemployment Rates
Source: Utah Department of Workforce Services.
Annual Unemployment Rates
Source: Utah Department of Workforce Services; U.S. Bureau of Labor Statistics.
2%
3%
4%
5%
6%
7%
8%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
U.S
Washington
Utah
Washington County Private Sector Unemployment Insurance Weeks Claimed with
No Earnings – November 2008
Source: Utah Department of Workforce Services.
13
57
96
194
61
9
2
46
175
23
144
319
1
5
Other Services
Leisure/Hospitality
Ed/Health/Social Svcs
Prof/Business Svcs
Financial Activities
Information
Utilities
Transportation/Warehousing
Retail Trade
Wholesale Trade
Manufacturing
Construction
Mining
Covered Agriculture
Total up 250% fromNovember 2007
Growth in Washington County Average Monthly Wage
*First two quarters of 2008.Source: Utah Department of Workforce Services.
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Washington County Average Monthly Wage As a Percent of State
Source: Utah Department of Workforce Services.
75% 75% 74%76% 78% 78% 78% 77% 78% 78% 76% 76% 76% 77% 77% 79% 80% 79%
1990 1992 1994 1996 1998 2000 2002 2004 2006
“Unfortunately, the hangover may prove to be proportional to the
binge.”
Warren Buffet
Box Elder1.35%
Cache1.45%
Rich
Weber1.78%
Tooele1.87%
Salt Lake1.57%
Morgan
Summit0.58%
Daggett
Utah1.62%
Wasatch1.99% Duchesne
1.05%Uintah0.99%
Juab2.2%
Sanpete1.35%
Carbon1.08%
Emery1.18% Grand
1.53%
Millard1.08%
Piute
Garfield
Sevier1.55%
Wayne
San Juan3.19%
Iron2.37%
Beaver1.34%
Washington2.75%
Kane
Davis1.13%
State Average = 3.2%
1.00% to 1.49%
Less than 1.00%
2.00% or higher
1.50% to 1.99%
Source: NY Federal Reserve Bank; Trans Union, LLC.
Percentage of Residential Mortgage Loans Delinquent for 90–plus Days; 2nd Quarter 2008
Box Elder2.5%
Cache1.5%
Rich0.4%
Weber3.3%
Tooele3.7%
Salt Lake2.8%
Morgan1.3% Summit
0.9%Daggett 1.7%
Utah2.5%
Wasatch2.2% Duchesne
3.0%Uintah3.5%
Juab3.5%
Sanpete3.5%
Carbon3.1%
Emery2.7% Grand
1.5%
Millard3.0%
Piute1.1%
Garfield3.0%
Sevier2.7%
Wayne0.5%
San Juan3.4%
Iron2.6%
Beaver3.3%
Washington3.5%
Kane1.6%
Davis2.2%
2.00% to 2.99%
1.00% to 1.99%
3.50% or higher
3.00% to 3.49%
Source: U.S. Department of Housing and Urban Development.
Foreclosure Rate Estimates; June 2008
Less than 1.00%
Year-over Change in MSA Area Housing Price Index (HPI)
-30
-20
-10
0
10
20
30
40
50
Pe
rce
nt
Ch
an
ge
1988 1991 1994 1997 2000 2003 2006
St. George Salt Lake Las Vegas
Source: Office of Federal Housing Enterprise Oversight, http://www.ofheo.gov/hpi.aspx.
Year-over Change in Housing Price Index (HPI) Compared to Annual Change in Average Monthly Wage
-5%
0%
5%
10%
15%
20%
25%
30%
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Avg Monthly Wage HPI
Source: Office of Federal Housing Enterprise Oversight, Utah Department of Workforce Services.
“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
Housing Affordability is Improving
0
10
20
30
40
50
60
1stQtr
2006
2ndQtr
3rdQtr
4thQtr
1stQtr
2007
2ndQtr
3rdQtr
4thQtr
1stQtr
2008
2ndQtr
3rdQtr
Washington County U.S.Source: National Association of Homebuilders; Wells Fargo Bank.
Housing Opportunity Index—% of homes which are affordableto families with the median income.
Washington County Dwelling Unit Permits
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
*Forecast based on January-November data.Source: U of U; Utah Bureau of Economic and Business Research.
Lowest number since 1989. . .
Annual Change in Washington County New Dwelling Unit Permits
Source: Utah Department of Workforce Services.
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
*January-November 2007 compared to January-November 2008.
Percent Change in Washington County Total Permit Authorized Construction Values
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
1992 1994 1996 1998 2000 2002 2004 2006 2008*
*January–November 2007 compared to January-November 2008Source: Utah Bureau of Business and Economic Research.
Change in Number of Washington County Homes Sold
Source: Utah Association of Realtors.
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
*Third Qtr 2008 compared to Third Qtr 2007.
Inventory of homes for saleis slowly shrinking
$458.2
$604.1
$411.8
$351.2
$125.0
$316.4
$235.4
$188.6$178.7$164.5
$157.0$136.3
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008*
Washington County New Residential Building Permit Valuation
*Forecast based on January – November data.Source: Utah Bureau of Business and Economic Research.
Millions of $
Lowest number since 1989. . .
2007-2008* Washington County Change in Permitted New Dwelling Units by Community
*January-November.Source: Utah Bureau of Business and Economic Research.
-75%
-63%
-49%
-83%
67%
-92%
160%
-69%
-78%
-68%
-46%
-66%
Enterprise
Hurricane
Ivins
LaVerkin
Leeds
Santa Clara
Springdale
St. George
Virgin
Washington City
Other
Total
$16.1
$44.3
$32.0
$75.2
$51.7
$84.8
$30.7$37.4
$68.9
$39.6
$109.6
$43.6
$107.5
$118.2
$176.9
$143.4
$120.0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008*
Washington County New Nonresidential Building Permit Valuation
*Forecast based on January - November.Source: Utah Bureau of Business and Economic Research.
Millions of $
-3% -3%
-14%-17%
0%
-4%
3%
7%
13%
21%21%
25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
3rdQtr
2005
4thQtr
1st Qtr2006
2ndQtr
3rdQtr
4thQtr
1st Qtr2007
2ndQtr
3rdQtr
1st Qtr2008
2ndQtr
3rdQtr
Washington County Change in Gross Taxable Sales
Big declines in building/garden, furniture and auto sales.
Source: Utah State Tax Commission.
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
1stQtr
2002
1stQtr
2003
1stQtr
2004
1stQtr
2005
1stQtr
2006
1stQtr
2007
1stQtr
2008
Washington County Change in Car/Light Truck Sales
Source: Utah State Tax Commission.
When will the recession end?
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
In Washington County. . .
Job losses should bottom-out in 1st Qtr 2009.Job losses should bottom-out in 1st Qtr 2009.
Higher unemployment likely in 2009. Higher unemployment likely in 2009.
Housing market adjustment will take longer. Housing market adjustment will take longer.
Market correction related to U.S. recovery. Market correction related to U.S. recovery.
Softening Effects . . .
Out-migration of undocumented workers Out-migration of undocumented workers
Lower prices boosts disposable income. Lower prices boosts disposable income.
Economic Stimulus Package; confidence.Economic Stimulus Package; confidence.
Different economy; different demographics.Different economy; different demographics.
Cautionary Tales . . .
Panic could continue to drive economy.Panic could continue to drive economy.
Housing bubbles collapse slowly. Housing bubbles collapse slowly.
Stimulus package may be timed poorly. Stimulus package may be timed poorly.
Watch the Indicators for a turnaround!!!
Check out our Website:
jobs.utah.govClick on “Economic
Information”Click on “County Info”
What’s Available?
Quarterly NewslettersWage DataEconomic/Demographic ProfileFact SheetsEconomic EventsLargest EmployersLinks to Other Data SourcesUnemployment Rates
This presentation. . .
Will be available for download on our website.jobs.utah.gov
Click on “Economic Information” Then. . . “Publications”
Lecia Parks Langstonlecialangston@utah.gov688-3115
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