ECONOMIC FORECAST BREAKFAST
LEADERSHIP IN A STARTUP ECONOMY
FRIDAY, JANUARY 15, 2016
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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%
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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
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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
network dedicated to accelerating economic
development by educating and connecting
investors and entrepreneurs
High Supply of Quality Companies
RVC Anti-Shark!
Two Ways to Invest in Colorado Startups
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