Economic Pressure Points

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Economic Pressure Points - What Matters for Growth?
A presentation by the Utah Legislative Fiscal Analyst.

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Economic Pressure Points

  1. 1. Pressure Points for Economic Development Tax Burden Work Ethic/ Religion/ Culture/ Reputation Natural Resources/ Land/ Geology Property rights/ Gov’t stability Business Incentives Weather Regulations /LicensingEnergy Costs/ Commodity Prices Human Capital/ Entreprene urship/ Productivity Geographic Location Industry Effects/ Clustering/ Critical Mass/ Technology Wage Inflation/ Relative Wage Levels Demographics Interest rates/ currency strength/ Inflation Infrastructure Thomas Young, Ph.D. Andrea Wilko, Ph.D. Steven Allred Angela Oh Economic Pressure Points – What Matters for Growth?
  2. 2. Outline The Background Influential Factors a. Current measures b. Potential measures/Partial influence c. External forces Growth Measures Relationships Regression Results Conclusions
  3. 3. BACKGROUND EST.WEALTHBYSTATE
  4. 4. Background: International Wealth
  5. 5. ECONOMIC GROWTH FACTORS INFLUENTIAL FACTORS CURRENT MEASURES
  6. 6. TAX POLICY: TOTAL STATE TAX (2012)
  7. 7. TAX POLICY: INCOME TAX (2012)
  8. 8. TAX POLICY: SALES TAX (2012)
  9. 9. TAX POLICY: CORPORATE TAX (2012)
  10. 10. TAX POLICY: SEVERANCE TAX (2012)
  11. 11. REGULATIONS AND LICENSING
  12. 12. REGLATIONS AND LICENSING GOVERNMENT EMPLOYMENT
  13. 13. REGLATIONS AND LICENSING GOVERNMENT EMPLOYMENT
  14. 14. BUSINESS INCENTIVES
  15. 15. BUSINESS INCENTIVES
  16. 16. ECONOMIC GROWTH FACTORS INFLUENTIAL FACTORS POTENTIAL MEASURES PARTIAL INFLUENCE
  17. 17. WAGE LEVELS (2012)
  18. 18. WAGE INFLATION
  19. 19. EDUCATION
  20. 20. ENTREPRENEURSHIP
  21. 21. ENTREPRENEURSHIP BUSINESS BIRTHS LESS DEATHS
  22. 22. HOUSING COSTS
  23. 23. INDUSTRY  EFFECTS/CLUSTERING UTAH CLUSTER:AEROSPACE  AND AVIATION
  24. 24. INDUSTRY  EFFECTS/CLUSTERING UTAH CLUSTER: AEROSPACE  AND DEFENSE
  25. 25. INDUSTRY  EFFECTS/CLUSTERING UTAH CLUSTER: FINANCIAL  SERVICES
  26. 26. INDUSTRY  EFFECTS/CLUSTERING UTAH CLUSTER: LIFE SCIENCES
  27. 27. INDUSTRY  EFFECTS/CLUSTERING UTAH CLUSTER: LIFE SCIENCES
  28. 28. INDUSTRY  EFFECTS/CLUSTERING UTAH CLUSTER: INFORMATION  TECHNOLOGY
  29. 29. INDUSTRY  EFFECTS/CLUSTERING UTAH CLUSTER: OUTDOOR  PRODUCTS & RECREATION
  30. 30. INDUSTRY  EFFECTS/CLUSTERING UTAH CLUSTER: ENERGY AND  NATURAL RESOURCES
  31. 31. INDUSTRY  EFFECTS/CLUSTERING UTAH CLUSTER: ENERGY AND  NATURAL RESOURCES
  32. 32. ECONOMIC GROWTH FACTORS INFLUENTIAL FACTORS EXTERNAL INFLUENCE
  33. 33. PRODUCTIVITY Source: The Conference Board
  34. 34. GLOBAL DEMOGRAPHICS • More than 50% of the world now lives in an  urban location and may grow to 70% by 2050 • More than 50% of the world’s population lives  within 200km of a coastline • About half of all nations have birth rates below  replacement levels • Of all kids born today, around 50% will celebrate  their 100th birthday • Baby boomers are retiring and their parents are  still alive.  First time ever to have multiple  generations of retired households Source: ISI; Census; various international agencies
  35. 35. DEMOGRAPHICS
  36. 36. DEMOGRAPHICS
  37. 37. DEMOGRAPHICS
  38. 38. DEMOGRAPHICS
  39. 39. DEMOGRAPHICS
  40. 40. DEMOGRAPHICS
  41. 41. WEATHER: AVG. TEMPERATURE
  42. 42. ENERGY COSTS/COMMODITY PRICES OIL
  43. 43. ENERGY COSTS/COMMODITY PRICES NATURAL GAS
  44. 44. NATURAL RESOURCES/LAND COAL
  45. 45. NATURAL RESOURCES/LAND METAL MINING
  46. 46. NATURAL RESOURCES/LAND NONMETAL MINING
  47. 47. OTHER AREAS THAT MATTER • Property rights (divorce law; bankruptcy law;  corporation law) • Licensing regulations; • Work ethic/religion/culture; • Geographic location; • Currency strength; • Inflation; • Interest rates; • Technology  • Infrastructure
  48. 48. ECONOMIC GROWTH MEASURES
  49. 49. PERSONAL INCOME PER  HOUSEHOLD
  50. 50. EMPLOYMENT GROWTH SINCE 1939
  51. 51. RELATIONSHIP BETWEEN FACTORS  AND ECONOMIC GROWTH
  52. 52. TAX POLICY: TOTAL STATE TAX
  53. 53. TAX POLICY: INCOME TAX
  54. 54. TAX POLICY: SALES TAX
  55. 55. TAX POLICY: CORPORATE TAX
  56. 56. TAX POLICY: SEVERANCE TAX
  57. 57. WEATHER: AVG. TEMPERATURE
  58. 58. RELATIVE WAGE LEVELS
  59. 59. WAGE INFLATION
  60. 60. REGULATIONS AND LICENSING
  61. 61. REGLATIONS AND LICENSING GOVERNMENT EMPLOYMENT
  62. 62. ENTREPRENEURSHIP
  63. 63. EDUCATION
  64. 64. HOUSING COSTS
  65. 65. DEMOGRAPHICS
  66. 66. DEMOGRAPHICS
  67. 67. DEMOGRAPHICS
  68. 68. BUSINESS INCENTIVES
  69. 69. DYNAMIC PANEL, PROBIT  REGRESSION RESULTS
  70. 70. PANEL REGRESSION RESULTS • Income tax per household: 0.0001316 (every dollar  increase in income tax per household is correlated with  a 0.0001316 increase in the unemployment rate) (70%  confidence) (a $200 million income tax increase  equates to a change in unemployment from 5.0 to  5.03); • Sales tax per household: 0.0005725 (every dollar  increase in sales tax per household is correlated with a  0.0005725 increase in the unemployment rate) (80%  confidence) (comparative figure XXXXX); • Corporate tax per household results are inconsistent 
  71. 71. PANEL/LOGIT REGRESSION RESULTS • Regulatory rank: 0.0466484 (every rank increase in  regulatory burden equates to a 0.047 increase in the  unemployment rate) (99% confidence) (if Utah  dropped from 7th or 8th best to 10th, then the  unemployment rate correlated with that change would  be from 5.0 to 5.08); • Government employment per household: 4.65824  (every percent increase in government employment  per household would equate to a 4.66 increase in the  unemployment rate (80% confidence) (please note  coefficient is too high); • Depending on the regression format, educational  attainment may or may not be associated with the an  increased or decreased unemployment rate 
  72. 72. Pressure Points for Economic Development Tax Burden Work Ethic/ Religion/ Culture/ Reputation Natural Resources/ Land/ Geology Property rights/ Gov’t stability Business Incentives Weather Regulations /LicensingEnergy Costs/ Commodity Prices Human Capital/ Entreprene urship/ Productivity Geographic Location Industry Effects/ Clustering/ Critical Mass/ Technology Wage Inflation/ Relative Wage Levels Demographics Interest rates/ currency strength/ Inflation Infrastructure Thomas Young, Ph.D. Steven Allred Andrea Wilko, Ph.D. Economic Pressure Points – What Matters for Growth?

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