Washington County Summit 2009

Washington County Economic 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 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 Source: U.S. Bureau of Economic Analysis. Most current four quarters compared Comparative 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” 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.

Employment Change During the Great Depression Source: U.S. Bureau of Labor Statistics. 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. Recessionary period as determined by the National Bureau of Economic Research.

Recessionary Employment Losses Using Annual Data Source: U.S. Bureau of Labor Statistics.

U.S. Unemployment Rates Source: U.S. Bureau of Labor Statistics.

Other National Indicators

Other Indicators

Year-over Change in Real Manufacturing Sales Source: U.S. Bureau of Economic Analysis.

Year-over Change in Real Retail Sales Source: U.S. Bureau of Economic Analysis. Most of the decline in durable goods—particularly motor vehicles.

Utah Unemployment Insurance Weeks Claimed Source: Utah Department of Workforce Services.

Utah Insured Unemployment Rate Source: Utah Department of Workforce Services.

Year-over Change in Consumer Price Index (All Urban Consumers) Source: U.S. Bureau of Labor Statistics.

Year-over Change in Consumer Price Index for Gasoline (All Urban Consumers) Source: U.S. Bureau of Labor Statistics.

Source: U.S. Bureau of the Census Female Male Female Male Millions Dominating the Labor Force Worker Vacuum Worker Vacuum Population by Age and Sex: 2005 U.S. Utah Stretching the economy to accommodate new workers Stretching the economy to accommodate new workers

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 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

Annual Population Change Source: Utah Population Estimates Committee. Washington County Utah

Population Change 2007-2008 Source: Utah Population Estimates Committee. In 2007, Washington County was the second-fastest growing county in Utah.

Washington County Net Migration Source: Utah Population Estimates Committee.

Migration of Washington County Residents Source: U.S. Census Bureau, American Community Survey.

Year-Over Change in Nonfarm Jobs Washington County Source: Utah Department of Workforce Services.

Year-Over Change in Nonfarm Jobs Washington County Source: Utah Department of Workforce Services; U.S. Bureau of Labor Statistics. Utah United States

Nonfarm Job Growth Source: Utah Department of Workforce Services; U.S. Bureau of Labor Statistics. Washington County Utah U.S.

Washington County Nonfarm Job Growth Source: Utah Department of Workforce Services. Down roughly 1,900 jobs in 2008—3.5%

Washington County Construction Employment Source: Utah Department of Workforce Services.

Washington County Year-Over Change in Construction Employment Source: Utah Department of Workforce Services.

Washington Industry Year-Over Job Change September 2007 Source: Utah Dept of Workforce Services .

Washington Industry Year-Over Job Change September 2008 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.

Washington County New Hires and Separations—Four-Qtr Moving Average Source: U.S. Census Bureau; Local Employment Dynamics Program.

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. U.S Washington Utah

Washington County Private Sector Unemployment Insurance Weeks Claimed with No Earnings – November 2008 Source: Utah Department of Workforce Services. Total up 250% from November 2007

Growth in Washington County Average Monthly Wage *First two quarters of 2008. Source: Utah Department of Workforce Services.

Washington County Average Monthly Wage As a Percent of State Source: Utah Department of Workforce Services.

“ Unfortunately, the hangover may prove to be proportional to the binge.” Warren Buffet

Box Elder 1.35% Cache 1.45% Rich Weber 1.78% Tooele 1.87% Salt Lake 1.57% Morgan Summit 0.58% Daggett Utah 1.62% Wasatch 1.99% Duchesne 1.05% Uintah 0.99% Juab 2.2% Sanpete 1.35% Carbon 1.08% Emery 1.18% Grand 1.53% Millard 1.08% Piute Garfield Sevier 1.55% Wayne San Juan 3.19% Iron 2.37% Beaver 1.34% Washington 2.75% Kane Davis 1.13% Source: NY Federal Reserve Bank; Trans Union, LLC. Percentage of Residential Mortgage Loans Delinquent for 90–plus Days; 2nd Quarter 2008 State Average = 3.2% 1.00% to 1.49% Less than 1.00% 2.00% or higher 1.50% to 1.99%

Box Elder 2.5% Cache 1.5% Rich 0.4% Weber 3.3% Tooele 3.7% Salt Lake 2.8% Morgan 1.3% Summit 0.9% Daggett 1.7% Utah 2.5% Wasatch 2.2% Duchesne 3.0% Uintah 3.5% Juab 3.5% Sanpete 3.5% Carbon 3.1% Emery 2.7% Grand 1.5% Millard 3.0% Piute 1.1% Garfield 3.0% Sevier 2.7% Wayne 0.5% San Juan 3.4% Iron 2.6% Beaver 3.3% Washington 3.5% Kane 1.6% Davis 2.2% 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) 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 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 Source: National Association of Homebuilders; Wells Fargo Bank. Housing Opportunity Index—% of homes which are affordable to families with the median income.

Washington County Dwelling Unit Permits *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. *January-November 2007 compared to January-November 2008.

Percent Change in Washington County Total Permit Authorized Construction Values *January–November 2007 compared to January-November 2008 Source: Utah Bureau of Business and Economic Research.

Change in Number of Washington County Homes Sold Source: Utah Association of Realtors. *Third Qtr 2008 compared to Third Qtr 2007. Inventory of homes for sale is slowly shrinking

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.

Washington County New Nonresidential Building Permit Valuation *Forecast based on January - November. Source: Utah Bureau of Business and Economic Research. Millions of $

Washington County Change in Gross Taxable Sales Big declines in building/garden, furniture and auto sales. Source: Utah State Tax Commission.

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 1 st Qtr 2009. Higher unemployment likely in 2009. Housing market adjustment will take longer. Market correction related to U.S. recovery.

Softening Effects . . . Out-migration of undocumented workers Lower prices boosts disposable income. Economic Stimulus Package; confidence. Different economy; different demographics.

Cautionary Tales . . . Panic could continue to drive economy. Housing bubbles collapse slowly. Stimulus package may be timed poorly.

Watch the Indicators for a turnaround!!!

Check out our Website:
jobs.utah.gov
Click on “Economic Information”
Click on “County Info”

What’s Available?
Quarterly Newsletters
Wage Data
Economic/Demographic Profile
Fact Sheets
Economic Events
Largest Employers
Links to Other Data Sources
Unemployment Rates

This presentation. . .
Will be available for download on our website.
jobs.utah.gov
Click on “Economic Information”
Then. . . “Publications”
Lecia Parks Langston
[email_address]
688-3115

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Washington County Summit 2009

by State of Utah, Salt Lake City on Apr 02, 2009

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Washington County Summit 2009 — Presentation Transcript