Dr. Anne M. Alexander, the Director of International Programs for the University of Wyoming, gave a presentation on the economic outlooks of Utah, Wyoming, and Idaho at the Tri-State Telecommunications Conference on August 1, 2012 in Jackson, WY.

1. Economic Outlook
Dr. Anne M. Alexander
Director, International Programs
University of Wyoming
The Telegraph

2. Idaho - Unemployment
Idaho Unemployment Rate, 2011-2012
9
8.8
8.6
8.4
8.2
8
7.8
PERCENT OF LABOR FORCE UNEMPLOYED
7.6
7.4
7.2
7

3. Idaho Outlook
 Idaho posted year-over-year job losses for 30 straight months until October
2010, when the economy began to stabilize. In 2012 the economy has
begun to show signs of job growth. June 2012 nonfarm jobs totaled
618,600, or 1.2 percent above June 2011.
 State government revenues for the last fiscal year ran below
expectations, and business formation has been essentially flat.
 Tourism, which accounts for roughly 5% the state’s GDP, has rebounded but
has not recovered to pre-recession levels.

4. Utah Unemployment
Utah Unemployment Rate, 2011-2012
8.0
7.0
6.0
5.0
4.0
Percentage of labor force
unemployed
3.0
2.0
1.0
0.0
Nov
Dec
Aug
Feb
Apr
Jul
Sep
Feb
Apr
June
May
May
Jan-11
Jan-12
Mar
Oct
Mar
Jun

5. Utah Outlook
 Utah typically grows more rapidly than the nation after recessions, and this
pattern is taking hold in the current recovery to a certain extent, but it is a much
slower recovery than normally would be expected.
 Job growth in 2011 was a healthy 2.3% for Utah, and the unemployment rate fell
to 6% by June 2012.
 Government revenues have stabilized and grown since FY 2011 for Utah.
 Economic growth in Utah has risen at a reasonable pace during 2012, but there
is still room for improvement. Housing has stabilized, but home-building is not
leading the economy as it does during a typical Utah recovery. There is still
significant hang-over in foreclosure rates, as they hover around 2.5% of
mortgage loans in the state.
 Another interesting note is that Utah is the state with the 5th largest percentage
of GDP generated by exports (top trade partners: United Kingdom, Hong
Kong, Canada, Thailand, Taiwan). This can buffer growth and present
opportunities (though it can also make you more susceptible to outside financial
chaos).

6. Wyoming Economic Outlook
 Wyoming’s economic structure ring-fences us from some
of the continued residual impacts of the 2007 recession
and continuing financial volatility in Europe.
 Resumed robust tourism and hospitality growth.
 Potential increase in flight to safety of European savings to
US, potentially WY as well as ID and UT, by Europeans
concerned about financial instability in Euro zone.
 Concerns about Iran and Syria (see also – “Negatives/Red
Flags”), and their impact on oil prices and energy
exploration patterns in general.

7. Wyoming Economic Outlook
 Financial volatility in Eurozone and potential for “Fiscal Cliff”
if Congress does not come to debt ceiling deal continue to
cause uncertainty. As we all know, “capital is a coward.”
 Recession in EU is certainly underway due to austerity
measures, which could put a damper on hospitality and
tourism.
 Concerns about public policy towards coal.
 Concerns about Iran and Syria (see also – “Positives-Green
Flags).
 Impact of oversupply of natural gas on state fiscal picture.

8. Wyoming Economic Outlook*
*Caveat Emptor!
 Poverty rate = 9.8%
 6th lowest in U.S. according to Census Bureau
 Food stamp usage is lowest in the country at 5.8%
 Has fallen 7% since Sept. 2010.
 Personal disposable income per capita = $47, 301
 6th highest in U.S. according to Bureau of Economic Analysis

9. Wyoming Economic Outlook*
*Caveat Emptor!
 “Competitiveness Effect” - effect on job creation of differing
public policy, industry focus, and economic development
strategies across states (newgeography.com)
 Wyoming created 1.1% more jobs in 2011 than could be explained by
national economic environment only

10. Wyoming 10-Year Unemployment Picture
January 2001-May 2012
8.0
Financial crisis begins
7.0
Recession begins
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Jan-01
Jan-06
Jan-11
Jul
Jul
Nov
Feb
Nov
Feb
Nov
May
Dec
Mar
Aug
May
Dec
Mar
Aug
Sep
Sep
April
Apr
Oct
Apr
Oct
Jun
Jun
Jun

11. Wyoming Economic Outlook*
*Caveat Emptor!
Wyoming Unemployment Rate 2011-12
7
May 2012 =
6
5.2%
5 (June
4 preliminary
estimate =
3
5.4%)
2
1
0
Unemployment Rate

12. Economic Outlook*
ID UT WY

13. Commodity Outlook – Oil From US EIA

14. Commodity Outlook – Natural Gas
Source: US EIA

15. Commodity Outlook – Natural Gas
Source: US EIA

16. Commodity Outlook - Coal
From Economist Intelligence Unit
Coal ($/ton)
140
120
100
80
Coal ($/ton)
60
40
20
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

17. Economic Outlook*
*Caveat Emptor!
 In the next 3-6 months, expect a stabilization of the Wyoming
unemployment rate near 5.0%. Utah’s unemployment rate will
finally fall below 6.0%, while Idaho’s will drop to around 7.3%.
 Without growth in the rest of the U.S., the Wyoming energy
economy will be solid but not accelerating.
 WY has likely hit a spot where improvement comes more
slowly, but conditions are very unlikely to worsen unless the
Euro crisis spins out of control or the U.S. falls back into
recession.
 Utah and Idaho are more exposed to a U.S. recession should it
occur, and both are more directly impacted by the Euro crisis.

18. US Economic Outlook*
*Caveat Emptor!
 In the EU a recession is already underway.
 A financial crisis or recession (or both) in the EU could tip the
U.S. back into recession in the coming 3-6 months.
 If a mild recession grips the EU, it may just slow growth in the
U.S. and Wyoming by as much as full percentage point (weak 2-
3% growth instead of recovery rates in excess of 3%).

19. US Economic Outlook*
*Caveat Emptor!
 We are still recovering from a deep and long economic
trauma.
 Research shows that recessions caused or exacerbated by
financial crises induce such an economic shock that they
significantly alter the structural characteristics of the economy
 The recessions that ensue are significantly deeper and longer
than those not caused by financial crises.
 Note that on average, your “run of the mill” non-crisis-induced
recession lasts around one year.

20. Financial Crises and their Recessions
 Unemployment rates are significantly higher in the
decade after crises compared to the decade before. In
the vast majority of post-World War II
crises, unemployment rates never returned to their
pre-crisis levels by the end of 10 years post-crisis.
 Real housing prices are 10-15% lower during the
entire post-crisis decade compared to their prices just
before the crisis.

21. Financial Crises and their Recessions
 Economic growth (real per-capita GDP) is significantly
lower during the entire post-crisis decade than during
the pre-crisis decade. On average, median growth is
1% lower post vs. pre-crisis.

22. Financial Crises and their Recessions
 US economic outlook has begun to look more
positive in the early part of the past three years, then
tips back towards slowing growth.
 Based on financial crisis histories, it’s almost always a
precarious situation and we are in for a long slog.

23. Unemployment

24. Unemployment

25. Millions of Jobs
10
12
14
2
4
6
8
0
11/1/2011
1/1/2012
3/1/2012
5/1/2012
7/1/2012
9/1/2012
11/1/2012
1/1/2013
3/1/2013
5/1/2013
7/1/2013
9/1/2013
11/1/2013
1/1/2014
3/1/2014
5/1/2014
7/1/2014
Jobs Shortfall
9/1/2014
11/1/2014
1/1/2015
3/1/2015
5/1/2015
7/1/2015
9/1/2015
11/1/2015
1/1/2016
Unemployment Recovery Estimates
Time Required to Restore 6% Unemployment Rate
3/1/2016
with net population growth – this what the red line represents
5/1/2016
NOTE: Around 125,000 jobs must be created per month to keep up
7/1/2016
9/1/2016
11/1/2016
1/1/2017

26. Millions of Jobs
10
12
14
0
2
4
6
8
11/1/2011
1/1/2012
3/1/2012
5/1/2012
7/1/2012
9/1/2012
11/1/2012
1/1/2013
3/1/2013
5/1/2013
7/1/2013
9/1/2013
Jobs Shortfall
11/1/2013
1/1/2014
3/1/2014
5/1/2014
7/1/2014
9/1/2014
11/1/2014
1/1/2015
3/1/2015
At 300K jobs added per
5/1/2015
300000 jobs added per month
7/1/2015
9/1/2015
month, 6% unemployment late
next year at current GDP growth
11/1/2015
1/1/2016
Unemployment Recovery Estimates
3/1/2016
5/1/2016
Time Required to Restore 6% Unemployment Rate
7/1/2016
9/1/2016
11/1/2016
1/1/2017

27. Millions of Jobs
10
12
14
0
2
4
6
8
11/1/2011
1/1/2012
3/1/2012
5/1/2012
7/1/2012
9/1/2012
11/1/2012
Jobs Shortfall
1/1/2013
3/1/2013
5/1/2013
7/1/2013
9/1/2013
11/1/2013
1/1/2014
3/1/2014
5/1/2014
7/1/2014
300000 jobs added per month
9/1/2014
11/1/2014
1/1/2015
3/1/2015
5/1/2015
7/1/2015
9/1/2015
11/1/2015
Time Required to Restore 6% Unemployment Rate
Unemployment Recovery Estimates
1/1/2016
250000 jobs added per month
at current GDP growth rate
3/1/2016
At 250K jobs per month, 6%
unemployment by mid-2014
5/1/2016
7/1/2016
9/1/2016
11/1/2016
1/1/2017

28. Millions of Jobs
0
2
4
6
12
14
8
10
11/1/2011
1/1/2012
3/1/2012
Jobs Shortfall
5/1/2012
7/1/2012
9/1/2012
11/1/2012
1/1/2013
3/1/2013
5/1/2013
7/1/2013
9/1/2013
300000 jobs added per month
11/1/2013
1/1/2014
3/1/2014
5/1/2014
7/1/2014
9/1/2014
11/1/2014
2016
1/1/2015
3/1/2015
250000 jobs added per month
5/1/2015
At 200K jobs per
7/1/2015
9/1/2015
11/1/2015
month, unemployment
would fall to 6% in mid-
Time Required to Restore 6% Unemployment Rate
1/1/2016
Unemployment Recovery Estimates
3/1/2016
5/1/2016
7/1/2016
9/1/2016
200000 jobs added per month
11/1/2016
1/1/2017

29. Job Losses Relative to Peak Employment in
Recent Recessions

30. Vehicle Sales 2006-2012

31. Vehicle Sales (since 1967)

32. Retail Sales

33. Housing Starts

34. Mortgage Delinquencies and Foreclosures

35. Specific Uncertainties/Challenges
 Net neutrality
 Cybersecurity
 Privacy

36. Euro Crisis Impact on The Tristate Region
Sigh…when
are the
You know, I’m German
kind of not elections?
sorry that I lost
the election…
36

37. Exposure to Euro Crisis
 Wyoming’s top-ten trading partners do not include
any EU country.
 On average, Wyoming firms have low direct exposure to Euro crisis via
exports.
 However, trade in manufactured/high tech goods as
well as tourism and other services are more highly
interconnected to EU.
 They are most at risk from an unwinding Eurozone or continuing
instability in the EU.

38. Exposure to Euro Crisis
 Utah’s top-ten trading partners includes the UK (non-
Euro, but impacted by crisis nonetheless); top-fifteen
includes Germany and Belgium as well
 On average, Utah’s firms have moderate direct exposure to Euro crisis
via exports.
 Again, Utah’s trade in manufactured/high tech goods
as well as tourism and other services are more highly
interconnected to EU.
 They are most at risk from an unwinding Eurozone or continuing
instability in the EU.

39. Exposure to Euro Crisis
 Idaho’s top-ten trading partners includes France; top-
fifteen includes the UK and Netherlands as well
 On average, Utah’s firms have moderate direct exposure to Euro crisis
via exports.
 Tourism and other services are more highly
interconnected to EU.

40. Exposure to Euro Crisis
 On broad scale, most impacts on region would be
indirect, which is not to say small or insignificant.
 Potential U.S. bank exposure uncertainty, though
US banks have likely unwound a large portion of
their EU portfolios, could lead to a “Lehman-like”
moment.
• Already seeing a large volume of outflows from EU
banks, and reduced lending there. If bank-run
atmosphere takes hold, that will impact all lending
institutions.

41. What Uncertainty Does to Financial Investment
Environment
Double-dip speculation
Lehman collapse, Emergency begins Euro
Economic Stabilization Act of
mess
2008 fails to pass

42. Exposure to Euro Crisis
 Indirect Effects, continued
 Wealth effects in savings held by people in our region –
when there is financial chaos, nest eggs tend to shrink.
 Higher uncertainty in the investment and business climate
 could negatively impact employment and expansion
plans that may have been looking more positive.
 Could see mini “trade collapse,” as seen in wake of 2008
financial crisis, that drags down growth for a few months.
 Reduced demand for commodities and energy resources if
either a European recession or a Euro financial crisis set in.

43. Summary – Wyoming
 Barring financial market chaos, Wyoming is on a
solid, steady economic trajectory.
 Unemployment will hold steady in the state around 5% in the next year. For
the next 12 months, economic growth will remain solid but unimpressive as
subdued domestic demand for energy, the warm winter, and oversupply of
natural gas continues among high national unemployment, relatively low
U.S. consumer confidence and weak national growth projections.
 If oil prices spike higher due to Iran or Syrian interventions or tensions, this
could improve Wyoming’s state revenue outlooks in the near term, but
would depress growth in the longer term as the US responds by falling into
another recession.
 Even with indirect exposure to Euro-Mess there is still concern about that
Lehman-like moment and its possible impacts on Wyoming. If something
spins out in the next few months, there would be a significant hit on the
Wyoming economy along with the rest of the U.S.

44. Summary – Idaho
 Barring financial market chaos, Idaho’s outlook is
improving.
 Unemployment will decline in the state to around 7.3% in the next year.
For the next 12 months, economic growth will pick up but will not be
robust because of relatively high state unemployment, high national
unemployment, weak consumer demand and confidence and weak
national growth projections.

45. Summary – Utah
 Barring financial market chaos, Utah’s outlook is
stronger.
 Unemployment will decline in the state to around 6% or lower in the
next year. For the next 12 months, economic growth will strengthen due
to strong export sector, but caution is still needed because of residual
effects of the housing bust, high national unemployment, weak
consumer demand and weak national growth projections.

46. Summary – US and World
 U.S. economy will remain sluggish but improved.
 EU is the US largest trading partner, so the Euro crisis and an emerging recession in the
E.U., a high degree of both investment and political uncertainty nationally and
globally, and chronically high but slightly improving level of unemployment point to a
challenging year ahead.
 Global economy on shaky ground.
 Strong and steady emerging economies’ growth rates are leveling or falling, and
confidence globally is eroding.
 It is still uncertain whether the Euro as a currency will continue on. Whether that decision
and ensuing results are orderly or not is up for grabs.