tapered, challenged, and changed. (does anyone remember curtis enis?) us bank outlook forum december...

Tapered, Challenged, and Changed.

(Does anyone remember Curtis Enis?)

US Bank Outlook ForumDecember 9, 2014

Hart HodgesWestern Washington University

• Less Fiscal Drag• Employment Gains• Net Worth Rebound• Real Disposable Income Rising• Better Balance Sheets• State and Local Finances Better• Housing’s Unsteady Climb

• But!• Global Growth Worries Intensified-Impacts Through

Trade, Exchange Rates, Interest Rates, Commodity Prices

Improved National Forecast

Questions & Themes• Why the continued urbanization?– “The World is Flat”…

• Related:– Are we more urban or more rural?– Structural change, or just delayed growth?

• Getting behind aggregate and average figures– Population– Retail sales

Jan-07

Apr-07Ju

l-07

Oct-07

Jan-08

Apr-08Ju

l-08

Oct-08

Jan-09

Apr-09Ju

l-09

Oct-09

Jan-10

Apr-10Ju

l-10

Oct-10

Jan-11

Apr-11Ju

l-11

Oct-11

Jan-12

Apr-12Ju

l-12

Oct-12

Jan-13

Apr-13Ju

l-13

Oct-13

Jan-14

Apr-14Ju

l-14

85

90

95

100

105

110

Perc

ent

Seattle

Mt. VernB’Ham

Employment Growth:• Why the Difference ?

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

Uneven Recovery Across WashingtonEmployment Relative to Prerecession Peak

WA

B’Ham

Seattle

Copyright © 2014 Michael J. Parks

Washington highlights:• Above-average recent growth in key

indicators, including employment, personal income, auto sales.

• Boeing backlog at nearly 9 years and still growing.

• Led by Amazon.com, Seattle-area economy powers ahead.

Copyright © 2014 Michael J. Parks

Key risks for Washington:• Global economic slowdown that

could erode Boeing’s record backlog.

• Hard economic landing in China, Japan or Europe, or all three.

• Rising dollar and widened Panama Canal erode export competitiveness

Looking Back…

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

1,500,000

1,600,000

45,000

50,000

55,000

60,000

65,000

70,000

75,000

80,000

85,000

90,000

95,000

Jobs

, Sea

ttle

Jobs

, B’H

am

Seattle

B’Ham

Factors to Consider

• Larger industry trends• Population• Number and concentration of jobs in an area – Agglomeration (place matters)

• Wealth ?– Mobility– The freedom/ability to make lifestyle choices

Larger Industry Trends

Two industry sectors accounted for 45.2 percent of the net job growth over the last two years• Professional & Technical Services• Leisure & Hospitality

The geography of this job growth has been uneven, with significant implications for wage growth

Prof and Business Services

Jan-90

Dec-90

Nov-91

Oct-92

Sep-93

Aug-94Ju

l-95

Jun-96

May-97

Apr-98

Mar-9

9

Feb-00

Jan-01

Dec-01

Nov-02

Oct-03

Sep-04

Aug-05Ju

l-06

Jun-07

May-08

Apr-09

Mar-1

0

Feb-11

Jan-12

Dec-12

Nov-13100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

2,500

3,500

4,500

5,500

6,500

7,500

8,500

9,500

Jobs

, Sea

ttle

Jobs

, B’H

am

Seattle

B’Ham

Population

• Variations in population growth in different regions

• Different regions appear to have different key cohorts– 25-34 year olds in King County– 35-44 year olds in Whatcom County

Average Annual Percent Change

1980 - 1989

1990 - 1999

2000 - 2009

2010 – 2013

2013

King 1.80 1.59 1.01 1.69 1.84

Skagit 2.16 2.96 1.37 0.49 0.66

Whatcom 1.68 2.93 1.96 0.80 0.69

Variation in Population Growth

Immigration and Emigration

Cohort 2002 2007 2012

25 - 29

30 - 34

35 - 39

Etc.

60 - 64

65 - 69

Cohort Differences

35

37

39

41

43

45

47

Mill

ion

Peop

le

25-34

35-44

Economic trends and demographics

Jan-90

Sep-90

May-91

Jan-92

Sep-92

May-93

Jan-94

Sep-94

May-95

Jan-96

Sep-96

May-97

Jan-98

Sep-98

May-99

Jan-00

Sep-00

May-01

Jan-02

Sep-02

May-03

Jan-04

Sep-04

May-05

Jan-06

Sep-06

May-07

Jan-08

Sep-08

May-09

Jan-10

Sep-10

May-11

Jan-12

Sep-12

May-13

Jan-14

Sep-14

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

2,500

3,500

4,500

5,500

6,500

7,500

8,500

9,500

Jobs

, Sea

ttle

Jobs

, B’H

am

B’Ham

Seattle

Wealth ?

Jan-90

Dec-90

Nov-91

Oct-92

Sep-93

Aug-94Ju

l-95

Jun-96

May-97

Apr-98

Mar-9

9

Feb-00

Jan-01

Dec-01

Nov-02

Oct-03

Sep-04

Aug-05Ju

l-06

Jun-07

May-08

Apr-09

Mar-1

0

Feb-11

Jan-12

Dec-12

Nov-13100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

2,500

3,500

4,500

5,500

6,500

7,500

8,500

9,500

Jobs

, Sea

ttle

Jobs

, B’H

am

No Recovery in Construction

Const

Mfg

Retail

Info

Prof/Tech

Mngt

Health

Accom

Govt

-40 -30 -20 -10 0 10 20 30 40

Percent Change, 2005 - 2013

Seattle

B’Ham

Copyright © 2014 Michael J. Parks

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014$25000

$30000

$35000

$40000

$45000

$50000

$55000

$60000

$65000

$70000

King and Snohomish Counties

Rest of state

Where the money isAverage annual wage

Data: Bureau of Labor Statistics via Washington Economic and Revenue Forecast Council

Thousands

Percent of Jobs Seattle Wage

PremiumKing+ Whatcom

Software Developers, Applications

4.5(48,400 jobs)

0.4(255 jobs)

$28,500

Retail Salesperson 4.4 5.4

Cashiers 2.4 3.7

Food Prep & Serv (including Fast Food)

2.2 1.2

Computer Programmers 1.3 0.4 $34,500

Market Research Specialists 1.0 0.3 $25,000

Computer & Info System Mngrs 0.7 0.2 $46,800

Wage Growth Depends on Job Mix

Retail

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014$0

$100

$200

$300

$400

$500

$600

$700

$800

Mill

ion

$

Blaine, Sumas, & Uninc..

(Belling-ham)

2015• Employment – up ~1.5%

– Assuming continued strength nationally with lower oil prices and other factors (risks to the downside)

– Still trailing Seattle

• Population – slight increase in growth rate (~1%)

• Retail Sales – up 2-3%– Rising slightly with population and employment; also more even

in distribution

• Unemployment – continued slow decline

• Wages – up 3%– Assuming stronger job growth in Prof. & Tech Services