Post on 18-Aug-2020
Coronavirus Regional Briefing:Western U.S.
Brian Schmidt, Regional EconomistJuly 2020
Regional Focus
ME
RI
MA
VTNH
AL GA
SC
TN
FL
MSLA
TX
OKNM
KS
MN
IA
MO
AR
WY
CO
ND
SD
NE
WA
ID
MT
OR
NVUT
AZ
CA
WI
ILIN
MI
OH
WVVA
NC
MD
DE
PA
NY
CT
NJ
Pacific Mountain
KY
HI
0
20
40
60
80
100
120
140
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Pacific
U.S.Mountain
Total Cement ConsumptionIndex, 2000=100
Source: USGS, PCA 3
0
100
200
300
400
500
600
700
800
3/1/2020 5/1/2020 7/1/2020 9/1/2020 11/1/2020
Based on IHME’s estimated infections
which include those not tested as well as
asymptomatic
IHME Projected Daily Infection Rates --Per Capita
Source: IHME, Census, PCA 4
Mountain
Pacific
New Daily COVID-19 Infections per Million of Population (July 14, 2020 Update)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Total Cement Consumption – Western U.S.
Source: USGS, PCA 5
Pacific
Mountain
‘W’ Scenario
‘W’ Scenario
(000 Metric Tons)
Economic Outlook
a
-40%
-30%
-20%
-10%
0%AZ CO ID MT NM NV UT WYMOUNT CA HI OR WA PAC US
Employment Recovery
Source: BLS, PCA
Percent Change in Employment (February through April)
7
0%20%40%60%80%
100%AZ CO ID MT NM NV UT WYMOUNT CA HI OR WA PAC USPercent of Employment Losses Recovered (June from April trough)
Leisure and Hospitality Exposure
ME
RI
MA
VTNH
AL GA
SC
FL
MSLA
TX
OKNM
KS
MN
IA
MO
AR
WY
CO
ND
SD
NE
WA
ID
MT
OR
NVUT
AZ
CA
WI
ILIN
MI
OH
WVVA
NC
MD
DE
PA
NY
CT
NJ
HI
Share of Total Nonfarm Employment
Source: BLS, PCA 10-12% 12-15% 15%+<10%
KY
TN
Oil, Agriculture, and Manufacturing Exposure
Oil States Agriculture Manufacturing& AgricultureSource: PCA 9
CO
WA
ID
MT
OR
NV
AZ
CA
NM
UT
WY
• As a whole, the region’s economy is generally diverse
• Not very reliant on energy, agriculture, or manufacturing
• Oil exposure in New Mexico and Wyoming (and to a lesser degree Colorado) represent an area of concern
HI
Construction Non-Exempt Impact
CO
WA
ID
MT
OR
NV
AZ
CA
NM
UT
WY
HI
Source: PCA
• An adverse wrinkle experienced in some markets due to construction not being considered exempt from stay at home orders
• Entire state of Washington as well as parts of California, mainly the Bay area
• Very depressed volumes in April for these areas
Residential Outlook
a
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20
Housing Permits – Western U.S.Seasonally adjusted, year-over-year percent change.
Source: PCA
MountainPacific
12
1.01.52.02.53.0
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
Home Affordability ConcernsHome Price-to-Household Income, SA
Source: NAR, BEA, BOC, Moody's 13
1.01.52.02.53.03.5
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
Denver1.01.52.02.53.03.5
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
Portland
1.02.03.04.05.06.0
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
San JoseSeattle
0
20
40
60
80
100
120
140
160
180
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Residential Cement Consumption – Western U.S.
Source: USGS, PCA 14
Mountain
Pacific
Index, 2000=100
U.S. Annual % Change2020 2021
Mountain 2.0% -0.8%Pacific -8.2% 3.7%
0
20
40
60
80
100
120
140
160
180
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Residential Cement Consumption – Western U.S.
Source: USGS, PCA 15
Mountain
Pacific
‘W’ Scenario
‘W’ Scenario
Index, 2000=100
0
5
10
15
20
25
30
US Mountain Pacific
Potential Shift in Homebuyer Preferences?
Source: PCA, NAR
Metric Tons of Cement Per Housing Unit
SF SF SF
MFMFMF
• 21% of agents reported buyers seeking the benefits of new homes, such as office space or backyards. (Source: NAR Research Group Survey)
• Potential for intrastate moves from urban to suburban/exurban locations.
• A 10% compositional shift from multi to single family would amount to roughly 60k MTs annually in Mountain and 115k MTs in the Pacific.
16
Nonresidential Outlook
a
0%
5%
10%
15%
20%
25%
AZ CO ID MT NV NM UT WY CA HI OR WA
Percent Share of Total Cement
Office, Hotel, and Retail Importance
Office
Hotel
Retail
Source: PCA
0
20
40
60
80
100
120
0
500
1,000
1,500
2,000
2,500
WTI Price (R)
Active Rig Count (L)
Oil & Gas Drilling a Concern in Some States
Source: Baker Hughes Incorporated, EIA 19
0
20
40
60
80
100
120
0
10
20
30
40
50
60
70
80
90
Colorado
New Mexico
Wyoming
Oil & Gas Drilling a Concern for Some StatesAverage Active Rotary Rigs - Total, (#)
Source: Baker Hughes Incorporated
Percent Change Since February:New Mexico -53%Colorado -71%Wyoming -95%U.S. -65%
20
0
100
200
300
400
500
600
700
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Oil Well Cement Consumption – Western U.S.Metric Tons, Thousands
Source: PCA
2016 2017 2018 2019 2020F 2021F 2022F 2023F 2023F 2024F-31% 44% 10% 2% -46% 31% 6% 2% 4% 7%
Oil Share of Total Regional Cement Consumption: 2%
New Mexico: 24%Wyoming: 24%Colorado: 6%
21
0
100
200
300
400
500
600
700
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Oil Well Cement Consumption – Western U.S.Metric Tons, Thousands
Source: PCA
2016 2017 2018 2019 2020F 2021F 2022F 2023F 2023F 2024F-31% 44% 10% 2% -46% 31% 6% 2% 4% 7%-31% 44% 10% 2% -55% 8% 30% 16% 12% 7%
Baseline“W”
22
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2007 2010 2013 2016 2019 2022 20250
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2007 2010 2013 2016 2019 2022 2025
Nonresidential Cement Consumption – Central U.S.
Source: PCA 23
Mountain Pacific
Metric Tons (000s)
2020 2021 2022 2023 2024 2025-3.5% 0.8% 2.1% 1.8% 2.2% 2.5%
-6.4% -6.4% 6.0% 3.4% 3.6% 3.3%
2020 2021 2022 2023 2024 20254.2% -1.3% 0.8% 1.4% 1.8% 2.4%
3.5% -2.2% 0.7% 1.5% 2.5% 3.4%
Baseline Scenario ‘W’ Scenario
Public Outlook
a
ME
RI
MA
VTNH
AL GA
SC
TN
FL
MS
LATX
OKNM
KS
MN
IA
MO
AR
WY
CO
ND
SD
NE
WA
ID
MT
OR
NVUT
AZ
CA
WI
ILIN
MI
OH
WVVA
NC
MD
DE
PA
NY
CT
NJ
1% or less 5% to 10% Greater than 15%
Rainy day balances as share of general fund expenditures
Source: NASBO Fall 2019 Fiscal Survey of the States
State Rainy Day Funding – FY2020
KY
Current National Average: 7.6%
Prior to Great Recession: 4.5%
2% to 5% 10% to 15%
Kansas and Illinois effectively have $0 balances, Pennsylvania and New Jersey are roughly 1%
Oil revenue reliant states of New Mexico, North Dakota and Wyoming have respective balances of 27%, 30% and 109%
25
0
5
10
15
20
25
30
35
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Cents Per Gallon
State Weighted Gas Tax
Federal Gas Tax
Source: Federal Tax Administrators, FHWA, PCA 26
States Have Been Increasingly Less Reliant on Federal Funds
-60%
-50%
-40%
-30%
-20%
-10%
0%AZ CO ID MT NM NV UT WYMOUNT CA HI OR WA PAC US
Reduction in Vehicle Miles Traveled
Source: FHWA, PCA
Percent Change in Vehicle Miles Traveled (Apr 20/Apr 19)
27
-60
-50
-40
-30
-20
-10
0
10
02/21/20 03/21/20 04/21/20 05/21/20 06/21/20
Workplaces: Mobility trends for places of work
Employees returning to Work…
Source: Google Mobility Report, PCA 28
Mountain
Pacific
Percentage change from baseline visits—Workplace
-60
-50
-40
-30
-20
-10
0
10
20
02/21/20 03/21/20 04/21/20 05/21/20 06/21/20
Retail & Recreation: Mobility trends for places like restaurants, cafes, shopping
centers, theme parks, museums, libraries and
movies theaters
Consumers Once Again Showing Apprehension
Source: Google Mobility Report, PCA 29
MountainPacific
Percentage change from baseline visits—Retail & Recreation
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
AZ CO ID MT NV NM UT WY CA HI OR WA
States with High Sales Tax Exposure at Risk
Source: Census State Government Tax Collections Report, PCA
Sales tax as a share of total tax collections
30
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2007 2010 2013 2016 2019 2022 20250
1,000
2,000
3,000
4,000
5,000
6,000
2007 2010 2013 2016 2019 2022 2025
Public Cement Consumption – Western U.S.
Source: PCA 31
Mountain Pacific
Metric Tons (000s)
2020 2021 2022 2023 2024 20250.6% -2.6% 1.8% 1.9% 2.1% 2.3%
-0.1% -3.6% 1.7% 2.1% 2.8% 3.5%
2020 2021 2022 2023 2024 20250.2% 0.4% 1.3% 1.6% 1.8% 2.1%
-0.7% -0.8% 1.2% 1.9% 2.7% 3.4%
Baseline Scenario ‘W’ Scenario
Regional Cement Trends: Through 2021
ME
RI
MA
VTNH
AL GA
SC
TN
FL
MS
LATX
OKNM
KS
MN
IA
MO
AR
WY
CO
ND
SD
NE
WA
ID
MT
OR
NVUT
AZ
CA
WI
ILIN
MI
OH
WVVA
NC
MD
DE
PA
NY
CT
NJ
5% or Greater Growth
+2% to -2%
-2% to -5%
Based on change in cement consumption between 2019 to 2021
KY
Source: PCA 2020 Summer State Forecast 32
2% to 5%
5% or Greater Decline
Coronavirus Regional Briefing:Western U.S.
Brian Schmidt, Regional EconomistJuly 2020