Economic OverviewSlower Growth Near-term

Chris AkersColorado State Demography Office#COPopulation #CODemogSummit

November 1, 2019

Looking Back over last 8 years• 2011: Growth Slow & Fragile• 2012: Economy Slowing in 2013• 2013: Gradually Recovering• 2014: Warning Signs Widespread• 2015: Sprinting or Plodding• 2016: Growing but Slowing• 2017: Moderating Growth, Maturing Recovery• 2018: Steady but Slowing Growth• 2019: Slower Growth Near-term

Economic OverviewSlower Growth… Again

What About It?Chris Akers

Colorado State Demography Office#COPopulation #CODemogSummit

WORLD ECONOMIC OUTLOOK UPDATE (IMF JANUARY 2018)-CHRISTINE LAGARDE SAID AT DAVOS:

“Global growth has been accelerating since mid-2016, and all signs point to a further strengthening both this year and next. This is very welcome news.”

‘At the same time, while growth is higher, it is mostly cyclical. Absent reforms, the fundamental forces that had us worried about the “new mediocre” – and future growth potential – will remain in place.’

https://www.imf.org/en/News/Articles/2018/01/22/sp012218-opening-remarks-for-the-world-economic-outlook-update-press-conference

GLOBAL ECONOMIC OUTLOOK (IMF OCT ‘19)

https://www.youtube.com/watch?v=Y1m5NDLDKxE

Colorado Economic OutlookThings that will not be covered this year:

• Unemployment Rates

• Inflation and Wage Growth

• Worker Shortages (JOLTS)

• Federal Funds Rate (now at 1.5 - 1.75%)

• Short-term outlook (2019 / 2020)

• Rising Risk of Recession

• Colorado Employment Growth relative to other states

• Productivity Growth

SDO ECONOMIC FORECAST APPROACHU.S. Macro Economic Forecast (Moody’s Analytics)• 86 Variables pulled from 1960 to 2048

• U.S. Population, GDP, CPI, Employment, Oil Price, Interest Rates

• Incorporate 25 State Variables from 1970 to 2018• Employment, Unemployment, Income, Population, Birth/Death Rate, Housing Permits

• Incorporate County-level variables from 1990 to 2050• Population, Civilian Pop, LFPR, Unemp. Rt., MJHR, Commuting, Income

Project employment for Colorado Statewide 2019-40

• Project out all 14 Planning Regions & Force Regions to State

• Project 58 counties within Regions & Force Counties to Regions

Longest U.S. Expansion on Record!

39

24

108

36

58

12

92

120

73

124

0

20

40

60

80

100

120

140

1954 1958 1961 1970 1975 1980 1982 1991 2001 2009

Mon

ths o

f Exp

ansio

n

Trough Year

Length of U.S. Expansions Post WWII (Number of months, Trough to Peak)

Also the Slowest Expansion

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%19

8319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

1620

1720

1820

19

GDP Growth by Year and Expansion Average

4.3%3.8%

2.8%2.3%

Annual Job Growth in U.S.Years Average Annual Job

Change (#) Max Change (Year) Average Annual

Growth Rate (%)1983 – 1989 2.8 Million 4.2 Million (1983) 2.8%

1990 - 1991 -367K -1.1 Million (1990) -0.3%

1992 - 1999 2.6 Million 3.2 million (1997) 2.4%

2000 - 2002 -875 K -1.4 Million (2001) -0.4 %

2003 – 2006 1.9 Million 2.4 Million (2005) 1.4%

2007 – 2009 -2.5 Million -5.9 Million (2008) -1.9%

2010 – 2018 2.4 Million 2.9 Million (2014) 1.5%

2020 - 2040 910 K 1.3 Million (2021) 0.6%

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000

UtilitiesMining

Management of companiesAgriculture

Federal GovernmentPrivate Education

InformationArts, Entertainment & Rec

Transportation and…Wholesale trade

Real estateState Government

Finance activitiesManufacturingOther services

Admin and wasteConstruction

Local GovernmentAccommodation and food

Retail TradeProfessional and Tech. services

Health Services

Colorado 2018 Total Employment by Industry & Wage

Low Wage ($23,400-$44,000) Mid Wage ($48,500 - $70,700) High Wage ($84,000 - $136,100)

3.39 Million Total Estimated Jobs$59,000 Average Annual Wage

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000

Management of companiesUtilities

InformationPrivate Education

Federal GovernmentMining

Finance activitiesWholesale trade

Transportation and warehousingManufacturing

State GovernmentArts, Entertainment & Rec

Real estateAdmin and waste

Professional and Tech. servicesAgriculture

Other servicesConstruction

Health ServicesRetail Trade

Local GovernmentAccommodation and food

Non Front Range Colorado 2018 Total Employment by Industry & Wage

Low Wage ($25,400-$35,000) Mid Wage ($37,100 - $52,900) High Wage ($68,600 - $105,600)

600K Total Estimated Jobs$44,800 Average Annual Wage

Total Jobs 2018 & OTY Change• U.S. – 149.1 million, + 2.45 million (1.7%)• Colorado – 3,389,300 + 87,700 (2.7%)

+78.5 K in 10 Counties or 89.5% of State

-1,000 1,000 3,000 5,000 7,000 9,000 11,000 13,000

Federal GovernmentUtilities

Finance activitiesAgriculture

Admin and wasteWholesale trade

Management of companiesPrivate Education

ManufacturingArts, Entertainment & Rec

State GovernmentRetail TradeReal estate

MiningLocal Government

Other servicesHealth Services

Accommodation and foodInformation

ConstructionTransportation and warehousing

Professional and Tech. services

Colorado 2018 Annual Employment Change by Industry & Wage

Low Wage ($23,400-$44,000) Mid Wage ($48,500 - $70,700) High Wage ($84,000 - $136,100)

Annual Gain = 87,700 or 2.7%

-500 0 500 1,000 1,500 2,000

Finance activitiesHealth Services

Federal GovernmentUtilities

Management of companiesInformation

Other servicesPrivate Education

AgricultureWholesale trade

Admin and wasteMining

Arts, Entertainment & RecState Government

ManufacturingRetail Trade

Transportation and warehousingReal estate

Local GovernmentAccommodation and food

Professional and Tech. servicesConstruction

Non Front Range Colorado 2018 Annual Employment Change by Industry & Wage

Low Wage ($25,400-$35,000) Mid Wage ($37,100 - $52,900) High Wage ($68,600 - $105,600)

Annual Gain = 9,300 or 1.6%

2008-2018 Job Change• U.S. + 11.8 million or 0.8% annualized• Colorado + 468,900 or 1.5% annualized

10 Counties + 461K or 98.4% of State

-10,000 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

UtilitiesFederal Government

MiningInformation

ManufacturingFinance activitiesWholesale trade

AgricultureManagement of companies

ConstructionReal estate

Admin and wasteArts, Entertainment & Rec

Private EducationRetail Trade

Other servicesLocal GovernmentState Government

Transportation and warehousingAccommodation and food

Professional and Tech. servicesHealth Services

Colorado Employment Change by Industry from 2008 to 2018

Low Wage ($23,400-$44,000) Mid Wage ($48,500 - $70,700) High Wage ($84,000 - $136,100)

Total Change = 462,000 or 1.8% Annually

-15,000 -10,000 -5,000 0 5,000 10,000 15,000

ConstructionMining

Finance activitiesInformation

Other servicesRetail Trade

Admin and wasteWholesale trade

Federal GovernmentUtilities

Transportation and warehousingManufacturing

Management of companiesState Government

Real estateProfessional and Tech. services

Local GovernmentPrivate Education

Arts, Entertainment & RecAccommodation and food

AgricultureHealth Services

Non Front Range Colorado Employment Change from 2008 to 2018

Low Wage ($25,400-$35,000) Mid Wage ($37,100 - $52,900) High Wage ($68,600 - $105,600)

Total Employment Change = 7,600 or 0.1% Annually

U.S. Industry Level (BLS)

0.1%

0.4%

0.5%

0.8%

1.1%

1.3%

1.4%

1.5%

1.6%

1.8%

2.3%

2.9%

3.4%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%

Manufacturing

Leisure & Hospitality

Other Services

Wholesale & Retail

Agriculutre

Information

Government

Professional & Business Svcs.

Education, Health Care and Social Assistance

Financial Activies

Mining & Utilities

Construction

Transportation & Warehousing

Projected Annual Rate of Change in Employment (2018-28)

Colorado Industry Level (SDO)

Total All Jobs Annual Growth = 1.5%

0 20,000 40,000 60,000 80,000

Manufacturing

Accomodation and Food Services

Agriculture

Arts, Entertainment, and Recreation

Other Services

Management of Companies

Mining and Utilities

Information

Real Estate

Professional, Scientific, and Technical

Finance and Insurance

Wholesale and Retail

Transportation and Warehousing

Administrative and support and waste

Education, Health Care and Social Assistance

Construction

Government

Colorado Projected Employment Change from 2018 to 2028

Low Wage ($23,000 - $44,000) Mid Wage ($48,000 - $71,000) High Wage ($84,000 - $136,100)

Total Change = 560,000 or 1.5% Annually

What has changed since 2012?• Non-Major Metro counties have mostly been revised down

• 36 are slower now in projected growth and 13 are negative

• Elbert, Phillips and Gunnison are right on track

• Denver Metro, Larimer and Weld have all been revised upward

• Oil & Gas Development boosted Weld

• Build up of extensive transportation and warehousing to allow more efficient distribution of on-line orders

• Continued expansion of RTD lines and Growth at DIA

Job Forecast Highlights 2020 - 40• Employment growth of 910,000 jobs

• 570,000 gain in Local Resident Service Jobs (many in Local Gov.)

• Growth rate peaks at 1.52% (+55,400 jobs) in 2023, then gradually slows. Need for migrants grows due to Baby Boomers retiring and less due to new job creation.

• Annualized Growth Rate = 1.15% (slows to 0.95% from 2030-40)

Job Forecast 2020 - 40• 2040 = 4,444,600 + 910,000 from 2020 (45,500 or 1.2% per year)

+828,000 in Metro Areas or 92% of State

-60,000 0 60,000 120,000 180,000 240,000

Accomodation and Food ServicesArts, Entertainment, and Recreation

ManufacturingOther Services

Mining and UtilitiesAgriculture

InformationManagement of Companies

Real EstateProfessional, Scientific, and Technical

Wholesale and RetailEducation, Health Care and Social Assistance

Finance and InsuranceAdministrative and support and waste

ConstructionGovernment

Transportation and Warehousing

Colorado Projected Employment Change from 2020 to 2040

Two Big Future Trends that could influence the forecast

• Broadband / Connectivity

• 100% Renewable Energy Goals

Broadband / Connectivity• Local Government’s in CO voting out of SB 05-152

• 40% of Muni’s and 66% of CO counties have “opted-out”• Lakewood, Greenwood Village, Parker, Edgewater, Mead, and

Rico are all voting on referenda in 2019• Billions of dollars being spent over the next decade through

Public-Private-Partnerships to build out networks.• Colorado providing an additional $115 million (SB 18-2) in State

Broadband Administrative Fund Grants over next 5 years.• Improves quality of life, health, safety and prospects for increased

work opportunities and earnings in rural Colorado.

100% Renewable Energy Goals• “You have to set audacious goals and big goals… and then have

everybody work like crazy to get there” – Tesla Chair Denholm• Nearly everyone benefits from de-carbonization of Energy • Renewable Goals are the “Broadband” of the next 2 decades

• 10 Municipalities & 2 Counties in Colorado have established goals• Municipal providers are often 1st to achieve - Aspen 2015!• Denver aims to be 100% in its municipal building by 2025

• State of Colorado is a partner and leader• Charge Ahead Grants, Solar Gardens, Renewable Purchase Power

Agreements, Reducing Energy Consumption 15% by FY 2023

A Dr. Seuss-like Summary What happens in the future Economy we truly do not Know.As has been said many times, the SDO expects it to Plateau & Slow.History says sometime it will surely contract… and then again Grow.But it is widely expected that growth rates will be Adagio, Adagio!Unemployment Rates should continue to remain near historic Lows, But this largely depends on how fast the Labor Force Grows. Retirements by Baby Boomers will likely the pace job growth to Slow,The impacts of aging our office by now believes to Foreknow Unknown impacts of Automation, A.I., Budgets, Climate Change, Drought, & more into our forecast could a monkey wrench Throw“Technological progress is key to economic growth”, says Robert Solow

Thank You!

Chris.Akers@state.co.us303-864-7751Demography.dola.Colorado.gov