Dr. Phyllis Resnick - Vectra Bank Colorado · 2015. 2016. 2017. 2018. 2019. 2020. 2021. 2022. 2023....
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Transcript of Dr. Phyllis Resnick - Vectra Bank Colorado · 2015. 2016. 2017. 2018. 2019. 2020. 2021. 2022. 2023....
Economic and Fiscal Outlook: US and ColoradoMETRO NORTH CHAMBER OF COMMERCE
ECONOMIC BREAKFAST
FEBRUARY 10, 2017
The Election Changed the US Economic Outlook
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2016 2017 2018 2019 2020 2021
US GDP
Trump Baseline Pre Election baseline
Source: Moody’s
140
142
144
146
148
150
152
154
2016 2017 2018 2019 2020 2021
US Employment (millions)
Trump Baseline Pre Election baseline
Source: Moody’s
4.00%
4.20%
4.40%
4.60%
4.80%
5.00%
5.20%
5.40%
2016 2017 2018 2019 2020 2021
Unemployment Rate: US
Trump Baseline Pre Election baselineSource: Moody’s
What is the Story? President Trump Inheriting a Near Full Employment Economy
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
2006
M01
2006
M04
2006
M07
2006
M10
2007
M01
2007
M04
2007
M07
2007
M10
2008
M01
2008
M04
2008
M07
2008
M10
2009
M01
2009
M04
2009
M07
2009
M10
2010
M01
2010
M04
2010
M07
2010
M10
2011
M01
2011
M04
2011
M07
2011
M10
2012
M01
2012
M04
2012
M07
2012
M10
2013
M01
2013
M04
2013
M07
2013
M10
2014
M01
2014
M04
2014
M07
2014
M10
2015
M01
2015
M04
2015
M07
2015
M10
2016
M01
2016
M04
2016
M07
2016
M10
Perc
ent o
f Lab
or F
orce
Labor Market Profile: US
Hires Rate Openings Rate Layoff and Discharge Rate Quit Rate
Source: US Bureau of Labor Statistics, JOLTS data
What Happens when Stimulus Hits a Full Employment Economy?Higher inflation andHigher interest rates…Ultimately slow economic activity. If economic activity slows it too much???? ◦Not predicting recession in our forecasts, but◦A survey of economists at January’s AEA meeting placed the probability of one higher than before the election
Stimulating a Full Employment Economy Creates Inflation
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2016 2017 2018 2019 2020 2021
US Inflation
Trump Baseline Pre Election baseline
Source: Moody’s
And Ultimately Drives up Interest Rates
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
2016 2017 2018 2019 2020 2021
Federal Funds Rate
Trump Baseline Pre Election baseline
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
2016 2017 2018 2019 2020 2021
10 Year Treasury Rate
Trump Baseline Pre Election baseline
Source: Moody’s
Colorado’s Economy will Experience Faster Near Term Growth
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
GDP Colorado
History Forecast
Translates into Short Term Bump in Employment Growth…
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Population and Employment Growth - Colorado
Historical Growth - Pop Forecast Growth - Pop Historical Growth- Emp Forecast Growth - Emp
…And in Wages
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
Per Capita Wages and Salary Disbursements - Colorado
History Forecast
As with the US, Colorado Inflation Expected to Increase
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Inflation - DBG CPI
History Forecast
The Strong Expected to Continue to Propel Real Estate Markets
$-
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
$1,400,000,000
$1,600,000,000
198319851987198919911993199519971999200120032005200720092011201320152017201920212023202520272029203120332035
Residential Values ($thousands) - Colorado
History Forecast
And Housing Price Pressure Especially High in Denver Region
59 PER DAY
Additional Households 2015 - 2035
The Good News…State General Fund Revenue Projections are Strong
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
General Fund (in $millions)
History Forecast
But State General Fund will not Fully Benefit from Economic Bump
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
TABOR Allowable Growth and Revenue Growth
POP + INFLATION Growth in Revenue st TABOR
$-
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
$3,000.00
$3,500.00
$4,000.00
$4,500.00
$5,000.00
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
TABOR Refunds ($millions)
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Refunds as a Share of GF
$-
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Refund Per Capita
And while TABOR Refunds Return…for the First Time in Many Years Gallagher Too is Once Again a Fiscal Issue
Colorado homeowners will get a tax break, thanks to TABOR’s lesser-known cousin. But local
governments will be squeezed.State will have to cover $170 million shortfall for
school districts
Denver Post, January 14, 2017
Residential Growth Expected to Outpace Non-Residential…
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Residential vs. Non-Residnential Value Growth
Growth Residential Growth Non-Residential
…And Residential Rate will Continue to Fall
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
2017 2019 2021 2023 2025 2027 2029 2031 2033 2035
RAR Forecast
Sustainability Study Coming in Late February National outlook suggests a near-term economic bump for Colorado; Longer term outlook riskier Uncertainty in Federal policy makes forecasting more difficultHealth Care Infrastructure spending Trade policy Tax policyTABOR returns as an issue and precludes State from capturing benefit of growing economyAnd Gallagher will shift more K-12 spending responsibility to GF; Negative factor here to stay Sustainability more tenuous?