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| From
Bonneville Research |
January
11, 2010 |
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| Dear
Reader,
January is always a good time to take a quick look at the
Utah economy. The legislature soon will start back into session,
City
Councils are looking at the second half of their budgets and most of us
are thinking about our property taxes we just paid and the income taxes
soon to be due!
Overview of the Economy
-Like the nation, Utah's
economy contracted during 2009. Employment, which increased slightly
during 2008, declined 4.9% in 2009. Further, the unemployment rate
almost doubled, from 3.4% in 2008 to 6.5% in 2009. The housing collapse
combined with business caution about building new plants, resulted in
construction employment declining 22.6%, after a decline of 12.5% in
2008.
Outlook 2010
-Utah's economy is expected to
gradually strengthen during 2010. Employment is forecast to decline
1.8% for the year as a whole, but subdued job increases should begin by
the second quarter. Construction employment is forecast to decline
13.6%, a third year of contraction. Housing permits are forecast to
remain near historic lows throughout 2010. Strengthening consumer
confidence, the end of the housing downturn, increasing credit, and
higher stock prices will support the economy during 2010. Though
economic activity will be on the uptick, slack hiring will drive a
slight increase in the unemployment rate from 6.5% in 2009 to 6.8% in
2010.
Thanks,
Bob and Jon Springmeyer
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Scorecard:
Economic
Report to the Governor 2010
- Employment
-Employment declined 4.9% in 2009 and is expected to decline 1.8% in
2010.
Industry
Focus-Education and health services and government were the only
industries to have job growth during 2009. Construction experienced the
largest decline of 22.6%.
Unemployment-Utah's 2009 unemployment rate
was 6.5%, up from 3.4% in 2008. In 2009, there were an average of
89,100 unemployed Utahns.
Average Wage-In 2009, Utah's average annual nonfarm wage was $37,764,
an increase of 0.8% from 2008.
- Construction -The
value of permit authorized
construction in Utah in 2009 was $3.5 billion, the lowest value since
1996. In the past twelve months the value of permit authorized
construction has fallen 25%. In inflation-adjusted dollars the value of
authorized construction is at the lowest level since 1992. The sharp
decline in value in 2009 was led by the severe contraction in
nonresidential construction, which fell from $1.9 billion in 2008 to
$1.2 billion in 2009, a 37% decline. In addition, the weakness of the
residential sector continued although the residential decline appears
to be slowing. In 2008 the value of residential construction dropped by
53% compared to 15% in 2009. The value of residential construction in
2009 was $1.6 billion.
- Tourism -Utah's
travel and tourism sector
was not immune to the economic recession, but regional and in-state
travel helped to soften the downturn.
- Skiing - The Utah
ski industry experienced
the third best season on record and visitation at national parks
increased for the third year in a row. State park visitation was also
up.
- Exports -Worsening
economic conditions in
Utah, the nation, and around the globe, were reflected in Utah's
production and export levels in 2009. Utah's total exports fell from a
record peak of $10.3 billion in 2008 to an estimated $9.3 billion in
2009, a decrease of 10.0%. Exports have been above $4.0 billion since
2002 and above $6.0 billion since 2005. Record high levels in 2008 were
primarily due to robust export growth in the first quarter, dropping
sharply as housing and financial market declines translated into weak
demand for manufactured goods that migrated to foreign markets.
- Energy -In 2009,
Utah experienced a
significant increase in crude oil and natural gas production despite
the downturn in the economy and significantly lower prices. Conversely,
coal production decreased as some companies experienced difficult
mining conditions, while other mines unexpectedly closed.
- Minerals -In 2009,
the estimated value of
energy and mineral production in Utah was $6.8 billion, about $2.6
billion less than the record high of $9.4 billion in 2008. The lower
2009 value is mostly due to decreased base metal and industrial mineral
values and decreased crude oil and natural gas prices. The decline of
nonfuel mineral values, which peaked in 2006 (in inflation-adjusted
dollars), will likely be offset by the increased valuation of oil and
gas in 2010.
- Agriculture -It is
estimated most
agricultural sectors in Utah were less profitable in 2009 than in 2008
and 2007. Factors included lower commodity prices in 2009 than in 2008.
Agricultural receipts in 2008 were greater than they had been for the
past several years. Due to record high milk prices in 2008, the Utah
dairy sector enjoyed record cash receipts and was the largest
agricultural sector, as measured by cash receipts.
- Education -In
2009, there were an estimated
563,273 students in Utah's public education system, a 2.2% (12,260
students) increase over 2008.
- Students score
favorably compared to their
national peers. Utah System of Higher Education enrollment for 2009 was
164,860, an increase of 12,632 (8.3%) from 2008.
- Population -The
State of Utah's July 1,
2009 population was an estimated 2,800,089, an increase of 1.5% over
2008, according to the Utah Population Estimates Committee (UPEC). This
is lower than the record growth of 3.2% experienced in 2007. A total of
42,310 people were added to Utah's population, with 3.7% of this
increase coming from people moving into the state. Utah's unique
characteristics of a high fertility rate and low mortality rate
consistently contribute to strong natural increase, the difference
between births and deaths. In 2009, the number of births did not
surpass the record of 55,357 set in 2008. However the 54,548 births led
to a strong natural increase of 40,763. Deaths within the state totaled
13,785 in 2009. Net in-migration totaled 1,547-less than 10% of last
year's number.
Rate of Growth-According to the U.S. Census Bureau,
Utah ranked second among states, behind Wyoming, with a population
growth rate of 2.1% from 2008 to 2009. The U.S. rate of growth was
0.9%.
- Median Age -Utah
was the youngest state in the nation with a 2008 median age of 28.7,
compared to the national median of 36.8.
- Long-Term Projections
-The State's population
is projected grow to 3.7 million in 2020, 4.4 million in 2030, 5.2
million in 2040, 6.0 million in 2050, and reach 6.8 million in 2060.
The growth rate, which will exceed that of the nation, will be
sustained by a rapid rate of natural increase.
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This
Weeks Leads:
Tucanos Brazilian
Tucanos Acquisition Co., LLC
trades as Tucanos Brazilian at four locations throughout ID, NM and
UT. The Brazilian steakhouse restaurants occupy spaces of 7,000
sq.qft. to 7,500 sq.ft. in freestanding locations, entertainment and
lifestyle centers, regional malls and urban/downtown areas. Plans
call
for four to six openings throughout middle markets nationwide, with a
strong concentration west of the Mississippi, during the coming 18
months, with representation by HMS Retail. Typical leases run 10
years. A vanilla shell and tenant improvement allowances are
required. Preferred cotenants include movie theaters.
Preferred
demographics include a population of 400,000 within 15 miles earning
$65,000 as the average household income. For more information,
contact
Lloyd Goldstein, HMS Retail, 500 Midsummer Drive, Suite 100, Potomac,
MD 20878
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Public
Policy Initiatives:
NV - Commission Chairman Rory Reid Unveils Cost-Cutting Plan for County.
Commission
Chairman Rory Reid apparently was no longer content with
waiting for another committee - even one he set up himself - to
finalize suggestions for solving the county's budget crisis. Holding a
press conference in the chambers of the Clark County Commission, where
he has served since 2002, Reid announced his desire not to study the
idea of transferring University Medical Center to another entity, but
to look at how the transfer can take place. "I just felt a sense of
urgency," he said. Aside from examining how UMC is managed and looking
at the process for turning the hospital over to a not-for-profit, he
talked about the need to talk with the county's employee unions, which
represent more than 10,000 workers, about making concessions to help
out the county's budget. Reid hopes the County Commission will be very
receptive to ideas for change to be adopted by the Committee on
Community Priorities, many of which targeted duplication of function.
http://www.lasvegassun.com/ounces-his-cost-c/
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Sincerely,
Bob Springmeyer
Bonneville Research
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Bonneville
Research Website:
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Bonneville
Research
Bonneville
Research is a regional consulting firm focused on consulting services
to state and local governments including economic analysis for real
estate development, public-policy analysis, tourism and economic
development. Since its founding in 1976, Bonneville Research has
completed assignments throughout the intermountain west yielding
unmatched experience in high quality public policy analysis and
economic analysis.
In broad terms, Bonneville Research assists
state and local governments find workable solutions and to establish
quality and sustainable public policy. We often work with private
developers and public agencies in assessing the future economics and
outcomes of real estate projects, economic development plans and
opportunities for public/private partnerships. Bonneville Research
offers a diverse array of economic analysis and tools to answer complex
problems.
- Market and Financial Feasibility Analysis
- Concept and Development Programming
- Operational Analysis and Budgeting
- Service Delivery and Cost Effectiveness
Analysis
- Business Organization and Marketing
Strategies
- Services Repositioning and Disposition
- Economic Development Plans
- Demand Assessment for Public and Cultural
Facilities
- Public-Private Partnerships
- Economic and Fiscal Impact
- Grant-writing/Fundraising
- Fusing talents of a multi-disciplined
staff, the firm's experience has concentrated in four interrelated
fields:
- Economic development and community
planning
- Law enforcement, fire and public safety
- Recreation, tourism and leisure time
- Management, benchmarking and best
practice services
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Economic
Notes:
Semiconductor
Billings: 3.7%
Global
semiconductor sales rose once again in November. The three-month moving
average reached $22.7 billion, which represented the first
year-over-year growth since September 2008. Growth occurred across all
geographical regions, which bodes well for the industry as the world
economy stabilizes.
Factory Orders (M3): 1.1%
Factory
orders rose 1.1% in November, slightly less than anticipated. The
increase in durable goods orders was unchanged from the first
publication, at 0.2%, and the increase in nondurable orders was 1.8%
over the month. Total shipments were up 1%, boosted by the increase in
petroleum prices in November. Unfilled orders and inventories for
durable goods fell, while total inventories were lifted by the rise in
inventories for petroleum products. The I/S ratio fell slightly to 1.32
months from 1.34 months in October. Core capital goods orders were up
3.6%, and shipments rose 1.1%.
Challenger Report: 45,094
The
December Challenger report provides further confirmation of a
stabilizing labor market. The number of announced job cuts has declined
precipitously since the beginning of 2009, when it soared above
240,000, to only 45,094 in December. Job cuts have receded to a pace
consistent with an expanding labor market.
Jobless Claims: 434,000
Initial
claims for unemployment benefits showed a modest gain, increasing by
1,000 to 434,000 for the week ending January 2. Despite the gain,
initial claims remain lower than in recent months. Meanwhile,
continuing claims continued their recent string of declines, falling by
179,000 to 4.802 million for the week ending December 26. On net,
claims for unemployment benefits are indicating modest labor market
firming.
Monster Employment Index: 115
The
Monster employment index fell by four points between November and
December to a level of 115. Much of the decline probably was related to
a seasonal slowdown in hiring, with only three of the industries
tracked by the index showing increases in ads on the month. Still, the
3.4% month-ago decrease in December was slightly smaller than the
average decline recorded during December in previous years. On a
year-ago basis, the index showed modest improvement, falling by 12.2%
compared with a 16.8% drop in November.
Construction Spending (C30): -0.6%
A
larger than expected drop in residential construction and a slight
decline in public construction led to total construction spending in
November declining more than previously expected. Construction spending
fell by 0.6% from the revised October total and also fell by 13.2%
compared with November 2008 levels. Private construction fell by 0.7%
from October, with private residential construction dropping a
substantial 1.6% from the previous month. Private nonresidential
construction stayed level from October to November. Public construction
fell by 0.4% from its revised October level.
Case-Shiller® Home Price Indexes:
-9.0
The
Case-Shiller Home Price Indexes posted their second consecutive quarter
of gains in the third quarter of last year. The national index
increased quarter over quarter by an annualized 7.7%, a gain that the
regional indices reflected. The CSI increased in all nine Census
divisions quarter over quarter, although on a year-ago basis, prices
are still down substantially.
MBA Mortgage Applications Survey: 462.2
In
the week ending January 1, the minor gain in the market index did not
undo the damage from the previous week. This week, the market index
gained 0.5% from the previous week finishing at 462.2; but the 22.8%
decline of the preceding week leaves the market index more than 20% shy
of its earlier level. This unusually large decline was a result of a
30.5% decline in the refinance index Christmas week. This week, the
refinance index slipped another 1.6%, to end at 1,976.9. The previous
two weeks for the purchase index have been, for the most part, a wash.
Last week, the purchase index slipped 4%, which was mostly undone by a
3.6% gain this week. As a result, the purchase index, now at 212.1, is
just shy of its level from two weeks ago.
Pending Home Sales: -16%
The
pending home sales index fell a whopping 16% between October and
November, the first month-ago decrease since January 2009 and a much
larger decline than had been expected. The pending home sales index
dropped back to a level of 96 in November from an upwardly revised
reading of 114.3 in October. The decline in pending home sales was
greatest in the Northeast and Midwest. On a year-ago basis, pending
home sales increased 15.5% in November, although this was about half
the year-ago increase reported during October.
Chain Store Sales Snapshot: 1.5%
Chain
store sales rose 1.5% in the week ending January 2, according to the
ICSC sales index. While the fourth consecutive gain, it was a
seasonally typical one. As a result, year-ago growth was little
changed, inching up to 2.5%. Gift card redemption reportedly helped
propel what was the largest week-to-week gain since June and a modest
increase in the ICSC's forecast for the month of December.
Weekly Natural Gas Storage Report:
-153.00 bcf
Working
gas in underground storage fell by 153 billion cubic feet during the
week ending January 1, nearly in line with the consensus estimate of a
154 bcf draw. This report will not have a substantial effect on gas
prices.
Oil and Gas Inventories: 327.3 mil
barrels
Crude
oil inventories rose by 1.3 million barrels for the week ending January
1, above expectations of a 1 million-barrel decline. Distillate
inventories fell by 300,000 barrels, which was below the consensus
estimate of a 1.9 million-barrel decline. Gasoline inventories rose
strongly by 3.7 million barrels. Refinery operating capacity fell from
80.3% to 79.9%. Petroleum demand fell. This report should cause oil
prices to retrace some recent gains.
Source:
Economy.com
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 Bonneville
Research is proud to join Yvon Chouinard,
founder of Patagonia, and Craig Mathews, owner of Blue Ribbon Flies and
700 other companies in recognizing that industry and ecology are
inherently connected, and to make a commitment to contribute 1% of
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