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Major Trends Impacting Colorado’s Future Today and Tomorrow
Colorado Economy Today
• Colorado’s recession ended in 2009.• 2012 and 2013, job growth beat projections by every
economist. 2014 continues the trend.• Colorado’s highly diversified economy (4th best in the
U.S.) cushioned the recession’s blow – especially in housing values.
• Growth is progressing at all levels across the State’s economic base, but growth in geographic areas is not equal.
• Lay-offs are half of lay-offs in 2008
The Depth of the Great Recession
• 2001 – 2010 “establishments” created “net zero” jobs. But job growth increased by 130,000 jobs. More about this later.
• Number Employed Metro (2005): 1.440 million
• Total Number Employed (2013): 1.463 million
• This was truly The Great Recession
Growth Up, Up, Up…
• State jobs up 2.6% Metro up 2.7%. Led by construction and natural resources. Expect 3% growth rate by year end. Haven’t seen numbers like this since the late 1990s.
• Exports up 6%. Could reach record of $8.6 billion by year end.
• Leeds Business Confidence Index is 60.5 up from 58.1
Colorado Per Capita Personal Income
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$33,986
$41,181
$44,180 $45,135 Colorado United States
Colorado has 13th Highest Per Capita Personal Income Level
Source: U.S. Bureau of Economic Analysis.
Nonfarm Job Growth Rates
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e-6%
-4%
-2%
0%
2%
4%
6%
1.1% 1.7% 1.9%0.8%
3.5%2.9%
United States Metro Denver
Metro Denver 2013 Employment = 1.5 million68K jobs lost 2009-2010; 64K jobs added 2011-2012; 49K jobs added 2013
Source: U.S. Bureau of Labor Statistics.
International Trends
Uncertainty in Every Corner• Putin holding Western Europe hostage with
natural gas.• Crimea, Syria, Libya and Iraq all caught up in
civil war. Libya and Iraq had been significant oil suppliers to U.S. in recent years.
• China and Japan conflict over northern Japanese Islands.
• International refugee crisis
International Trends
• Colorado now a global competitor – direct flights to Europe, Asia and Panama (December, 2014) now connect Colorado to 65% of Gross World Product in the “Global Triangle”.
• Huge global consumer market will seem to “explode” in tourism and trade, as China alone adds 300 million to the middle class in next 10 years.
• Japan will begin to off-shore its manufacturing over the next five years as it emerging from twelve year recession. U.S. and Brazil will benefit.
The Prospect of American Energy Independence
• Colorado ranks 5th in U.S. for natural gas production and 10th in oil production
• U.S. is preparing to launch a major infrastructure initiative that would permit the export of liquefied natural gas (LNG).
• “Re-shoring” of manufacturing will result as low cost gas will increase our competitiveness
U.S. will be world’s largest oil producer by 2020
• Reliable oil prices – over 80% of U.S. oil demand will come from domestic sources or trusted allies – Canada and Mexico.
• Balance of payments will improve, strengthening dollar, increasing domestic investments.
• Western Europe and Asia (Japan and China) will increase direct investments in U.S. as Russia’s grip on oil and gas costs throughout Europe will discourage expansions due to higher production costs.
Fig. 14
1.0 Trillion Barrels of
Oil
U.S. Russia Qatar Iran Canada Norway China Saudi Arabia0
5,000
10,000
15,000
20,000
25,000
30,000
Natural Gas Production Leaders, 2008-2012U.S. is 1st and growing; top 8 producers
equal 62.0% of global production2008
2009
2010
2011
2012
Tri
llion
Cu
bic
Feet
(T
cf)
Source: International Energy Agency
U.S. ranks 1stwith 19.8% of
global production24.05 (Tcf)
Fig. 16
TX LA PA WY OK CO AR NM WV UT0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Natural Gas Production by State, 2008-2012
Colorado ranks 6th in production; pro-duction is increasing
due to technology improvements 2008
2009
2010
2011
2012
Tri
llion
Cu
bic
Feet
(T
cf)
Source: U.S. Department of Energy, Energy Information AdministrationNote: Top ten producers including Colorado
CO ranks 6thin production
1.6 (Tcf)
Fig. 10
19731975
19771979
19811983
19851987
19891991
19931995
19971999
20012003
20052007
20092011
0
5,000
10,000
15,000
20,000
25,000
U.S. Crude Oil Production & Consumption, 1973-2012Gap is narrowing; domestic production increasing
since 2009; domestic consumption decreasing since 2006
U.S. Production
U.S. Consumption
Mil
lion
Bar
rels
per
Day
Source: U.S. Department of Energy, Energy Information AdministrationFig. 6
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Renewables
Hydro
Nuclear
Natural Gas
Oil
Coal
% o
f Gen
erat
ion
Source: U.S Department of Energy, Energy Information Administration; some 2012 data is provisional
U.S. Net Generation History by Resource, 1950-2012
Fig. 33
Partnership between Natural Gas and Renewable Energies
• Natural gas produces 40% less carbon dioxide than other fossil sources.
• “Ramp up” time for natural gas electrical generation is generally faster than older coal plants. This “quick on” advantage allows gas to supplement drops in wind speeds for turbines or weather changes for solar fields.
China U.S. European Union
India Russia Japan Germany Iran South Korea Canada0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
25%
16%
11%
6%5%
3%
2% 2% 2%1%
CO₂ Emissions by Country: 2000, 2005, 2010
Top ten countries account for 64% of world CO₂ emissions 2000
2005
2010
CO E
mis
sion
s (b
illi
on m
etri
c to
ns)
₂
Source: World Bank; Carbon Dioxide Information Analysis Center, Environmental Sciences Division, Oak Ridge National Laboratory
In 2010, China accounted for 25% of the world's total CO ₂
emissions (8.3 billion metric tons), while the U.S. accounted for 16%
(5.4 billion metric tons)
Percentages reflect share of total global CO2 emissions in 2010
Fig. 41
The Changing Workforce
Migration of people U.S. migration vector
from East to West remains unchanged.
Colorado now “first choice” of 25-34 year old migrantsNew vector from Latin
America
Millennials Largest Population Group - 2014
0 to 4 5 to 9 10 to 14
15 to 19
20 to 24
25 to 29
30 to 34
35 to 39
40 to 44
45 to 49
50 to 54
55 to 59
60 to 64
65 to 69
70 to 74
75 to 79
80 to 84
85 to 89
90+0
50,000
100,000
150,000
200,000
250,000
Population 2014 = 2.99 million
Millennials833,000
Gen X632,700 Baby Boomers
701,600
Silent Gen207,700
Greatest Gen
15,100
Next Gen 599,900
Baby Boomers Slow to Retire
• Replacing 401k losses during the Great Recession
• Increased longevity and fears of having enough for lives into age 90 keeps Boomers working.
• Example: Projected aerospace retirees in 2012 was 8% - actual percentage who retired - 1%.
Millennials Largest Population Group - 2024
0 to 4 5 to 9 10 to 14
15 to 19
20 to 24
25 to 29
30 to 34
35 to 39
40 to 44
45 to 49
50 to 54
55 to 59
60 to 64
65 to 69
70 to 74
75 to 79
80 to 84
85 to 89
90+0
50,000
100,000
150,000
200,000
250,000
300,000
Population 2024 = 3.45 million
Millennials941,100
Gen X638,900
Baby Boomers636,200
Silent Gen120,300
Future Gen229,500
Next Gen 880,400
Changing Workspaces
Millennials are most educated generation in history. Most bachelor’s degrees conferred in business, the social sciences and history, health sciences, and education.
One-half to two-thirds of Millennials are interested in entrepreneurship, and 27% already self-employed.
29% of entrepreneurs were 20 to 34 years old in 2011. Three out of four Millennials say that work-life balance
drives their career choices. This balance will place greater emphasis on transportation and access to the mountains.
Aerospace
Aviation
Medical Devices
Telecom
Cleantech
Banking/Finance
Insurance
Pharma
IT/Software
Investments
Healthcare & Wellness
Fossil Fuels
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
-5.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%
Nin
e-C
oun
ty L
ocat
ion
Qu
otie
nt
Rel
ativ
e to
U.S
. (A
vg.=
1.0)
Avg. Annual Employment Growth (2007-2012)
Metro Denver Industry Clusters2007 - 2012
Aerospace
Aviation
Medical Devices
Telecom
Cleantech Banking/Finance
Insurance
Pharma
IT/Software
Investments
Healthcare & Wellness
Fossil Fuels
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
-0.5% 0.5% 1.5% 2.5% 3.5% 4.5% 5.5% 6.5%
Nin
e-C
oun
ty L
ocat
ion
Qu
otie
nt
Rel
ativ
e to
U.S
. (A
vg.=
1.0)
One-Year Direct Employment Growth (2012-2013)
Metro Denver Industry Clusters
Possible Ballot Initiatives in 2014
• Deferred maintenance on State’s roads – sales tax increase – DEAD
• State-wide fracking ban – deferred to Commission
Real Gross Domestic Product Annual Average Growth Rates
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e-4%
-3%
-2%
-1%
0%
1%
2%
3%
4% 3.8%3.3%
2.7%
1.8%
-0.3%
-2.8%
2.5%
1.6%
2.3% 2.2% 2.2%
Source: U.S. Bureau of Economic Analysis.
Metro Denver Annual Change in Population
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
-20,000
-10,000
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Net Migration Natural Increase
Source: Colorado Division of Local Government, State Demography Office.
2014 Population = 2.99 million
Colorado Becoming More Diverse
2015
White Hispanic BlackAsian/PI Am. Indian
2025
White Hispanic BlackAsian/PI Am. Indian
Percent of minority population increases from 31% to 37%
Colorado 3rd fastest growing state
AZ CO KS NE NM OK TX UT WY-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
2010 2013
#4 #2
#40
Source: U.S. Bureau of Labor Statistics, QCEW.
Nonfarm Job Growth Rates
#3
Employment growth inconsistent across the state
Colorado Springs
Grand Junction
Pueblo
Metro Denver
Fort Collins-Loveland
Greeley
Colorado
U.S.
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%
1.0%
1.2%
1.9%
2.9%
3.1%
5.2%
2.9%
1.9%
Source: U.S. Bureau of Labor Statistics.
Nonfarm Job Growth Rates by Metro Area, YTD July 2014
Proprietors are another significant component of employment
594,663
792,999
816,087 836,983
500,000
550,000
600,000
650,000
700,000
750,000
800,000
850,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: U.S. Bureau of Economic Analysis.
Proprietors Employment25.5% of Colorado’s Total Employment (US avg = 22.4%)
Milliennials and Housing
Student loan debt more than tripled in past decade, to more than $1.1 trillion. While Fannie- and Freddie-backed borrowers have an average score of 740, most Millennials have credit scores below 700. (Source: FICO)
In 2012, 36% of the nation’s Millennials were living in their parents’ home. This is the highest share in at least four decades. (Source: Pew Research Center)
Younger buyers tend to buy older homes, and are more likely to buy previously owned homes. Most often they do so because the home is a better price and better overall value. (Source: National Association of Realtors)
“Always end a speech on a high note.”
Is legalized marijuana hurting our economic future?
2015• Growth will continue, but at slower rate as
U.S. returns to more “normal” five-year business cycle. Expect 2.0% growth rate.
• High housing prices will slow job growth, as Phoenix, Las Vegas and Dallas costs will compete strongly against Colorado. “Most expensive housing market without a coast.”
• If you own a house, your net worth will continue to grow, but not at the 15% rate of 2012-13.
Enjoy another great year!