the economic outlook...2018/10/19 · country exports imports total, 829.8 1233.9 china 64.0 7.7%...

Beacon EconomicsBeacon Economics | beaconecon.com

Christopher Thornberg, PhDFounding Partner, Beacon EconomicsDirector, UCR SoBA Center for Economic Forecasting and Development

The Economic OutlookFocus on the Tahoe RegionOctober 2018

Beacon EconomicsBeacon Economics

The Good: Strong Growth Trends

Meet the Trump economy, same as the old economy

⏤ Economy on a steady growth path since

2014-2015 global commodity bust

⏤ Labor markets, business investment,

wages, exports, energy, housing all on

good trends

⏤ 2018 better: good momentum with fiscal

stimulus after-burner

⏤ Still a low chance of recession in next 24

months`

⏤The west is still the best

⏤Tahoe: center point of Route 80 boom

2

0.0% 20.0% 40.0% 60.0%

2023

2022

2021

2020

2019

2018

WSJ Next Recession Poll

It isn’t the ‘when’, it’s the ‘why’ that matters


The Bad and Ugly

Brakes and Imbalances⏤Labor shortages impacting employers⏤Local Housing Shortages⏤Recent market volatility / rising long term rates⏤Aggressive Fed, flattening yield curves⏤Sharp growth in government deficits⏤Global trade / security worries

Politics going in the wrong direction⏤Little effort to deal with underinvestment in infrastructure, rising wealth and

income inequality, healthcare cost inflation, pension and entitlement issues, etc⏤The great disconnect between economic realities and political discourse

3


GDP Growth Q2: 4.2%

-2

-1

0

1

2

3

4

5

2000

Q1

2002

Q1

2004

Q1

2006

Q1

2008

Q1

2010

Q1

2012

Q1

2014

Q1

2016

Q1

2018

Q1

Real GDP Growth Y-o-Y2016 2017 2018Avg Avg Q1 Q2

GDP 1.88 2.48 2.20 4.20Final Demand 2.42 2.81 1.95 4.04Consumption 1.87 1.83 0.36 2.69

Goods 0.75 0.96 -0.13 1.24Services 1.11 0.87 0.49 1.46

Fixed Invest 0.39 0.95 1.34 0.94Structures 0.07 0.08 0.40 0.39Equipment -0.08 0.54 0.49 0.23Intellectual 0.24 0.18 0.58 0.35Residential 0.16 0.15 -0.14 -0.04

Inventories -0.20 -0.11 0.27 -1.00Net exports -0.34 -0.23 -0.02 1.06

Exports 0.09 0.56 0.43 1.12Imports -0.43 -0.79 -0.45 -0.06

Government 0.16 0.03 0.27 0.37National defense -0.03 0.05 0.11 0.21State and local 0.15 -0.06 0.10 0.15

Q3 GDP: ~4.0%


Consumer Spending / By Type

5

75

85

95

105

115

125

135

2010 2011 2012 2013 2014 2015 2016 2017

Real Spending Recreation ($Bil)

Gambling Hotels Parks / Sports / Live Shows

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

Jan-

00M

ar-0

1M

ay-0

2Ju

l-03

Sep

-04

Nov

-05

Jan-

07M

ar-0

8M

ay-0

9Ju

l-10

Sep

-11

Nov

-12

Jan-

14M

ar-1

5M

ay-1

6Ju

l-17

Real Consumer Spending- YoY Gr


Consumer Debt / Savings

6

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

10.0%

2000

Q1

2001

Q1

2002

Q1

2003

Q1

2004

Q1

2005

Q1

2006

Q1

2007

Q1

2008

Q1

2009

Q1

2010

Q1

2011

Q1

2012

Q1

2013

Q1

2014

Q1

2015

Q1

2016

Q1

2017

Q1

2018

Q1

Personal Savings Rate (Share DPI)

0.7

0.75

0.8

0.85

0.9

0.95

1

1.05

1.1

1.15

1.2

03:Q

104

:Q1

05:Q

106

:Q1

07:Q

108

:Q1

09:Q

110

:Q1

11:Q

112

:Q1

13:Q

114

:Q1

15:Q

116

:Q1

17:Q

118

:Q1

Household Debt / DPI Ratio


Labor Markets

7

0.0

0.5

1.0

1.5

2.0

2.5

2010

-01-

0120

10-0

7-01

2011

-01-

0120

11-0

7-01

2012

-01-

0120

12-0

7-01

2013

-01-

0120

13-0

7-01

2014

-01-

0120

14-0

7-01

2015

-01-

0120

15-0

7-01

2016

-01-

0120

16-0

7-01

2017

-01-

0120

17-0

7-01

2018

-01-

01

Y-o-Y Growth Non Farm Payrolls

Employ Y-o-Y Ch Y-o-Y GrTotal nonfarm 149741 2564 1.7%Mining 759 63 9.1%Construction 7477 300 4.2%Logistics 5385 174.3 3.3%Administrative 9650 278.1 3.0%Professional 9216 257.8 2.9%Durable goods 7980 220 2.8%Health care 19964 411.2 2.1%Hospitality 16509 282 1.7%Wholesale trade 6010 94 1.6%Management 2333 35.4 1.5%Other services 5862 87 1.5%Financial activities 8608 118 1.4%Nondurable goods 4807 58 1.2%Education 3704 35.6 1.0%Government 22378 105 0.5%Retail trade 15782 62.6 0.4%Information 2763 -15 -0.5%


The Labor Supply Crunch

8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Jan-

94Ju

l-95

Jan-

97Ju

l-98

Jan-

00Ju

l-01

Jan-

03Ju

l-04

Jan-

06Ju

l-07

Jan-

09Ju

l-10

Jan-

12Ju

l-13

Jan-

15Ju

l-16

Jan-

18

US Unemployment Rate

U6

U3

1

1.5

2

2.5

3

3.5

4

4.5

Dec

-00

Jan-

02Fe

b-03

Mar

-04

Apr

-05

May

-06

Jun-

07Ju

l-08

Aug

-09

Sep

-10

Oct

-11

Nov

-12

Dec

-13

Jan-

15Fe

b-16

Mar

-17

Apr

-18

US Job Openings Rate


Consequences

9

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

Sep

-02

Sep

-03

Sep

-04

Sep

-05

Sep

-06

Sep

-07

Sep

-08

Sep

-09

Sep

-10

Sep

-11

Sep

-12

Sep

-13

Sep

-14

Sep

-15

Sep

-16

Sep

-17

Real Wage Gains for Continuously Employed FT Workers

Median Average

1.01.21.41.61.82.02.22.42.62.83.0

2009

-01-

0120

09-0

8-01

2010

-03-

0120

10-1

0-01

2011

-05-

0120

11-1

2-01

2012

-07-

0120

13-0

2-01

2013

-09-

0120

14-0

4-01

2014

-11-

0120

15-0

6-01

2016

-01-

0120

16-0

8-01

2017

-03-

0120

17-1

0-01

Growth in Employment Costs


Conventional Non-Wisdoms

10

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

1953

1957

1961

1965

1969

1973

1977

1981

1985

1989

1993

1997

2001

2005

2009

2013

2017

Real Median Income- Males (Census)

0.30

0.35

0.40

0.45

0.50

0.55

0.60

0.65

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

Gini Coefficients

Based onMarketIncome

Based onIncomeAfterTransfers andTaxes


62

64

66

68

70

72

74

76

78Life Expectancy

1973 2018

Quality of Life

Source: Countryeconomy.com. Statista. 11

0.0%

0.4%

0.8%

1.2%

1.6%

2.0%Infant Mortality

1973 2018

4.15%

2.85%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%Total Crime Rate in the U. S.

1973 2016


Workforce Growth

12

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Jan-

80Fe

b-82

Mar

-84

Apr-8

6M

ay-8

8Ju

n-90

Jul-9

2Au

g-94

Sep-

96O

ct-9

8N

ov-0

0D

ec-0

2Ja

n-05

Feb-

07M

ar-0

9Ap

r-11

May

-13

Jun-

15Ju

l-17

US Labor Force Growth (Smoothed)

60.0

61.0

62.0

63.0

64.0

65.0

66.0

67.0

68.0

Jan-

86N

ov-8

7Se

p-89

Jul-9

1M

ay-9

3M

ar-9

5Ja

n-97

Nov

-98

Sep-

00Ju

l-02

May

-04

Mar

-06

Jan-

08N

ov-0

9Se

p-11

Jul-1

3M

ay-1

5M

ar-1

7

US Participation Rate


The Boomer Bust

13

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%Ja

n-75

Jun-

77N

ov-7

9Ap

r-82

Sep-

84Fe

b-87

Jul-8

9D

ec-9

1M

ay-9

4O

ct-9

6M

ar-9

9Au

g-01

Jan-

04Ju

n-06

Nov

-08

Apr-1

1Se

p-13

Feb-

16

US Population 25-54 Y-o-Y Gr

-

5.0

10.0

15.0

20.0

25.0

Und

er 5

yea

rs5

to 9

yea

rs10

to 1

4 ye

ars

15 to

19

year

s20

to 2

4 ye

ars

25 to

29

year

s30

to 3

4 ye

ars

35 to

39

year

s40

to 4

4 ye

ars

45 to

49

year

s50

to 5

4 ye

ars

55 to

59

year

s60

to 6

4 ye

ars

65 to

69

year

s70

to 7

4 ye

ars

75 to

79

year

s80

to 8

4 ye

ars

85 y

ears

and

ove

r

2016 Population by Age (Millions)


Looking Ahead

0-24 25-64 65+Current 104.5 169.4 49.2

2016-26 0.9 4.7 17.82026-36 2.0 6.2 11.92036-46 2.3 9.4 4.8

Total 5.3 20.3 34.5

Real Average Net Worth by Age

1989 2016 1989 2016Median Median Mean Mean

All 87.5 97.3 346.9 692.0< 35 14.6 11.0 87.4 76.135–44 105.3 59.8 275.4 288.645–54 184.2 124.2 515.7 727.555–64 182.6 187.3 574.3 1167.465–74 143.1 223.4 522.0 1066.075 + 135.2 264.8 450.7 1066.9

US Population Forecast


Budget Implications

15

Fed M. Spending / Senior

1995 $5,461 2015 $13,531 2035* $43,395

Spending Share Federal Rev

1995 13.0%2015 18.7%2035* 41.0%

Medicare Spending Projections

-$1,600-$1,400-$1,200-$1,000

-$800-$600-$400-$200

$0$200$400

199820002002200420062008201020122014201620182020202220242026

CBO:Past and Projected Federal Budget Gap

2017 Projection 2018 Projection


Trade Trends

16

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Jan-

75

Jan-

78

Jan-

81

Jan-

84

Jan-

87

Jan-

90

Jan-

93

Jan-

96

Jan-

99

Jan-

02

Jan-

05

Jan-

08

Jan-

11

Jan-

14

Jan-

17

Share of GDP

Net National Savings Net Exports

Linear (Net National Savings) Linear (Net Exports )

-70000

-60000

-50000

-40000

-30000

-20000

-10000

0

Jan-

93A

ug-9

4M

ar-9

6O

ct-9

7M

ay-9

9D

ec-0

0Ju

l-02

Feb

-04

Sep

-05

Apr

-07

Nov

-08

Jun-

10Ja

n-12

Aug

-13

Mar

-15

Oct

-16

Trade Deficit


The China Syndrome

17

Value US Exports to China as % of

GDP: 0.75%

Demands• reduce its trade surplus with the U.S. by

$200 billion over two years• would not challenge U.S. actions taken in

intellectual property disputes• stop subsidizing high-tech sectors

identified in its “Made in China 2025“ plan• cut tariffs on “all products in non-critical

sectors” to levels at or below U.S. duties • demanded that China not target U.S.

farmers and agricultural products • demanded that China not retaliate

against U.S. restrictions on Chinese investments

• ease a process for approving U.S. investments

Country Exports ImportsTotal, 829.8 1233.9China 64.0 7.7% 249.7 20.2%Canada 151.9 18.3% 160.0 13.0%Mexico 131.3 15.8% 169.3 13.7%Japan 35.7 4.3% 70.3 5.7%Germany 29.4 3.5% 62.3 5.0%United Kingdom 33.9 4.1% 29.3 2.4%Korea, South 27.1 3.3% 35.4 2.9%France 18.1 2.2% 25.7 2.1%India 15.5 1.9% 26.8 2.2%Italy 11.9 1.4% 26.8 2.2%Taiwan 13.6 1.6% 21.6 1.8%Netherlands 24.2 2.9% 10.7 0.9%

Value China Exports to US as

% of GDP: 4.0%


State Economic Performance

Source: U.S. Bureau of Labor Statistics, U.S Bureau of Economic Analysis 19

Q1 2018 1 Year 5 YearWashington 4.3% 3.7%California 3.5% 3.7%Utah 3.7% 3.4%Colorado 4.5% 3.4%Oregon 3.4% 2.9%Florida 2.3% 2.8%Texas 4.2% 2.8%Idaho 3.2% 2.8%Georgia 2.5% 2.8%Nevada 4.0% 2.7%South Carolina 2.0% 2.5%Arizona 4.2% 2.5%

Rk State #Ann Gr Share US1 Nevada 211.2 3.4% 1.7%2 Utah 218.3 3.2% 1.7%3 Florida 1238.2 3.1% 9.8%4 Oregon 252.1 2.9% 2.0%5 Idaho 92.1 2.8% 0.7%6 Colorado 328.7 2.7% 2.6%7 Washington 413.1 2.7% 3.3%8 California 2051 2.6% 16.3%9 Georgia 537.9 2.6% 4.3%10 South Carolina 237.6 2.4% 1.9%11 Texas 1371.6 2.4% 10.9%12 Arizona 283.3 2.2% 2.2%

Real Output Employment


Population Shifts

20

-0.3%-0.2%-0.1%0.0%0.1%0.2%0.3%0.4%0.5%0.6%0.7%0.8%

2011 2012 2013 2014 2015 2016

Net Migration (% of Pop) by region

Northeast Region Midwest RegionSouth Region West Region

Florida 1.51% Ohio -0.05%Nevada 1.27% Penn -0.06%Colorado 1.10% Wisconsin -0.08%Oregon 1.08% Michigan -0.08%South Carolina 1.04% New Jersey -0.14%Washington 0.99% Vermont -0.19%Arizona 0.96% W Virginia -0.26%Texas 0.90% New York -0.27%North Dakota 0.79% Mississippi -0.28%Idaho 0.77% Kansas -0.30%Delaware 0.66% Connecticut -0.32%North Carolina 0.66% Wyoming -0.35%Montana 0.60% New Mexico -0.47%Georgia 0.54% Illinois -0.58%Tennessee 0.53% Alaska -0.73%

Net Migration by State 14-16

Beacon EconomicsBeacon EconomicsSource: Business Insider/Census Bureau 21


California Economic Engine

22

11.0%

11.5%

12.0%

12.5%

13.0%

13.5%

14.0%

14.5%

1981

:Q1

1983

:Q1

1985

:Q1

1987

:Q1

1989

:Q1

1991

:Q1

1993

:Q1

1995

:Q1

1997

:Q1

1999

:Q1

2001

:Q1

2003

:Q1

2005

:Q1

2007

:Q1

2009

:Q1

2011

:Q1

2013

:Q1

2015

:Q1

2017

:Q1

California Share National Personal Income

California Balance US

Share Ch 12-16 Share Ch 12-16

< 25K 18.5% -3.3% 21.6% -3.1%

25-50K 19.4% -2.4% 22.9% -1.6%

50-100K 28.5% -0.5% 30.2% 0.2%

100-150K 15.7% 1.3% 13.8% 1.7%

150K-200K 7.9% 1.6% 5.6% 1.2%

200K+ 10.1% 3.3% 6.0% 1.6%

Distribution Household Incomes


Myth Busting

23

California's economy recently grew to become the world's fifth-largest economy if it were its own country.

Sounds like great news, but that wealth mostly benefits the very rich in the tech sector.

"Almost all the income growth and high-end job growth took place in Silicon Valley,”

Joel Kotkin, professor of Urban Studies at Chapman UniversityMay 18, 2018

25-50K 50-75K 75K-100K 100K+

State 318,146 179,115 177,425 484,322

Bay 4.4% 9.1% 24.1% 39.4%

So Cal 43.1% 27.7% 29.5% 39.4%

S Cen Val 19.6% 19.9% 8.8% 7.1%

N Cen Val 16.1% 11.8% 12.1% 10.1%

Cen Cst 5.3% 6.0% 5.1% 2.2%

Other 11.4% 25.5% 20.3% 1.8%

Share New FT Employees 2013-2016


Quiz Time

24

Match the payroll employment growth rate (letters) (1995-2015) to the California region (numbers)

A 23.6%

B 25.8%

C 27.0%

D 33.8%

E 39.8%

1 Bay Area

2 Central Coast

3 Greater Los Angeles

4 Greater Sacramento

5 So Central Valley


The Big Slowdown

25

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Jan-

11Ju

l-11

Jan-

12Ju

l-12

Jan-

13Ju

l-13

Jan-

14Ju

l-14

Jan-

15Ju

l-15

Jan-

16Ju

l-16

Jan-

17Ju

l-17

Jan-

18Ju

l-18

Employment Growth

CA US

Total Nonfarm Aug-18 17-18 16-17 15-16San Jose 1142.3 3.8% 2.3% 2.7%Inland Empire 1509.6 3.5% 3.6% 3.5%Fresno 355.8 3.1% 2.3% 3.4%Stockton 242.7 3.0% 4.0% 3.2%Santa Rosa 211.7 2.7% 2.1% 2.3%Bakersfield 264.6 2.6% 1.9% -2.0%San Francisco (MD) 1140.8 2.1% 1.8% 3.7%California 17192 2.1% 2.0% 2.4%Oakland (MD) 1186.2 1.8% 2.0% 2.9%Sacramento 989.5 1.7% 2.1% 3.3%San Diego 1478.9 1.6% 1.8% 2.6%Ventura 310.4 1.5% 1.5% 1.5%Los Angeles (MD) 4513.6 1.4% 1.2% 2.3%Orange County (MD) 1637.8 0.8% 2.5% 2.1%


California Labor Markets

Source: U.S. Census 26

-0.50%

-0.30%

-0.10%

0.10%

0.30%

0.50%

0.70%

0.90%

1.10%

1.30%

1.50%

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Net Migration as a % of Pop

3456789

10111213

Jan-

90A

ug-9

1M

ar-9

3O

ct-9

4M

ay-9

6D

ec-9

7Ju

l-99

Feb-

01S

ep-0

2A

pr-0

4N

ov-0

5Ju

n-07

Jan-

09A

ug-1

0M

ar-1

2O

ct-1

3M

ay-1

5D

ec-1

6

Unemployment Rate

California


New Housing Supply

27

How Much Housing Needed?Housing Needed to maintain 2% State

Job Growth

Method 1Total 722,022 Per Year 206,674 Current 111,185 Shortfall 100,489

Method 2Total 911,001 Per Year 263,667 Current 111,185 Shortfall 157,482

0

50000

100000

150000

200000

250000

Q1-

95Q

2-96

Q3-

97Q

4-98

Q1-

00Q

2-01

Q3-

02Q

4-03

Q1-

05Q

2-06

Q3-

07Q

4-08

Q1-

10Q

2-11

Q3-

12Q

4-13

Q1-

15Q

2-16

Q3-

17

Residential Permits (SAAR)

SF MF


Residential Real Estate

28

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

0

100000

200000

300000

400000

500000

600000

Q1-

97Q

3-98

Q1-

00Q

3-01

Q1-

03Q

3-04

Q1-

06Q

3-07

Q1-

09Q

3-10

Q1-

12Q

3-13

Q1-

15Q

3-16

California Home Prices Median Prices Q1-18 17-18 16-17

California $472,294 7.3% 8.0%

East Bay $723,993 10.0% 9.4%

Fresno MSA $254,936 5.0% 10.7%

Inland Empire MSA $352,761 9.2% 9.4%

Los Angeles $615,090 6.7% 8.4%

Orange $774,821 6.5% 6.2%

Sacramento MSA $386,318 6.5% 11.4%

San Diego $597,336 5.9% 7.4%

San Francisco MD $1,456,570 11.4% 20.1%

Santa Clara MSA $1,248,883 8.7% 29.3%


Establishments, Lake Tahoe Sub Region

Source; U.S. Census Bureau County Business Patterns

Industry 2016Est.

2011-16Change

Total Establishments 3,038 3.9%

Goods Producing 451 5.4%

Trade, Transportation, & Utilities 450 4.9%

Leisure and Hospitality 427 7.3%

Local Services 1,710 2.8%20,000

22,000

24,000

26,000

28,000

30,000

32,000

34,000

36,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Lake Tahoe Sub Region Private Employment


Incomes, Lake Tahoe Basin

Source: American Community Survey 30

Income ($) Lake Tahoe Basin, 2016

Number of HH

% of Total

Abs Ch 2011

Total 21,658 100% -720

Less than 25,000 4,221 19.5% -397

25,000 to 49,999 5,268 24.3% -320

50,000 to 99,999 6,076 28.1% -968

100,000 to 149,999 3,046 14.1% 191

150,000 or more 3,047 14.1% 774 $40$50$60$70$80$90

$100$110$120

Q2-

11Q

4-11

Q2-

12Q

4-12

Q2-

13Q

4-13

Q2-

14Q

4-14

Q2-

15Q

4-15

Q2-

16Q

4-16

Q2-

17Q

4-17

Seas

onal

ly A

djus

ted

South Lake TahoeTaxable Sales Q2-11 to Q1-18


Regional Trends

050000

100000150000200000250000300000350000400000450000500000

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Population

El Dorado, CA Nevada, CA Placer, CADouglas, NV Washoe, NV Carson City, NV

Pop10 Yr

Ch10 Yr

Gr

Total 1221641 122667 10.0%

Washoe 453616 53163 11.7%

Placer 380531 58597 15.4%

El Dorado 185625 8852 4.8%

Nevada 99107 1558 1.6%

Carson 54742 -668 -1.2%

Douglas 48020 1165 2.4%


Employment, Reno

Source: Bureau of Labor Statistics 32

160170180190200210220230240250

Jun-1

1

Jun-1

2

Jun-1

3

Jun-1

4

Jun-1

5

Jun-1

6

Jun-1

7

Jun-1

8-2-101234567

Empl

oym

ent (

SA, T

hous

ands

)

Year

ove

r Yea

r Gro

wth

(%)

Total Nonfarm EmploymentJune 2011 to June 2018

Total Nonfarm Employment Growth

Industry June 2018 Emp.

YoY % Growth

17/18 16/17Total Nonfarm 239.9 3.8 5.7Logistics 53.4 1.8 5.6Hospitality 38.2 1.6 1.4Prof. & Business 32.7 5.2 3.0Government 31.3 2.4 2.6Education/Health 26.5 1.5 2.8Retail Trade 23.6 0.1 3.2Manufacturing 20.2 22.4 18.7Construction 17.8 2.1 23.0Admin Support 17.6 2.9 3.0Financial Activities 10.7 2.0 1.0Wholesale Trade 9.3 -3.1 6.7Other Services 6.5 1.5 10.2Information 2.2 0.1 5.0


Business Activity

Source: UNLV Center for Business and Economic Research 33

5557596163656769717375

Jul-0

1

Dec-02

May-04

Oct-05

Mar-07

Aug-08

Jan-1

0

Jun-1

1

Nov-12

Apr-14

Sep-15

Feb-17

Jul-1

8

Occ

upan

cy R

ate

(%)

Hotel Occupancy Rate, Reno MSAJune 2001 to June 2018

0

1

2

3

4

5

6

7

2004

2006

2008

2010

2012

2014

2016

-12.0-10.0-8.0-6.0-4.0-2.00.02.04.06.0

Num

ber o

f Vis

itors

(milli

ons)

Year

ove

r Yea

r Gro

wth

(%)

Visitor Volume, Reno MSA2004 to 2017

Visitor Volume Growth


Storey County Employment

Source: QCEW 34

0

2000

4000

6000

8000

10000

12000

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Empl

oym

ent

Total Employment2002 to 2017Industry 2017

Emp.

Year over Year

Growth (%)

Wage 2017

Year over Year

Growth (%)

Total 11,100 66.9 $57,000 12.8

Logistics 4,174 21.3 $37,300 -1.5

Manufacturing 3,956 209.1 $64,100 -8.9

Construction 1,549 131.2 $88,305 26.9

Accommodation 136 --10.9 $18,600 3.5

Admin Support 128 -5.4 $41,800 -10.3

Wholesale Trade 106 11.7 $60,750 -3.4

Prof. & Technical 103 102.9 $101,300 57.4


Residential Real Estate, Metro Comparisons

Source: Zillow, Wells Fargo 35

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2002

2004

2006

2008

2010

2012

2014

2016

2018

Num

ber o

f Per

mits

Residential Permits, Reno2002 to 2018*

Single-family Multi-family

Reno Housing2017 2014

Total: 199,160 189,622Occupied 182,846 168,863Vacant 16,314 20,759For Sale / Rent 6,138 7,061Seasonal 4,449 7,053

Vacant 8.2% 10.9%For Sale / Rent 3.1% 3.7%Seasonal 2.2% 3.7%


Sacramento

8008208408608809009209409609801000

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%Ju

l-04

Nov

-05

Mar

-07

Jul-0

8N

ov-0

9M

ar-1

1Ju

l-12

Nov

-13

Mar

-15

Jul-1

6N

ov-1

7

Sacramento Job Growth Industry Aug-18 5 Year ChangeTotal Nonfarm 989.5 119.2 13.7%NR/Construction 59.9 15.6 35.2%Management 13.2 2.9 28.2%Education/Health 160.5 29.5 22.5%Logistics 27.3 4.5 19.7%Admin Support 60.7 8.9 17.2%Leisure and Hospitality 103.6 14.9 16.8%Wholesale Trade 28.3 3.4 13.7%Other Services 31.7 2.8 9.7%Government 244.4 20.9 9.4%Retail Trade 102.4 8.7 9.3%Prof Sci Tech 55.8 3.7 7.1%Financial Activities 53.1 3.5 7.1%Manufacturing 36.6 2.4 7.0%Information 12 -2.7 -18.4%


Employment, Placer County

Source: QCEW 37

Industry Q1-18 Emp.

2014-18 Growth

AnnualWage Q1-18

Total 146,440 19.8% $54,912 Trade, Trans., & Util. 30,341 7.7% $45,292

Education/Health 27,558 19.5% $68,796 Leisure/Hospitality 24,164 17.6% $22,620 Professional/Bus. 21,369 31.4% $61,100 Construction 14,410 48% $61,412 Financial Activities 13,281 18.6% $93,392 Other services 5,581 14.8% $36,712 Manufacturing 5,421 -10.8% $62,556 Information 2,375 8.6% $76,024

NR/Mining 400 8.4% $42,276

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

80,000

90,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Placer County

Total Payrolls Unemployment Rate


Local Employment

38

Folsom Establishments and Employment by Zip Code, 2015

Zip Code Establishments EmploymentChange since 2012

Est. Emp.

95630 Folsom 2,063 33,772 12.5% 40.5%

95742 Rancho Cordova 774 11,645 7.6% 11.1%

95662 Orangevale 554 3,952 4.7% 4.9%

95628 Fair Oaks 911 6,976 3.4% 13.4%

95670 Rancho Cordova 1,249 32,892 1.1% 3.0%

Total 5,551 89,237 6.8% 16.8%Source: U.S. Census, County Business Patterns


Workforce Education

39

Local Workforce by Educational Attainment, 25 and Older

Attainment Level

2016Change since

2013 (p.p.)

Sac

CountyFolsom

Sac

CountyFolsom

Less than H.S. Diploma 13.7% 7.1% 0.5 1.3

H.S. Graduate 22.7% 14.4% -0.8 -6.4

Some College, No Degree 24.5% 21.8% -0.7 1.6

Associate's 9.4% 9.1% -0.4 0.6

Bachelor's 19.3% 28.7% 0.8 1.8

Graduate or Professional 10.4% 18.9% 0.7 1.1

Source: ACS

Median Household Income

Location $, 2016Change since

2013

Folsom 102,460 5.4%

Sacramento County 59,780 12.9%

California 67,739 12.5%

Source: ACS


Employment, El Dorado / Douglas

Source: QCEW 40

Industry Q1-18 Emp.

2014-18 Growth

AnnualWage Q1-18

Total 45,294 15.2% $50,336Leisure/Hospitality 9,374 6.2% $22,516Education/Health 7,745 7.8% $50,648Trade, Trans., & Util. 7,344 8.4% $38,792

Professional/Bus. 5,650 9.8% $57,772

Construction 5,302 62.5% $63,544Financial Activities 4,166 9.5% $108,888

Manufacturing 2,506 48.7% $59,488Other Services 1,729 9.8% $30,940

Information 602 24.9% $71,500

NR/Mining 349 -20.1% $28,548

Industry Q1-18 Emp.

2014-18 Growth

AnnualWage Q1-18

Total 16,866 10.4% $43,264 Leisure/Hospitality 6,157 5% $31,252 Trade, Trans., & Util. 2,737 5.2% $37,908

Manufacturing 1,815 9.4% $59,280 Professional/Bus. 1,628 3.9% $59,488

Education/Health 1,598 13.3% 43420Construction 1,452 73.3% $44,564 Financial Activities 726 6.3% $81,536

Other services 390 2.6% $34,736

Information 187 23% $66,456

NR/Mining 133 9% $45,344


Local HH Incomes 2014-20172017 El Dorado Nevada Placer Douglas Washoe Carson < 40K 16,750 12,720 33,669 5,383 54,628 7,43040-100k 25,124 14,781 52,365 10,529 76,247 10,385100k + 27,494 14,137 57,625 5,226 49,976 4,958Ch 14-17< 40K -3,746 -765 -2,985 -1,256 -9,204 -2,33840-100k 2,107 -2,169 2,452 723 7,078 1,976100k + 5,203 4,386 7,953 1,334 16,336 1,907Gr 14-17< 40K -28.8% -6.4% -9.7% -30.4% -20.3% -45.9%40-100k 7.7% -17.2% 4.5% 6.4% 8.5% 16.0%100k + 15.9% 23.7% 12.1% 20.3% 24.6% 27.8%


Unemployment Rate and Labor Force

Source: California Employment Development Department, U.S. Bureau of Labor Statistics

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Tahoe Region Unemployment

El Dorado Nevada PlacerDouglas Washoe Carson

0.0

50000.0

100000.0

150000.0

200000.0

250000.0

300000.0

350000.0

400000.0

450000.0

500000.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Labor Force

PL/WA Other


A Housing Shortage

Share When Built (2017)

El Dorado Nevada Placer Washoe

90311 53869 163927 196667

Built 2014 or later 1.3 0.9 2.9 3.1

Built 2010 to 2013 1 0.9 3.1 3.1

Built 2000 to 2009 15.5 13.7 27.3 20

Built 1990 to 1999 18.1 17 19.1 21.5

Built 1980 to 1989 19.6 25.5 16.4 14.6

Built 1970 to 1979 22.6 23.5 15 18.7

$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000

Jan-

11Ju

l-11

Jan-

12Ju

l-12

Jan-

13Ju

l-13

Jan-

14Ju

l-14

Jan-

15Ju

l-15

Jan-

16Ju

l-16

Jan-

17Ju

l-17

Jan-

18

Lake Tahoe Area Median Home Prices

Carson City Incline VillageKings Beach South Lake TahoeTahoe City Tahoe Vista


Housing Supply, Lake Tahoe Basin

Source: American Community Survey 44

Lake Tahoe Housing Stock

2016

Lake Tahoe Housing Stock

2011Total: 52,354 49,777Occupied 21,658 22,378Owner Occupied 12,846 12,704Vacant 30,696 27,399For Sale 651 701Seasonal 26,896 23,892

Owner Occupied 59.3% 56.8%Vacant 58.6% 55%Seasonal 51.4% 48%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

North South

Seasonal Home by Region

2016 2011


South Lake Tahoe Building Permits

Source: Construction Information Research Board

010203040506070

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

YTD

Num

ber o

f Uni

ts

South Lake Tahoe Residential Permits

Single-Family Multi-Family

0.05.0

10.015.020.025.030.035.0

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

YTD

Valu

atio

n ($

Milli

ons)

South Lake Tahoe TotalNon-Residential Permits


§ Positives: It will be a good year�GDP Growth Outlook for 2018: 3%�State revenues will look positive�Labor markets to remain tight�Rising wages to put pressure on profits�Exports, business investment up�Inflation to remain constrained�Interest Rates Still Low�Tahoe: Great Prospects in the broader

economic region

The Big Picture

46

§ Negatives: Problems Growing�Labor shortages will be an issue�Fed will continue to tighten, yield curve flat�Markets looking frothy�Federal deficit widening sharply�Political uncertainty to dominate headlines�Critical Policy Issues Remain Undiscussed�Miserabilism warping our sense or reality�Growth: a 2-edged sword

Cycle Goal ExamplesRecession Triage Access to Capital, Services for DisplacedRecovery Bulding Business New Markets, Supply ChainsEarly Expansion Trophy Hunting Marketing, Business AtractionLate Expansion Infrastructure Skill Training, Housing Supply


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47

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For more information, see Slide 2.

Continue the conversation.

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Portfolio Spotlight

48

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forecasting

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testimony

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