Zions Bank Economic Overview Dow Breaks 21,000 ¢â‚¬â€œ The Trump Bump 17,000 18,000 19,000 20,000 21,000

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  • Zions Bank Economic Overview

    Association of Financial Planners of Utah • July 20, 2017

  • National Economic Conditions

  • Dow Breaks 21,000 – The Trump Bump

    17,000

    18,000

    19,000

    20,000

    21,000

    22,000

    Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17

    Source: Federal Reserve Bank of St. Louis

    Dow Reaches New Heights Following U.S. Presidential Election

    DOW: +18% NASDAQ: +21.5% S&P: +14.9%

  • Current Level of Consumer Confidence Indicates Economic Prosperity

    50

    60

    70

    80

    90

    100

    110

    120

    130

    Ju n- 12

    Se p- 12

    De c- 12

    M ar -1 3

    Ju n- 13

    Se p- 13

    De c- 13

    M ar -1 4

    Ju n- 14

    Se p- 14

    De c- 14

    M ar -1 5

    Ju n- 15

    Se p- 15

    De c- 15

    M ar -1 6

    Ju n- 16

    Se p- 16

    De c- 16

    M ar -1 7

    Ju n- 17

    Above 110 indicates economic prosperity

    Source: The Conference Board

  • Business Optimism Booms Post Election

    Source: Trading Economics, NFIB Small Business Optimism Index

  • Why?

  • Th ou

    sa nd

    s Cumulative Job Loss by Months of Recession

    Source: Euler Hermes analysis of Bureau of Labor Statistics Data

  • Th ou

    sa nd

    s

    Source: Euler Hermes analysis of Bureau of Labor Statistics Data

    Cumulative Job Loss by Months of Recession

  • 80

    90

    100

    110

    120

    130

    140

    150

    0 5 10 15 20 25 30 35 40

    In de x

    Periods from Value Scaled to 100

    2007 Recession 2001 Recession 1990 Recession 1981 Recession 1980 Recession 1973 Recession

    Slower Recovery than Past Recessions

    Source: Federal Reserve Bank of St. Louis

  • Slower Recovery than Past Recessions

  • Trumponomics •Repeal and replace the Affordable Care Act •Cut corporate and income taxes • Increase spending on infrastructure and military •Reduce government regulations •Renegotiate trade deals

    •But can they get it done…?

  • June Job Indicators

    Indicator Expectation Actual Total Nonfarm Payrolls 170,000 222,000 Unemployment Rate 4.3% 4.4% Private Payrolls 164,000 187,000 Monthly Average Hourly Wage Growth 0.3% 0.2%

    Yearly Average Hourly Wage Growth 2.5% 2.6%

    Labor Force Participation 62.8%

    Sources: Wall street Journal and Bureau of Labor Statistics

  • 222,000 Jobs Added in June

    -900

    -700

    -500

    -300

    -100

    100

    300

    500

    2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

    Pa yr ol l C ha ng e in th

    ou sa nd

    s 8.7 Million Jobs Lost

    16 Million Jobs Recovered

    Source: Bureau of Labor Statistics

  • Job Growth Boom 222,000 Jobs added in June

    126

    237 225

    153

    43

    297 291

    176

    249

    124

    164 155

    216 232

    50

    207

    152

    222

    0

    50

    100

    150

    200

    250

    300

    Ja n- 16

    Fe b- 16

    M ar -1 6

    Ap r-1

    6

    M ay -1 6

    Ju n- 16

    Ju l-1

    6

    Au g- 16

    Se p- 16

    O ct -1 6

    No v- 16

    De c- 16

    Ja n- 17

    Fe b- 17

    M ar -1 7

    Ap r-1

    7

    M ay -1 7

    Ju n- 17

    Th ou

    sa nd

    s o f E m pl oy ee s

    Source: Bureau of Labor Statistics

  • National Employment Change Percent Change in National Employment by Industry: June 2016 to June 2017

    0.6% 1.3%

    2.0% 2.2%

    3.1% 2.0%

    -2.1% 0.7%

    0.4% 3.1%

    7.0%

    -4% -2% 0% 2% 4% 6% 8%

    Government Other Services

    Leisure & Hospitality Ed. & Health Serv. Prof. & Bus. Serv. Financial Activity

    Information Trade, Trans., Utilities

    Manufacturing Construction

    Ntl. Res. & Mining

    Total: 1.6%

    Source: Bureau of Labor Statistics

  • National Employment Change Total Change in Number of Jobs by Industry in Thousands: June 2016 to June 2017

    138 78

    314 494

    624 169

    -61 180

    49 206

    47

    -100 0 100 200 300 400 500 600 700

    Government Other Services

    Leisure & Hospitality Ed. & Health Serv. Prof. & Bus. Serv. Financial Activity

    Information Trade, Trans., Utilities

    Manufacturing Construction

    Ntl. Res. & Mining

    Source: Bureau of Labor Statistics

  • Unemployment Remains Low

    3%

    4%

    5%

    6%

    7%

    8%

    9%

    10%

    11%

    19 95

    19 96

    19 97

    19 98

    19 99

    20 00

    20 01

    20 02

    20 03

    20 04

    20 05

    20 06

    20 07

    20 08

    20 09

    20 10

    20 11

    20 12

    20 13

    20 14

    20 15

    20 16

    20 17

    5.0% = Full Employment

    Source: Bureau of Labor Statistics

  • Unemployment and Underemployment Continue to Drop

    2%

    4%

    6%

    8%

    10%

    12%

    14%

    16%

    18%

    20 00

    20 01

    20 02

    20 03

    20 04

    20 05

    20 06

    20 07

    20 08

    20 09

    20 10

    20 11

    20 12

    20 13

    20 14

    20 15

    20 16

    20 17

    U-6 (Underemployed) U-3 (Unemployment)

    Source: Bureau of Labor Statistics

    4.2%

    7.1%

  • Long-Term Unemployment Decreasing

    0

    2

    4

    6

    8

    1980 1983 1985 1988 1991 1994 1997 2000 2002 2005 2008 2011 2014 2017

    M illi

    on s

    of P

    er so

    ns

    Sources: Federal Reserve Bank of St. Louis, Numbers are rounded

    June 2017: 1.7 m

    Unemployed for more than 27 weeks

  • 56%

    58%

    60%

    62%

    64%

    66%

    68%

    19 55

    19 57

    19 59

    19 61

    19 63

    19 65

    19 67

    19 69

    19 71

    19 73

    19 75

    19 77

    19 79

    19 81

    19 83

    19 85

    19 87

    19 89

    19 91

    19 93

    19 95

    19 97

    19 99

    20 01

    20 03

    20 05

    20 07

    20 09

    20 11

    20 13

    20 15

    20 17

    Source: U.S. Bureau of Labor Statistics

    Labor Force Participation Among Lowest Level in Almost 40 Years

    June 2017 62.8%

    Mar 2000 67.3%

    Apr 1978 63.0%

  • Source: U.S. Bureau of Labor Statistics

    62%

    63%

    64%

    65%

    66%

    67%

    68%

    2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

    Labor Force Participation Seeing Little Change

    June: 62.8%

  • Baby Boomers Head for Retirement

    20% 22% 24% 26% 28% 30% 32% 34% 36% 38%

    60

    61

    62

    63

    64

    65

    66

    67

    68

    19 90

    19 91

    19 92

    19 93

    19 94

    19 95

    19 96

    19 97

    19 98

    19 99

    20 00

    20 01

    20 03

    20 04

    20 05

    20 06

    20 07

    20 08

    20 09

    20 10

    20 11

    20 12

    20 13

    20 14

    20 16

    20 17

    U.S. Participation Rate Age 55+ Share of Working Age Pop

    U. S LF PR

    Pe rc en t

    Share of 55+

    Source: Zions Bank Analysis of Federal Reserve Bank of St. Louis

  • Civilian Labor Force Participation Rate

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    19 48

    19 51

    19 54

    19 57

    19 60

    19 63

    19 66

    19 69

    19 72

    19 75

    19 78

    19 81

    19 84

    19 87

    19 90

    19 93

    19 96

    19 99

    20 02

    20 05

    20 08

    20 11

    20 14

    20 17

    Men Women

    Source: Bureau of Labor Statistics

  • Job Openings Outnumber Hires

    2,000

    2,500

    3,000

    3,500

    4,000

    4,500

    5,000

    5,500

    6,000

    6,500

    2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

    Le ve l i n Th ou

    sa nd

    s

    Hires Openings

    Federal Reserve Bank of St. Louis

  • Wage Growth Stagnant

    1.0%

    1.5%

    2.0%

    2.5%

    3.0%

    3.5%

    4.0%

    2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

    2007 – 2017 Average 2.4%

    June 2017 2.5%

    Source: Federal Reserve Bank of St. Louis

  • Wages Stagnant Even As Unemployment Falls

    0% 1% 2% 3% 4% 5% 6% 7% 8% 9%

    10%

    2007 2008 2009 2010 2011 2012 2013 2014