Idaho Economic OutlookEconomic Outlook and Revenue Assessment Committee

Jan 03, 2020Jordan PrassinosManager - Demand ForecastingIdaho Power

Economic Headlines

2

Headline Statistical Economic Considerations

• Idaho economy ranks 1st in the nation in aggregate of econ indicators

• Idaho holds top migration rate in country (big impact) 3rd year in a row

• Idaho labor market continues robust compared to US average at 3.0% job growth

• Idaho personal income grew over 5.5% in 2018, fifth in the nation

• Housing and income growing at much different rates

Population Growth in Idaho

3

2019 State Rankings of Population

Source: US Census Bureau. Annual Estimates of Population Change - July 1, 2010 to July 1, 2019.

5 Year State Rankings of Population

1.0%

1.1%

1.2%

1.2%

1.3%

1.3%

1.7%

1.7%

1.7%

2.1%

0.0% 1.0% 2.0%

Idaho

Nevada

Arizona

Utah

Texas

South Carolina

Washington

Colorado

Florida

North Carolina 1.3%

1.3%

1.5%

1.5%

1.5%

1.6%

1.6%

1.8%

1.8%

1.8%

0.0% 1.0% 2.0%

Idaho

Nevada

Utah

Florida

Arizona

Washington

Colorado

Texas

South Carolina

District of Columbia

Western Home Value Growth

Western City Home Values Rate of Change

SOURCE: Zillow research. Zillow Home Value Index (ZHVI) of single family homes through 11/30/19.

4

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

201

0-1

1

201

1-1

1

201

2-1

1

201

3-1

1

201

4-1

1

201

5-1

1

201

6-1

1

201

7-1

1

201

8-1

1

Boise City, ID Salt Lake City, UT Reno, NV

Spokane, WA Seattle, WA San Jose, CA

Boise City MSA

#1 of top 100

Idaho Home Value Growth

Idaho Cities Home Values Rate of Change

SOURCE: Zillow research. Zillow Home Value Index (ZHVI) of single family homes through 11/30/19.

5

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

201

1-0

1

201

2-0

1

201

3-0

1

201

4-0

1

201

5-0

1

201

6-0

1

201

7-0

1

201

8-0

1

201

9-0

1

Boise City, ID Twin Falls, ID

Pocatello, ID Coeur d'Alene, ID

Idaho Falls, ID

Of top 800 cities in

US, these 5 are in

the top 10

Q319 Earnings Growth by StateLess Farm Industry

6

Percent Change in Personal Income – Top 10 States(Annualized Percent Change)

RANK STATE CHANGE

1 District of Columbia 9.6%

2 Washington 3.8%

3 Texas 3.8%

4 Utah 3.7%

5 Georgia 3.3%

6 Idaho 3.2%

7 California 3.1%

8 New Hampshire 3.1%

9 Oregon 3.0%

10 Arizona 3.0%

Percent Change in Personal Income – Bottom 10 States(Annualized Percent Change)

RANK STATE CHANGE

42 Kentucky 2.3%

43 Virginia 2.3%

44 North Dakota 2.2%

45 Oklahoma 2.1%

46 Hawaii 2.0%

47 Louisiana 2.0%

48 Michigan 2.0%

49 New York 2.0%

50 Wyoming 1.5%

51 West Virginia 1.2%

Source: U.S. Bureau of Economic Analysis (BEA). Data Table SQ4: Personal Income by Major Component. Actual data through Q32019. US: 2.8%.

NOTE: Farm earnings were excluded due to increases in payments associated with the Department of Agriculture's Market Facilitation Program in the third quarter.

Idaho-US Personal Income Gap

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

196

7Q

1

197

0Q

1

197

3Q

1

197

6Q

1

197

9Q

1

198

2Q

1

198

5Q

1

198

8Q

1

199

1Q

1

199

4Q

1

199

7Q

1

200

0Q

1

200

3Q

1

200

6Q

1

200

9Q

1

201

2Q

1

201

5Q

1

201

8Q

1

Idaho

US

Idaho and National Median Income

SOURCE: U.S. Bureau of Economic Analysis (BEA); U.S. Bureau of Labor Statistics (BLS) Wage and salary disbursements: Total, (Mil. USD, SAAR)

15% gap

7

Idaho Incomes and Home Values

Idaho Median Household Income and Home Values (Indexed to 1997)

SOURCE HOME VALUES: Zillow research. Zillow Home Value Index (ZHVI) of single family homes.

SOURCE INCOME: U.S. Bureau of Economic Analysis (BEA); U.S. Bureau of Labor Statistics (BLS) Wage and salary disbursements: Total, (Mil. USD, SAAR) 8

0

50

100

150

200

250

300

1997Q

1

1998Q

1

1999Q

1

2000Q

1

2001Q

1

2002Q

1

2003Q

1

2004Q

1

2005Q

1

2006Q

1

2007Q

1

2008Q

1

2009Q

1

2010Q

1

2011Q

1

2012Q

1

2013Q

1

2014Q

1

2015Q

1

2016Q

1

2017Q

1

2018Q

1

2018 ~15%/yr

appreciation

Steady ~2% growth/yr

Labor Market Readings

9

Idaho and National Private Sector Employment Growth

Source: U.S. Bureau of Labor Statistics (BLS): Current Employment Statistics (CES), Quarterly Census of Employment and Wages (QCEW). Actual data through Q119

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

200

0Q

1

200

0Q

3

200

1Q

1

200

1Q

3

200

2Q

1

200

2Q

3

200

3Q

1

200

3Q

3

200

4Q

1

200

4Q

3

200

5Q

1

200

5Q

3

200

6Q

1

200

6Q

3

200

7Q

1

200

7Q

3

200

8Q

1

200

8Q

3

200

9Q

1

200

9Q

3

201

0Q

1

201

0Q

3

201

1Q

1

201

1Q

3

201

2Q

1

201

2Q

3

201

3Q

1

201

3Q

3

201

4Q

1

201

4Q

3

201

5Q

1

201

5Q

3

201

6Q

1

201

6Q

3

201

7Q

1

201

7Q

3

201

8Q

1

201

8Q

3

US Idaho

US: 1.7%

Idaho: 3.0%

Construction Labor Exposure

10

Ratio of Idaho Private Sector Construction Employment

Source: U.S. Bureau of Labor Statistics (BLS): Current Employment Statistics (CES), Quarterly Census of Employment and Wages (QCEW). Actual data through Q219

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

1990Q

1

1991Q

1

1992Q

1

1993Q

1

1994Q

1

1995Q

1

1996Q

1

1997Q

1

1998Q

1

1999Q

1

2000Q

1

2001Q

1

2002Q

1

2003Q

1

2004Q

1

2005Q

1

2006Q

1

2007Q

1

2008Q

1

2009Q

1

2010Q

1

2011Q

1

2012Q

1

2013Q

1

2014Q

1

2015Q

1

2016Q

1

2017Q

1

2018Q

1

2019Q

1

National Jobs Report

11

National Employment Jobs Added

Source: U.S. Bureau of Labor Statistics (BLS) through Nov 2019

0

50

100

150

200

250

300

350

Jan

-18

Fe

b-1

8

Ma

r-1

8

Ap

r-18

Ma

y-1

8

Jun

-18

Jul-

18

Au

g-1

8

Se

p-1

8

Oct-

18

No

v-1

8

De

c-1

8

Jan

-19

Fe

b-1

9

Ma

r-1

9

Ap

r-19

Ma

y-1

9

Jun

-19

Jul-

19

Au

g-1

9

Se

p-1

9

Oct-

19

No

v-1

9

000's

185k

2019 US adding jobs at ~185k per month

Down from ~225k per month in 2018

225k

US Recession Recovery Periods

Duration in Months from Previous Recessionary Period

12Source: National Bureau of Economic Research (NBER) business cycles data through Dec 2019

0

20

40

60

80

100

120

140

Gre

at

Dep

ress

ion

Recessio

n o

f 1937–1938

Po

st

WW

II

Re

ces

sio

n o

f 19

49

Re

ces

sio

n o

f 19

53

Re

ces

sio

n o

f 19

58

Recessio

n o

f 1960–61

Re

ces

sio

n o

f 19

69

1973–75 r

ecessio

n

19

80 R

ese

ssio

n

1981–1982 r

ecessio

n

Earl

y 9

0's

Do

tCo

m

Gre

at

Rec

ess

ion

Cu

rren

t

What Preempts A Recession –

Inversion?Flattening or inversion of

the yield curve commonly

used term…what does it

mean?

Build a curve of yield rates

across different bond

maturities lengths and

they are equal

Historically, 12-18 month

period from flat or

inversion of YC to

recession, are we in a

new paradigm?

13

US Household Debt

US Household Debt Balance and its Composition

0

3

6

9

12

15

03:Q

1

03:Q

3

04:Q

1

04:Q

3

05:Q

1

05:Q

3

06:Q

1

06:Q

3

07:Q

1

07:Q

3

08:Q

1

08:Q

3

09:Q

1

09:Q

3

10:Q

1

10:Q

3

11:Q

1

11:Q

3

12:Q

1

12:Q

3

13:Q

1

13:Q

3

14:Q

1

14:Q

3

15:Q

1

15:Q

3

16:Q

1

16:Q

3

17:Q

1

17:Q

3

18:Q

1

18:Q

3

19:Q

1

Mortgage

HE Revolving

Auto Loan

Credit Card

Student Loan

Other

Trillions

Source: Fed Reserve Bank of New York/Equifax through Q2 2019 14

2019Q2 Total: $13.9T

11%

3%

15

US GDP - Probabilistic Cases

US Real GDP scenarios

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

3.0% Growth

Base US Forecast

Updated through Dec 2019

Current Policy Impacts to GDP:

(a) US Trade …. (0.4)%

(b) Strict Immigration … (0.3)%

(c) Light Reg … + hard to measure

Isolating Trade/Tariffs Impacts

16

Idaho State GDP Estimate - Trade War Scenario

Notes:

(1) Opening of Canadian dairy

demand to US farmers as

per USMCA ratification,

provisions for Mexican

workers

(2) Potential Impacts to GDP:

Brinksmanship

Uncertainty

DRAM/China

Production shift to

Vietnam/SE Asia

(3) Issue for Idaho ag (alfalfa

hay, whey protein and milk

powder, wheat, beef) exports to

China. More quarantine

inspections have turned away

US products.

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Actual GDP

Baseline Forecasted GDP

Consensus Trade Impact

GSP amounts expressed as annualized percent change with 2009 chain weighted $, SAAR

Downward pressure to

Idaho GDP by ~(1.5)%

Idaho Utility Watchlist

Summary Points

17

11%

3%

• Idaho Power represents nearly 1% of GSP directly. Indirect impacts 100%. Employees

~2,000 Idahoans, contributes ~$35M-40M in sales and other taxes (excludes income and

payroll taxes).

• Company has seen sales grow at 0.5%-1.0% over past several years (weather

dependent). Near top of class when compared to proxy group of IOU. Cost containment.

• Idaho Power expectation is 2020 net migration will support a continued high level of

customer growth in its service territory between 2.0%-2.5%

• Strong development potential for food processing, manufacturing, and dairy

• Have experienced timeline impacts recently on large load (keep extending out).

Businesses are showing a bit more anxiety?

Idaho Economic Summary

Summary Points

18

11%

3%

• Idaho continues top preforming “hard data” state economy and demographics in US

• National/global soft spots percolating under the surface that increase probability of

adverse economic impact in Idaho in ‘20+, although activity a positive

➢ Global economies

➢ Manufacturing

➢ Consumer confidence remains strong

• On balance, nominal personal income growth in state could range from 0.0%-7.5%,

with 5.5% the most probable outcome (5.0% in 2021)

Email: jprassinos@idahopower.comPhone: 208-377-6105