The Wild West Current Performance and Outlook Presented at: The Economic Future of Northern Nevada Challenges and Opportunities March 22, 2017 George Hammond, Ph.D. Director Economic and Business Research Center Eller College of Management University of Arizona

U.S. Real GDP And Job Growth IHS Economics, March 2017 HERE’S THE LATEST FORECAST FOR REAL GDP AND THE UNEMPLOYMENT RATE. NOTE THAT THE BASELINE FORECAST CALLS FOR REAL GDP GROWTH TO ACCELERATE FROM 1.6% LAST YEAR TO 2.6% BY 2018. THAT ACCELERATION IS DRIVEN BY A COUPLE OF FACTORS: THE UNWINDING OF AN INVENTORY CYCLE, THEN THE EXPECTED GROWTH IMPACTS OF THE NEW ADMINISTRATIONS TAX/REGULATORY POLICIES. THE UNEMPLOYMENT RATE IS EXPECTED TO FALL MODESTLY IN THE NEXT TWO YEARS, FROM 4.9% LAST YEAR TO A LOW OF 4.1% BY 2019. THAT’S A BIT LOWER THAN THE PRE-RECESSION LOW OF 4.6% IN 2007. OVERALL, THE TONE OF THE OUTLOOK IS GOOD. CONTINUED ECONOMIC GROWTH, PERHAPS EVEN ACCELERATING A LITTLE, WITH A CONTINUED TIGHTENING IN THE LABOR MARKET. KEEP IN MIND HOWEVER, THAT REAL GDP GROWTH IS EXPECTED TO HIT JUST 2.6% IN 2018, THEN IT DECELERATES BACK TO THE 2.0%PY RANGE. THIS IS FAR SLOWER GROWTH THAN THE US ECONOMY HAS GENERATED IN THE PAST, WHICH IS ABOUT 3% PER YEAR. SO WHAT GIVES? WELL, IT’S RELATED TO A PHENOMENON THAT I LIKE TO TRACK USING A METRIC CALL THE MOST POPULAR RECREATIONAL DRUG OF CHOICE…. University of Arizona / Eller College of Management

U.S. Population IHS Economics, March 2017 ONE BIG DRIVING FORCE IN THE GROWTH SLOWDOWN DURING THE NEXT 30 YEARS IS SLOWER POPULATION GROWTH DRIVEN BY POPULATION AGING. NOTE THAT POPULATION GROWTH IS FORECAST TO AVERAGE JUST 0.6%PY DURING THE NEXT 30 YEARS, THAT MUCH SLOWER THAN POPULATION GROWTH DURING THE PREVIOUS 30 YEARS OF 1.0%PY. MUCH OF THIS SLOWER POPULATION GROWTH IS DRIVEN BY SLOWER NATURAL INCREASE. NOTE THE BIG INCREASES IN THE POPULATION AGE 65+ THAT ARE STILL TO COME. THE POPULATION SHARE 65+ IS EXPECTED TO RISE FROM 15.3% IN 2016 TO 19.4% BY THE END OF THE FORECAST. THAT’S ABOUT A 25% INCREASE IN THE POP SHARE 65+ DURING THE NEXT DECADE. SLOWER POPULATION GROWTH MEANS SLOWER LABOR FORCE GAINS, WHICH TRANSLATED INTO SLOWER GROWTH IN REAL GDP. University of Arizona / Eller College of Management

U.S. Consumer Spending and Income Inflation-Adjusted, IHS Economics, March 2017 HOUSEHOLD SPENDING ON CONSUMPTION IS A HUGE DRIVER OF THE ECONOMY, ACCOUNTING FOR 68.7% OF GDP LAST YEAR. THE OUTLOOK FOR CONSUMPTION SPEDNING IS POSITIVE AT THE MOMENT, WITH REAL REAL DISPOSABLE INCOME EXPECTED TO CONTINUE TO RISE AND EVEN ACCELERATE IN THE NEAR TERM. THAT ACCELERATION IN DISPOSABLE INCOME IS DRIVEN BY THE EXPECTATION OF FALLING TAX RATES PROPOSED BY THE NEW ADMINISTRATION. THOSE LOWER TAX RATES LEAVE MORE INCOME IN CONSUMERS POCKETS, WHICH DRIVES SPENDING UP DURING THE NEXT YEAR AND A HALF. University of Arizona / Eller College of Management

U.S. Housing Starts IHS Economics March 2017 RESIDENTIAL CONSTRUCTION ACTIVITY HAS GRADUALLY REBOUNDED SINCE THE END OF THE GREAT RECESSION, AIDED BY LOW MORTGAGE RATES. HOWEVER, HOUSEHOLD GROWTH TOOK A LOT LONGER THAN ORIGINALLY EXPECTED TO REBOUND AND CREDIT CONDITIONS WERE TIGHT. NONETHELESS, HOUSING CONSTRUCTION IS EXPECTED TO CONTNUE ON ITS UPWARD MARCH IN COMING YEARS, WITH NATIONAL HOUSING STARTS PEAKING AT 1.5MILLION. University of Arizona / Eller College of Management

U.S. Interest Rates IHS Economics, March 2017 HOUSING AND THE OVERALL NATIONAL ECONOMY ARE EXPECTED TO CONTINUE TO RISE EVEN THOUGH THE FEDERAL RESERVE RAISES INTEREST RATES IN COMING YEARS. THE CURRENT OUTLOOK CALLS FOR THE FEDERAL FUNDS RATE, THE POLICY RATE, TO RISE FROM 0.5%-0.75% CURRENTLY TO 3.0% BY THE END OF 2019. THAT DRIVES LONGER TERM RATES UP AS WELL, WITH THE 30 YEAR FIXED RATE REACHING ABOUT 6% BY THE END OF 2019. IT IS BEST TO THINK OF THESE INTEREST RATE INCREASES AS DEMAND-DRIVEN. IN OTHER WORDS, THEY ARE NOT EXPECTED TO BE ENOUGH TO CHOKE OFF CONTINUED GROWTH IN HOUSING OR THE BROADER ECONOMY. University of Arizona / Eller College of Management

Annual Growth Rates, IHS Economics March 2017 U.S. Core Inflation Annual Growth Rates, IHS Economics March 2017 OVERALL, THE FED IS EXPECTED TO KEEP CORE INFLATION RATES NEAR THE TARGET RANGE OF 2.0% PER YEAR. REMEMBER THAT WEIGHTS DIFFER ACROSS THE TWO INDEXES: HOUSING GETS A MUCH BIGGER WEIGHT IN THE CPI. University of Arizona / Eller College of Management

Impacts Of The New Administration International trade Retreat from free trade, renegotiate NAFTA, tariffs, etc. Immigration The Wall, deport undocumented immigrants Fiscal Stimulus Restructure tax policy, increase infrastructure investment and defense spending Regulation Roll back ACA and Dodd-Frank Spur energy development University of Arizona / Eller College of Management

U.S. Dollar Spikes Against The Peso THIS GRAPH GIVES YOU A SENSE OF HOW THIS HAS PLAYED OUT USING DAILY DATA. NOTE THE BIG SURGE AFTER THE ELECTION IN THE DAILY DATA. University of Arizona / Eller College of Management

U.S. Dollar Appreciation Almost Over Real Effective Exchange Rate, IHS Economics, March 2017 FINALLY, THE US DOLLAR APPRECIATION HAS BEEN A BIG STORY SINCE MID-2014. NOTE THAT AGAINST BOTH MAJOR AND BROAD CURRENCIES, THE DOLLAR EXPECTED TO CONTINUE TO RISE UNTIL 2018 AND THEN GRADUALLY DESCEND THROUGH 2026. WHAT DRIVES THIS? NORMALIZATION OF MP AND OVERALL GROWTH GLOBALLY. University of Arizona / Eller College of Management

U.S. Productivity Growth Over the Year, IHS Economics March 2017 THE FORECAST ALSO CALLS FOR A DECELERATION IN NONFARM PRODUCTIVITY GROWTH DURING THE FORECAST. THE FORECAST CALLS FOR PRODUCTIVITY GROWTH TO AVERAGE JUST 1.4%PY DURING THE NEXT 30 YEARS, WHICH IS BELOW THE 1.8%PY RATE OF THE PREVIOUS 30 YEARS AND BELOW THE 1.9% RATE DURING THE 30 YEARS BEFORE THE GREAT RECESSION. NOTE THAT THIS CALLS FOR A PRETTY SERIOUS ACCELERATION IN PRODUCTIVITY GROWTH IN THE NEAR FUTURE! PRODUCTIVITY GROWTH FROM 2010-2015 HAS AVERAGED JUST 0.5% PER YEAR. GROWTH IN PRODUCTIVITY AND INNOVATION IS THE KEY DRIVER IN CONTINUOUS IMPROVEMENTS IN OUR OVERALL STANDARD OF LIVING. SLOWER GROWTH IN PRODUCTIVITY MEANS SLOWER IMPROVEMENTS IN OUR ECONOMIC WELLBEING. SO THIS IS A KEY CONCERN GOING FORWARD. NOTE THAT PRODUCTIVITY GAINS ARE DRIVEN BY A LARGE ARRAY OF FACTORS, INCLUDING EDUCATION, POLICY, AND THE PROGRESS OF SCIENTIFIC DISCOVERY. ONE FACTOR TO PAY ATTENTION TO IS EDUCATIONAL ATTAINMENT. University of Arizona / Eller College of Management

U.S. Educational Attainment Bachelor’s Degree Or Better, Population Age 25-64 Projected PART OF THIS IS LIKELY TO BE DRIVEN BY HUMAN CAPITAL. OVER THE PAST 74 YEARS, THE SHARE OF THE WORKING AGE POPULATION WITH A BA+ HAS RISEN DRAMATICALLY, FROM 4.5% IN 1940 to 32% by 2015. BUT NOTE HOWEVER, THAT THE PACE OF CHANGE HAS MODERATED LATELY, AND THIS WILL HAVE BIG IMPLICATIONS FOR PRODUCTIVITY AND INCOME GROWTH. University of Arizona / Eller College of Management

U.S. Educational Attainment By State Bachelor’s Degree Or Better, Population Age 25-64, 2015 U.S. 32.0% Nevada 23.2% KEEP IN MIND THAT EDUCATIONAL ATTAINMENT LEVELS VARY A LOT BY STATE. NOTE THAT IN 2015, DC HAD BY FAR THE LARGEST SHARE OF WORKING AGE RESIDENTS WITH A BA+, WITH ROUGHLY 60%, WHILE WV HAD THE LOWEST SHARE AT 20.9%. NOTE THAT FIVE WESTERN STATES WERE ABOVE THE US AVERAGE, PARTICULARLY COLORADO AND WASHINGTON. FIVE WESTERN STATES WERE BELOW THE US AVERAGE INCLUDING NEVADA, NEW MEXICO, AND IDAHO. WE KNOW FROM ACADEMIC RESEARCH THAT STATES AND LOCAL AREAS THAT HAVE HIGHER LEVELS OF EDUCATIONAL ATTAINMENT TEND TO GENERATE FASTER GAINS IN JOBS, POPULATION AND PER CAPITA INCOME. THUS, EDUCATIONAL ATTAINMENT WAS A KEY DRIVER OF STATE AND LOCAL ECONOMIC GROWTH DURING THE PAST 30 YEARS. IT IS LIKELY TO BE EVEN MORE IMPORTANT DURING THE NEXT 30 YEARS. University of Arizona / Eller College of Management

Western States And U.S. Job Growth Over The Year LET’S TALK ABOUT GROWTH TRENDS IN THE WESTER STATES. THIS GRAPH SHOWS OVER THE YEAR JOB GROWTH FOR WESTERN STATES RELATIVE TO THE US. NOTE THAT JOB GROWTH IN THE WEST WAS WELL ABOVE THE NATIONAL AVERAGE DURING THE 2004-2007 PERIOD. WESTERN JOB GROWTH FELL RAPIDLY DURING THE GREAT RECESSION (SHADED AREA) AND JOB LOSSES ENDED UP BEING WORSE THAN THOSE EXPERIENCED NATIONALLY. SINCE THE END OF THE GREAT RECESSION, WESTERN STATE JOB GROWTH HAS RETURNED TO ABOVE AVERAGE GROWTH. University of Arizona / Eller College of Management

Job Growth During The Expansion Trough To Peak During The 2000s WE CAN BREAK THIS DOWN BY STATE, COMPARED TO THE US. THIS GRAPH SHOWS WESTERN STATES JOB GROWTH FROM THE TROUGH OF THE 2001 DOWNTURN TO THE PEAK JUST BEFORE THE GREAT RECESSION. NOTE THAT NEVADA GREW THE FASTEST, WITH EMPLOYMENT RISING BY 25% DURING THE PERIOD. THAT WAS MUCH FASTER THAN THE NATIONAL INCREASE OF 6.3%. FOR THE WEST AS A WHOLE, THE INCREASE WAS 10.4%. University of Arizona / Eller College of Management

Job Losses During The Great Recession Peak To Trough THIS GRAPH SHOWS THE CARNAGE OF THE GREAT RECESSION ON THE WEST. NATIONALLY, THE PEAK/TROUGH JOB LOSS WAS 6.3%. FOR THE WESTERN STATES AS A WHOLE, THE JOB LOSS WAS MUCH GREATER AT 10%. NEVADA GOT HIT THE HARDEST DURING THE PERIOD, WITH JOB LOSSES AT A WHOPPING 14.4%. MORE THAN DOUBLE THE NATIONAL RATE OF LOSS. University of Arizona / Eller College of Management

Annual Job Growth Rates During The Current Expansion THE GOOD NEWS IS THAT THRE GREAT RECESSION DID EVENTUALLY END AND JOB GROWTH RETURNED TO THE WEST. IN FACT, JOB GAINS HAVE BEEN REALLY ROBUST. SINCE HITTING BOTTOM THE NATIONAL ECONOMY HAS ADDED JOBS AT AN ANNUAL PACE OF 1.7%PY. THE WEST HAS GROWN MUCH FASTER, AT 2.3%PY. NOTE THAT UTAH HAS ADDED JOBS AT THE FASTEST PACE, FOLLOWED BY NEVADA AT 2.6%PY, University of Arizona / Eller College of Management

Percent Of Jobs Lost That Have Been Replaced Job Replacement Rates Percent Of Jobs Lost That Have Been Replaced ANOTHER WAY TO THINK ABOUT JOB GROWTH PERFORMANCE DURING THE RECOVERY SO FAR IS TO LOOK AT THE SHARE OF JOBS THAT WERE LOST DURING THE DOWNTURN THAT HAVE BEEN REPLACED. THE NATIONA AND THE WEST HAVE MORE THAN REPLACED THE JOBS LOST DURING THE DOWNTURN. THAT’S ALSO TRUE TO NEVADA AND ARIZONA, WITH ONLY NEW MEXICO STILL STRUGGLING TO REACH THE PREVIOUS PEAK. SO ON THE JOB FRONT, THE WEST IS BACK IN PEAK FORM, FAR OUTPERFORMING THE NATIONAL ECONOMY. AND THAT’S CERTAINLY TRUE FOR NEVADA. University of Arizona / Eller College of Management

Western And U.S. House Prices FHFA, All Transactions OBVIOUSLY, THE HOUSING BOOM/BUST PLAYED A BIG ROLE IN THE GREAT RECESSION NATIONALLY AND FOR THE WEST. INDEED, SEVERAL WESTERN STATES ARE COMMONLY REFERRED TO AS GROUND ZERO FOR THE HOUSING BUST, INCLUDING NEVADA. AS WITH JOBS, HOUSE PRICES HAVE REBOUNDED SINCE HITTING BOTTOM IN 2011-2012. SINCE THEN HOUSE PRICES IN THE PACIFIC AND MOUNTAIN REGIONS HAVE BEEN RISING RAPIDLY, FAR FASTERN THAN THE NATIONAL AVERAGE. NOTE ALSO THAT HOUSE PRICES FOR THE NATION HAVE REGAINED THEIR PREVIOUS PEAK, BEFORE ADJUSTING FOR INFLATION. THAT’S NOT TRUE ON AVERAGE FOR HOUSE PRICES IN EITHER THE PACIFIC OR MOUNTAIN REGIONS. KEEP IN MIND THAT IF WE ADJUST FOR INFLATION, HOUSE PRICES FOR ALL THREE ARE WELL BELOW THEIR PRE-BUST PEAKS. OVERALL, RESIDENTIAL HOUSING MARKETS IN THE WESTERN STATES HAVE REBOUNDED WELL SINCE HITTING BOTTOM. University of Arizona / Eller College of Management

Population Growth Rates 2010-2016 Nevada 1.4% Per Year U.S. 0.7% Per Year IN PART, THAT’S BEEN DRIVEN BY STRONG POPULATION GROWTH, COMPARED TO THE US AND TO OTHER PARTS OF THE COUNTRY. INDEED, DURING THE 2010-2015 PERIOD, NINE OUT OF TEN WESTERN STATES BEAT THE NATIONAL AVERAGE. NEVADA’S POPULATION GROWTH WAS DOUBLE THE NATIONAL PACE DURING THE PERIOD. WESTERN STATE POPULATION GROWTH WAS 1.2% DURING THE PERIOD. THUS SO FAR WE’VE SEEN THAT THE WEST HAS POSTED VERY FAST JOB AND POPULATION GROWTH SINCE THE END OF THE GREAT RECESSION. ONE QUESTION HERE IS WHY THE FAST POPULATION GROWTH? ONE REASON IS THAT MANY WESTERN STATES ARE RELATIVELY YOUNG AND/OR HAVE RACE/ETHNIC MIXES THAT TRANSLATE INTO LOTS OF BIRTHS. ANOTHER REASON IS STRONGLY POSITIVE NET MIGRATION. HOWEVER, IT DOES NOT APPEAR THAT THE MIGRATION IS ALWAYS DRIVEN BY STRONG INCOME GAINS. WE CAN SEE THAT FROM THE PER CAPITA INCOME DATA. University of Arizona / Eller College of Management

Real Per Capita Personal Income Adjusted For Cost Of Living, 2015 $42,207 Nevada $38,252 OVERALL, SEVEN OF THE 10 WESTERN STATES HAD COST OF LIVING ADJUSTED PER CAPITA INCOME THAT WAS WELL BELOW THE NATIONAL AVERAGE. IN NEVADA, PER CAPITA INCOME WAS 9.4% BELOW THE NATIONAL AVERAGE. ONLY COLORADO, WASHINGTON, AND TEXAS WERE ABOVE THE NATIONAL AVERAGE. NOTE THAT COLORADO AND WASHINGTON HAD THE HIGHEST EDUCATIONAL ATTAINMENT RATES OF WESTERN STATES. IF IT IS NOT PER CAPITA INCOME THAT’S ATTRACTING MIGRANTS, THEN WHAT IS? WE CAN GET SOME IDEAS BY ANALYZING GROSS MIGRATION FLOWS ACROSS STATES. IN FACT, WE CAN COME UP WITH A VOTING WITH YOUR FEET STYLE ESTIMATION OF STATE STANDARDS OF LIVING. University of Arizona / Eller College of Management

Estimating Relative “Quality of Life” with Cross-Migration Data Voting With Their Feet Estimating Relative “Quality of Life” with Cross-Migration Data Census 2000 186,151 WIN: +1 92,452 9,304 8,739 LOSS: -1 SO, HERE’S HOW WE’LL CREATE A WIN/LOSS RECORD FOR AZ: LET’S USE AZ-CA FLOWS FOR EXAMPLE: FROM 1995-2000, 92K AZ RESIDENTS MOVED TO CA. HOWEVER, DURING THE SAME PERIOD, 186K CA RESIDENTS MOVED TO AZ. WE RECORD THAT AS A “WIN” FOR AZ AND ASSIGN A +1 TO AZ WIN/LOSS RECORD. LET’S TRY AZ-GA: FROM 1995-2000, 9.3K AZ RESIDENTS MOVED TO GA, WHILE 8.7K GA RESIDENTS MOVED TO AZ. THAT GETS RECORDED AS A LOSS FOR AZ AND AZ GETS A -1 IN IT’S WIN/LOSS RECORD. WE DO THIS FOR AZ VS ALL STATES AND SUM UP THE +1,-1 TO GET THE TOTAL WIN/LOSS RECORD FOR AZ. THEN WE FOLLOW THIS PROCEDURE FOR ALL STATES. THUS WE GET PAIRWISE COMPARISONS FOR ALL STATES VERSUS ALL STATES, WHICH IS NICE, BC IT FULLY EXPLOITS ALL THE INFORMATION IN THE CROSS-MIGRATION DATA. WE’LL HAVE SOME TIES TO BREAK, WHICH IS DONE BY HEAD-TO-HEAD. INTRANSITIVITIES ARE SETTLED WITH A SLIGHTLY MORE COMPLICATED PROCEDURE. THE STATE WITH THE BEST WIN LOSS RECORD GETS RANKED NUMBER ONE AND SO ON DOWN TO THE STATE WITH THE WORST WIN LOSS RECORD. University of Arizona / Eller College of Management

Voting With Their Feet Census 1970 Migration Rank 1 - 10 11 - 20 21 - 30 31 - 40 41 - 51 HERE’S THE RANKED RESULTS FOR CENSUS 1970, WHICH REFLECTS MIGRATION FROM 1965-1970. NOTE THAT STATES IN THE WEST AND SOUTH TEND TO DO WELL, WHILE STATES IN THE UPPER MID-WEST AND NORTHEAST DID LESS WELL. NOTE THAT CA IS BLUE, IN TOP 10. University of Arizona / Eller College of Management

Voting With Their Feet Census 1980 Migration Rank 1 - 10 11 - 20 21 - 30 31 - 40 41 - 51 DURING THE 1975-1980 PERIOD, WE GET A FAIRLY SIMILAR PATTERN, WITH THE WEST AND SOUTH AGAIN DOMINATING. NOTE THAT CA HAS FALLEN OUT OF THE TOP 10. University of Arizona / Eller College of Management

Voting With Their Feet Census 1990 Migration Rank 1 - 10 11 - 20 21 - 30 31 - 40 41 - 51 THIS SHOWS THE RANKINGS FOR THE 1985-1990 PERIOD. TX AND OK FALL, AS DO OTHER ENERGY DEPENDENT STATES. IT’S STILL THE WEST BUT NOW THE SOUTHEAST RANKS HIGHER. University of Arizona / Eller College of Management

Voting With Their Feet Census 2000 Migration Rank 1 - 10 11 - 20 21 - 30 31 - 40 41 - 51 NOTE THAT DURING THE 1995-2000 PERIOD, CALIFORNIA FALLS STRONGLY, INTO THE BOTTOM QUINTILE. ALONG WITH THE NORTHEAST AND MIDWEST AZ, NV, AND OR ARE STILL IN THE TOP 10, ALONG WITH THE SOUTHEAST. University of Arizona / Eller College of Management

Voting With Their Feet ACS Five-Year 2005-2009 Migration Rank 1 - 10 11 - 20 21 - 30 31 - 40 41 - 51 FINALLY, WE HAVE THE ACS FIVE-YEAR DATA. NOTE THAT CA REMAINS IN THE BOTTOM QUINTILE, ALONG WITH THE NORTHEAST AND GREAT LAKES STATES. THE ENERGY BOOM IS EVIDENT, WITH ND IMPROVED, AND TX AND OK IN THE TOP 10. THE SOUTHEAST STILL DOES RELATIVELY WELL. MOST OF THE REFLECTS THE BOOM, BUT IT DOES COVER THE BEGINNINGS OF THE BUST. University of Arizona / Eller College of Management

ACS One-Year Domestic Gross Migration Flow Data: 2010-2014 Voting With Your Feet ACS One-Year Domestic Gross Migration Flow Data: 2010-2014 Migration Rank 1 - 10 11 - 20 21 - 30 31 - 40 41 - 51 AS WE’VE DISCUSSED BEFORE, THERE ARE SOME OTHER OPTIONS FOR MEASURE A STATE’S STANDARD OF LIVING. ONE OF THESE IS THE VOTING WITH YOUR FEET METHODOLOGY. ITS RELIES ON PRINCIPLES OF REVEALED PREFERENCE. THIS METHOD EXPLOITS GROSS MIGRATION FLOWS ACROSS STATES TO MEASURE RELATIVE STANDARDS OF LIVNG. IT ASSUMES THAT MIGRANTS AGREE ON WHAT MAKES ONE STATE MORE ATTRACTIVE THAN ANOTHER. WE DON’T HAVE TO KNOW WHAT THOSE FACTORS ARE BUT THEY COULD INCLUDE INCOME LEVELS, CLIMATE AND OTHER AMENITIES, LOW CRIME, ETC. USING A SIMPLE COMPETITION BASED METHODOLOGY, GENERATES THE RANKING IN THIS SLIDE. HERE STATES THAT RANK HIGH ARE SHADED BLUE AND STATES THAT RANK LOW ARE SHADED RED. NOTE THAT ARIZONA RANKS IN THE SECOND HIGHEST QUINTILE (ACTUALL 11TH), ACCORDING TO THE MOST RECENT PRELIMINARY DATA. University of Arizona / Eller College of Management

Western Blue Chip Job Growth 2017-2018 FINALLY, LET’S TAKE A LOOK AT THE NEAR FUTURE FOR WESTERN STATES, USING THE LATEST FORECASTS FROM THE WESTERN BLUE CHIP FORECAST. THE WESTERN BLUE CHIP FORECASTS ARE COMPILED FROM THE FORECASTS OF INDIVIDUALS FORECASTERS WITHIN EACH STATE. NOTE THAT THE LATEST FORECASTS CALL FOR NEARLY ALL WESTERN STATES TO BEAT THE EXPECTED NATIONAL AVERAGE DURING BOTH 2017 AND 2018. NEVADA IS EXPECTED TO DO WELL, WITH JOB GROWTH IN THE 2.8%, 2.6% RANGE. University of Arizona / Eller College of Management

Western Blue Chip Population Growth 2017-2018 SIMILARLY, POPULATION GROWTH IS EXPECTED TO BE RELATIVELY RAPID FOR THE WESTERN STATES, DRIVEN BY RELATIVELY POSITIVE DEMOGRAPHICS AND POSITIVE NET MIGRATION. NOTE THAT ALL WESTERN STATES ARE EXPECTED TO OUTPACE THE US. NA University of Arizona / Eller College of Management

Western Blue Chip Income Growth 2017-2018 INCOME GROWTH IS NOT QUITE SUCH AS POSITIVE STORY, WITH GAINS IN NEVADA, IDAHO AND NEW MEXICO EXPECTED TO LAG THE US AND MOST WESTERN STATES IN THE GENERAL NEIGHBORHOOD OF THE US. THAT DOES NOT BODE WELL FOR PER CAPITA INCOME GROWTH, WHICH IS 3.8% IN 2017, AND 4.4% IN 2018 FOR THE US. FOR NEVADA IT IS 2.3% IN 2017 AND 1.9% IN 2018. University of Arizona / Eller College of Management

The Risks Major disruptions to global trade caused by new tariffs. Severe labor market disruptions caused by large-scale deportation of undocumented immigrants. Productivity growth remains sluggish. Major oil price shock. Geopolitical risks. University of Arizona / Eller College of Management

The Takeaways U.S. economy is likely to grow this year and next, but at a slow pace. Interest rates will rise, but not choke off growth. Western states will continue to add jobs, population, and income. Western states will continue to be attractive to domestic migrants. Productivity will be a key concern. Educational attainment trends will help determine which states generate prosperity. University of Arizona / Eller College of Management