Grant D. Forsyth, Ph.D. Chief Economist Grant.Forsyth@avistacorp.com Spokane ISM January 8, 2019 2019 Economic Forecast Grant D. Forsyth, Ph.D. Chief Economist Grant.Forsyth@avistacorp.com

U.S. Population: “From Pyramid to Pillar” Source: U.S. Census

U.S. GDP Growth, 2013-2024

Weak growth offset by expansion’s length. Spokane+Kootenai Economic Growth and U.S. Expansions: The Slow Decay of Time Weak growth offset by expansion’s length. Source: BEA and author’s calculations

Non-Farm Employment, 2007-2018: Remember to Hug a Central Banker May 2015 No growth from Dec 2009 – May 2012 (2 ½ Years) Source: BLS, WA ESD, and author’s calculations

Non-Farm Employment Growth, 2016-2018: Hiring that Special Someone is not Easy 2018 UR 5.0% 2018 UR 3.1% 2018 UR 5.5% 2018 UR 3.9% Source: BLS, WA ESD, and author’s calculations

Private Sector Weekly Work Hours, 2007-2018: Above the U.S. Average Source: BLS and author’s calculations

Regional Leading Indicator 2017-2018: Adding Jobs at a Slower Rate in 2019 Other Factors: Amazon Waning tax stimulus China trade war Source: Various and author’s calculations

Spokane+Kootenai Population Growth, 1971-2018: The Ebb and Flow of the Masses Source: BEA, U.S. Census, and author’s calculations

Spokane vs. Kootenai Population Growth, 1971-2018: Kootenai’s Transformation Metro Area Avg. Annual Growth, 1971-2018 Kootenai 3.2% Spokane 1.3% 36K 164K 324K 576K Source: BEA, U.S. Census, and author’s calculations

Regional Cost of Living Difference, 2016: We’re Still a Relatively Cheap Date Source: BEA and author’s calculations

Existing Home Price Growth, 2015-2018: Still Cooking Source: FHFA and author’s calculations

U.S. Household Debt Growth, 2007-2018: Text Books and Climbing Walls Don’t Come Cheap +152% +50% Source: Federal Reserve, Bloomberg, and author’s calculations

Spokane Taxable Sales Growth, 2013-2018: From Vehicles to Construction Source: WA DOR and author’s calculations

WA State Gross Receipts Growth and the Great Recession: Our Memory is Short Source: WA DOR and author’s calculations

Takeaways for 2019 Slowing employment growth but with continued tight labor markets. Continued robust population growth through in-migration—for good or ill. Relative cost-of-living remains low, but some deterioration because of housing prices. Beware of revenue collections driven by cyclical components. Trade war BAD…Grant no like.