Southwest Business Forum January 9, 2009 Fort Lewis College’s 17 th Annual Focus on Our Future: Business and Economics Sponsored by Wells Fargo

Investment Advice If you had purchased $1,000 of AIG stock one year ago, you would have $42 left. With Lehman, you would have $0.60 left. With Fannie or Freddie, you would have less than $5 left. But if you had purchased $1,000 worth of beer one year ago, drank all of the beer, then turned in the cans for the aluminum recycling REFUND, you would have had $214. Based on the above, the best current investment advice is to drink heavily and recycle. It is always nice to know some investments still hold their value over time.

Wall Street Sympathy Back in the 1929 Financial Crash it was said that some Wall Street Stockbrokers and Bankers JUMPED from their office windows and committed suicide when confronted with the news of their firms and clients financial ruin... Many people were said to feel sorry for them... In 2008 the attitude has changed somewhat:

Beeeeep ….

The Region 9 Economy

Region 9 Labor Force Source: U.S. Census Bureau

Region 9 Labor Force Growth Rates Source: U.S. Census Bureau

Region 9 Per Capita Income Source: U.S. Department of Commerce, Bureau of Economic Analysis, Regional Economic Information System. Most recent data available.

Region 9 Per Capita Income: Percentage of Colorado Source: U.S. Department of Commerce, Bureau of Economic Analysis, Regional Economic Information System. Most recent data available.

Region 9 Growth Per Capita Income Source: U.S. Department of Commerce, Bureau of Economic Analysis, Regional Economic Information System. Most recent data available.

Region 9 Unemployment Rate Source: U.S. Department of Commerce, Bureau of Economic Analysis, Regional Economic Information System. Most recent data available.

The La Plata County Economy

Tourism Tourism Includes: 1. Airport Passengers 2. Train Ridership 3. Mesa Verde Visitors 4. Lodger’s Tax Collected 5. Skier Boarder Visits

Airport Passenger Activity (enplanements) Percent Change By Year ( ) Source: Durango - La Plata County Airport

Train Passenger Activity Percent Change By Year ( e ) Source: Durango & Silverton Narrow Gauge Railroad e = estimate

Mesa Verde Visitors Percent Change By Year ( e ) Source: National Park Service Public Use Statistics Office e = estimate

Lodger’s Tax Revenue (Durango) Percent Change By Year ( e ) Sources: City of Durango (unadjusted numbers) e = estimate

Skier/Boarder Visits YearUnited States (millions) Purgatory (DMR) 2000/ , / , / , / , / , / , / , / ,000 Sources: National Ski Association and Annual Reports

Retail Sales (Adjusted for Inflation) An indicator of tourism activity as well as population growth.

La Plata County Retail Sales (adjusted $s) Percent Change – Semi-Annual ( ) Source: Colorado Department of Revenue

2009 Tourism and Retail Outlook Tourism: Dependent upon discretionary spending Retail: Reflection of national economy

Agriculture Includes Calf Prices and Alfalfa Hay Prices – adjusted for inflation. A better measure would be sales, but these numbers are not available.

Alfalfa Hay Prices Percent Change By Year ( e ) Source: U. S. Department of Agriculture - Economics, Statistics and Market Information System e = estimate

Calf Prices, Adjusted Dollar Value per Cut Weight Percent Change By Year ( e ) Source: U. S. Department of Agriculture - Economics, Statistics and Market Information System e = estimate

2009 Agriculture Outlook Higher volatility in commodity prices  Hedge fund deleveraging  Corn-based ethanol Decreased prices in calf prices  Not passing input costs to consumer  Ranchers/farmers not buying calves with increased feed costs

Industrial Kilowatt-Hours Used as an indicator of industrial activity in the county. Most industrial usage of electricity in the county is to compress natural gas for transmission through gas pipelines

Industrial Kilowatt Hours Percent Change By Year ( e ) Source: La Plata Electric Association Inc. e = estimate

Observations for Oil & Gas Given the current regulations in the oil & gas industry, the region is producing natural gas near full capacity High political uncertainty

Fort Lewis College Enrollment The college stabilizes the economy because of higher enrollment in the fall and winter months. This offsets some of the decline in tourism during this time period.

Fort Lewis College Enrollment (Fall) Percent Change By Year ( ) Source: Fort Lewis College

2009 Fort Lewis College Outlook Increased admission standards at FLC  Comparable with UC-Boulder and CSU Slight dip in enrollment last several years Intermediate-term goal is 5,000 students Increased number of applications and lower admission rate

Residential Real Estate

% Change in Median Price of Durango In-Town Single-Family Home

Average Days on Market & Number of Transactions In-Town Durango

Median Home Price of Condos/Town Homes In-Town Durango

Days on Market & Number of Transactions Condos/Town Homes Durango In-Town

Building Permits This indicator uses the adjusted dollar valuation of the properties for which permits were issued—thereby measuring the dollar value (as assessed) of new construction in La Plata County.

Building Permits (Construction) Percent Change By Year ( ) Sources: La Plata County Building Department, City of Durango Planning and Community Development Department

Building Permits (Construction Value) Percent Change By Year ( e ) Sources: La Plata County Building Department, City of Durango Planning and Community Development Department e = estimate

Durango Price-to-Rent Analysis

Durango Comparables Price-to-Rent

2009 Real Estate Outlook Nation is absorbing the worst real estate correction since the Great Depression National builders anticipate a bottom in early 2010 Single-family homes = healthy correction Condos/Town Homes = less healthy correction Building permits = significant decline

Bank Deposits An important indicator of the economic health of the community. Also an indicator of the ability of local banks to make loans to consumers and business borrowers.

Bank Deposits (Unadjusted) Source: Federal Deposit Insurance Corporation June 30thDepositsYear to Year % Change 2002$615,000, $702,000, $778,000, $874,000, $1,020,000, $1,034,000, $1,097,000,

Inflation Durango Price Index (DPI) Monitors the change in the price of goods and services in our region Durango Price Index  Adjust Denver CPI for Durango housing and income levels  Assumes similar other expenditure patterns as Denver consumers

Durango Price Index versus Denver CPI

Annual Inflation Rate: Durango vs. Denver

2009 Inflation Outlook Durango housing rents will continue to increase Volatility in commodity prices Decreased consumer spending

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