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welcome everyone to the third quarter zions bank economic update we appreciate all of you for attending and hope that all is well with you and your families my name is kelly robertson with the banks idaho corporate banking group on behalf of the corporate banking group we welcome you to this economic presentation and forum today to create value zions bank's corporate banking group will also be sponsoring other future presentations containing topics that are important and timely for our clients so please look out for those emails in the future as we proceed throughout the presentation this morning please feel free to enter questions into the chat box we will try to answer those questions during the presentation but we'll also have a q a at the end of robert's presentation this morning i would now like to introduce our speaker robert spendlove robert is the senior vice president and the senior economist at zions bank he also serves as the economic and public policy officer for zions in this capacity he monitors and reports on economic indicators and public policy developments for the bank robert's research interests are primarily in the areas of macroeconomics demographics financial markets and public policy he frequently advises and briefs policy makers as well as business and civic groups throughout the united states he tracks key economic indicators for idaho and travels the state extensively speaking to groups in all parts of this great state robert is regularly called on to give expert analysis in the media through print radio and television he is known for his insightful and understandable approach to explaining economic trends because of his expertise robert's economic perspective is often sought in the idaho press and he also contributes regular articles for idaho publications robert received a masters of public administration with an emphasis in economic public policy at the university of utah where he currently is an adjunct instructor of public policy robert is married and a father of four children and he enjoys visiting the idaho mountains with his families as often as possible i'd like to now turn the time over to robert spendlove robert thanks so much kelly it's uh great to be with you today and to uh to give this update um it's um you know 2020 has been such an interesting year i i don't know if even interesting is a word for it but uh we're seeing in in kind of economics and in a a number of different areas uh we're seeing historic changes uh and and impacts and so that's what i want to kind of spend some time on uh today looking at some of those the nature of the changes that we've seen and what some of those implications are uh it's uh it in in some ways as tough as it's been it's also uh kind of exciting to be an economic nerd because uh i'm thinking you know 50 years from now we'll be writing textbooks about what's going what what's happening uh to our economy right now so i just want to jump in kind of show what that looks like and you can see it with a very first slide this is the uh what we call the comes from the monthly jobs report and on the first friday of every month so next friday a week from today the labor department releases their uh jobs report and uh what this slide is one that i've used many times but it looks extremely different from what i've ever used before and the reason for that is just the magnitude of what we're experiencing right now so this is showing month month to month change in jobs at the national level if you look on the top left you see that that section of blue that usually fills the entire chart that is uh the impact of the great uh recession uh of uh 2008 to 2010 and uh during that period uh from february of 08 to february of 10 uh the economy lost 8.7 million jobs we were losing around 750 000 jobs a month uh for about six months during that kind of that worst period of the great recession uh and there's a reason we call it the great recession it was you know bigger and worse than anything that we'd seen in a generation and it took a long time to recover from that we'll now look over on the right side of the of the graph in between march and april of this year we lost 22 million jobs in fact most of that occurred in april you see april was the big uh drop in april alone we lost over 20 million jobs uh more than twice as many jobs were lost in the month of april than we lost in the entire great recession uh it it has truly been historic if you think about why that happened i mean this is what when we talk about a black swan event this is a black swan event uh it was something that was uh unexpected uh unanticipated it was dramatic and severe um and so it it's that shock that no one could have uh prepared for and it had a a huge impact on the net on the nation's economy now uh coming out of it again we've seen historic increases uh between may and september uh the economy added 11.4 million jobs again we've never seen that kind of growth in the in the u.s labor market especially in such a short period of time so we saw a historic drop in the in the spring and then a historic increase uh since then however uh when you look at where we are right now so you can see that big drop uh in april of 20 million jobs uh and and march uh relatively smaller but for all the months that we've come back we still are down by just under 11 million jobs in the u.s economy and then if you kind of look at the breakout of months you can see that most of that growth occurred in may and june it really occurred in june that was the big comeback month but since then if you look at july and august and september those relative additions of jobs to the us economy are becoming smaller and smaller so we're coming back but we're not coming back at the magnitude to be able to gain back uh those jobs quickly and return back to where we where we were before so that's something i'm a little concerned about is the ability of the of the economy to come back to uh the levels we were experiencing before the recession to show that a different way this is showing uh how long it's taken uh various recessions over the last uh 50 years to recover actually over 50 years because we go back to 1953 and you can see there they're all kind of color-coded differently this is a little bit messy but it's really interesting um so you can see kind of the different shapes our magnet or magnitude of of hits um also you can see uh the duration of those kind of recoveries and generally it takes about uh 24 to 36 uh months to recover from a recession that's been historic now the reason we called the great recession is this is the kind of the light blue very long tail is the great recession where it actually took uh several years uh specifically about six years to fully recover uh from the uh from the recession you can also see kind of a u-shaped recovery in 1957 and a v-shaped recovery in 1980 so what are we seeing right now i mean it just dwarfs anything we've ever seen before a dramatic drop now we're seeing that that that those jobs coming back so the ques people always ask me well you know what what's going to be the shape of the recovery you know b shape u shape this uh this one when you hear someone talking about the nike swoosh this is what we're talking about where we have the dramatic drop we have the quick initial recovery but then we're starting to see slowing uh as the as the growth starts to taper and what we could see is a similar growth path to what we saw coming out of the great recession where we slowly come back to where we were before as the economy remains somewhat constrained in its ability uh to come back again there's also uh and i'll talk about this in just a minute uh there is uh starting to be some talk about a w shaped which would be uh uh where we have an initial respon initial recovery but then we start to see more weakness and we slip back into uh another recession uh we're already seeing signs of that in europe right now uh and other uh parts of the world that are seeing uh new surges of the virus so where where have we seen these impacts let me see there we go um so really uh and what we're looking at here is the impact of jobs this is specifically uh looking at the coronavirus uh uh impact or specifically the um uh the recession impact of of the virus so we're looking from february to september of this year and every single sector uh during that period is still lower or smaller than it was in february this year the worst one of course is legion hospitality which has just been decimated uh from the recession uh if you think about you know things you used to do you know who's gone on the plane lately who's gone on no one's gone on a cruise lately um you know going to restaurants or going to uh uh going to the movies uh the the uh entertainment sector has has really been hurt and so the leisure and hospitality has been hit the worst uh the next largest is uh natural resources of mining and i'll talk about this a little bit in just a minute too uh this is because we're not traveling like we used to uh the uh demand for oil has dropped and so that's caused that that natural resources and mining sector uh to contract and then the information sector is also seeing uh an impact there it's a relatively smaller industry and so i'm not as concerned but the big ones that that we're seeing those impacts are natural resources and mining and leisure and hospitality uh when we look at the the number of jobs that have been lost again you really see that magnitude leisure and hospitality today has 3.8 million fewer people working for the industry uh than they had in february so a a big hit there and big implications for uh the overall economy but then uh yeah again in relation uh the information uh sector even though it has a big impact represents a relatively smaller number of p of jobs that have been lost uh over the past several months now in any kind of a a a recession or a contraction there are always areas that are mixed so there are some these are sub sectors of those industries that are actually thriving and i don't think you'll be surprised by any of these uh the federal government is thriving up 11.5 percent uh the result of that is the massive spending from the cares act uh the cares act was uh around three trillion dollars uh imagine trying to push out three trillion dollars of money into the economy so that's resulted in a a large uh expansion of the federal government also uh uh kind of warehouse club supercenter so think of costco and sam's club uh big increases there as well as people have changed their uh their purchasing habits couriers and messengers again kind of that door-to-door delivery the next one building materials and general merchandise so you know as we're as we're all kind of uh staying home more and going to work less everyone's thinking about their homes and working on their homes and fixing things so a lot of demand for that and then uh computer and electronics uh again you know i we're all doing uh zoom meetings we're all doing uh uh online versions of what we used to do uh and so the the man is changing there so uh but there are that what we are and what we're seeing and this is kind of one of our uh things that i'm watching really closely is not only the impacts but how the the nature of what uh how we live is is changing and i think uh while some things may return back to normal back to how it was before there are long-term implications of the the way that we are changing our lives today uh and no one knows exactly how uh how the world will look five years from now but i think it's it will not look like it did a year ago i think we're good we're we were are we're essentially in a period of fundamental change and uh and we uh and coming out of this will have a very different way of operating uh our unemployment rate is another one of those uh dramatic changes as a result of the uh of the recession so what i'm doing here is i'm going back about 15 years so you can see uh the great recession again great recession worse than a generation our unemployment rate topped out at 10 and you can see that right here right around uh 2010. we we saw a nice drop coming out of that we've seen unemployment dropping consistently ever since uh the the end of the recession the great recession bottoming out right here in february of this year at 3.5 percent that was the lowest unemployment rate uh our nation had seen in 50 years uh the the the the biggest struggle we were having uh and you and your own businesses probably know this well our biggest struggle in february was a labor shortage finding the people to fill these uh these jobs that were in such high demand so we go from the lowest unemployment rate in a generation and then in a period of two months we jumped up to 14.7 percent uh again that's the highest we've seen since the great depression uh that and and it happened just literally overnight now we've come down from that we're back down below the level that we saw during the great recession but uh the unemployment rate in september is still elevated nationally at 7.9 percent uh which is uh consistent with what we're seeing um with the uh the job growth at the national level or the the the number of jobs that remain unfilled or that excuse me that so that with a higher uh number of people that have jobs right now now one of the unique things about this current economic situation is that the characteristics that story is changing so quickly that what we've had to do and this was even more true in the spring is we've had to turn to uh what we call high frequency economic information to try to tell a better story so that's what i want to show you here these are uh weekly unemployment insurance claims so this last one uh the unemployment rate comes out monthly it's part of that jobs report but on a weekly basis uh the uh the the state department of labor releases a count of how many people have filed for unemployment insurance claims and so just to kind of break it down a little bit you'll see there's two lines the green line is what we call initial unemployment insurance claims and the blue one is continued uh unemployment insurance claims so when someone loses their job they go into the the state department of labor and they file an initial claim for unemployment insurance benefit and then if they remain unemployed past that first week then they file a continued claim so you can see kind of the effect of that leading into uh the the shock we had relatively or extremely low initial unemployment insurance claims uh but then we saw that spike up uh and kind of uh the the top of that spike nationally was right around the end of march uh as we started to see more and more people losing their excuse me yeah more and more people starting to lose their jobs uh on uh and filing those initial claims but then if you look at the continue claims even though the weekly claims started to come back down into april those continued claims continued to rise more and more and actually topped out at 25 million people uh receiving continued unemployment insurance claims now the the weekly claims have continued to trend down but remember the weekly claims their initial claims which means is people that have just started receiving unemployment insurance claims and even today right now with the with the latest data is still four times as high as it was before the pandemic hit and the economy fell into recession that means four times as many people last week filed for initial claims than uh than in uh january of this year now if we look at the continue claims they're coming down well too we're getting better uh but we're still not back to that kind of pre uh uh recession level uh that we saw of of around uh 200 000 a week in the in the u.s economy when we look at at idaho as a as a comparison we see a similar trend uh that the continued claims are actually a little bit higher uh that not higher absolutely but higher relatively to the nation we tell that big spike starting on march 14th we really saw the the the apex at the end of march and then it's come down very quickly now this is the continued claims uh we topped out at around 70 000 people uh in idaho receiving uh continued unemployment insurance but look how quickly that number has dropped d
wn so well and i just want to jump back real quick so you can kind of compare those again there's the u.s so it's coming down but that kind of a a slow drop idaho has seen a very quick and a very aggressive drop down from that high level that we saw in april and may so that's a good sign for idaho that while uh uh you know while we sell have some work to do the uh the uh our local economy is looking really good when we look at the uh one of the the the longer term impacts that i always i'm watching and always i'm very concerned about is what we call the long-term unemployment so long-term unemployment is defined as people who are on unemployment insurance benefits for well they may not necessarily be on unemployment insurance benefits but it's people that are unemployed for over six months and that's a critical uh indicator of the economy because once someone passes six months of unemployment they start to lose the skills their employment skills they start to lose their uh connections their ability to return back to where they were before and the higher that long-term unemployment becomes the harder it becomes for the economy to return back to where it was uh before a recession hit so you can kind of see that effect in several of the last few recessions you see that long-term unemployment go up as the economy struggles to return again here's why we called the great recession that long-term unemployment spiked way up to seven million people in uh in 2010 and then took a while to come back because if you remember back 10 years ago uh there we kind of called it called it a jobless recovery where even though it was coming back it still felt like there was a drag on the economy and it took a long time to kind of bring that back down so where are we right now we're just starting to see the early signs of that long-term unemployment moving up again it was it was a very low around a million people uh in uh in january of this year and it's already jumped up to 2.4 million people uh in september now remember we're seven months into uh the pandemic and we're seven months into kind of the the dramatic shock that we first felt in the economy so we're just starting to see people uh moving into that long-term um unemployment characterization but we're already seeing that number moving up very quickly um i wouldn't be surprised to see uh that number if the economy doesn't uh recover very quickly that we could see that number potentially surpass what we saw in the the great recession um but that's one of the numbers that i'm watching really closely to uh uh and very concerned about frankly so looking at gdp uh this is uh the the latest numbers for the gross domestic product were released just yesterday so uh it's a really interesting and i want to spend a little bit of time on this too because uh the top line you know when when you listen to uh you know the the the campaigns especially the national campaigns you know you have one site saying oh it's the worst drop in in history and the other side saying it's the biggest increase in history they're both right so uh but what does it actually mean so in the second quarter uh on an annualized basis uh gross domestic product contracted by 31.4 that is by far the largest uh quarterly contraction our country's ever seen now this uh it's it's certainly possible i i should say that our our country has ever seen i it's the the largest quarterly drop on record and uh that's because our records only go back to 1948. before that during the great depression there's a chance that it was larger but we didn't have the same kind of data series or maybe if you go back to the 1800s you could see a larger one but going back to 1948 with that it's what we call post-war um it is by far the largest we've seen the closest yet you can get is if you go back to 1957 we saw a contraction of about 10 percent but this dwarfs that in its magnitude now what did we see yesterday came back even stronger grew 33.1 again that is the largest quarterly increase on record uh and uh we've we've never seen we we have seen uh some big jumps uh in 1978 uh we saw about 15 percent uh in 1950 uh we saw uh about 15 as well so we've seen some big uh big increases but nothing like 33.1 so on its face you may say okay we're out we're out of the hole right because we dropped 31.4 and now we're up 33.1 um but there's a few caveats to this so number one is uh gdp these numbers the the way gdp is accounted is on a uh an annualized basis and so essentially this these quarterly changes are assuming that this change were to continue uh for the next year now if we just if we just look at the actual quarterly change rather than an annualized change uh gdp dropped nine percent in the second quarter and then it increased 7.4 in the third quarter so uh and let me show you it a different way when we look at the absolute value of gdp so this is the actual value of a gross domestic product it increased for the last 10 years it hit a high point in the fourth quarter of 2019 at 19.3 trillion dollars but then started to fall in the first quarter and then that drop accelerated in the second quarter and even with that so you can see that that drop is um you know is right over here on the right that kind of uh downward sloping line and there's our bottom and uh we've come back up again but even with that uh with that 33.1 percent increase gdp is still 700 billion dollars below its pre-recession height now if we if we wanted if we were if our goal is to get back to where we were before the recession gdp uh is about 3.5 percent below its uh fourth quarter uh high however even though it's only 3.5 below the high it would require a 15.2 percent annualized growth rate in the quarter to get back to where it was before so and let me just put it back in these terms so that 33.1 percent for the third quarter would have to be followed by a uh 15.2 percent fourth quarter gdp growth to get back to where we were uh before the recession hit and i'll just tell you right now that's not going to happen um and if you uh if we kind of break down when the actual impacts happened the biggest impact if you go back to those uh those jobs numbers uh the gdp impacts were uh very closely coincide with the job impacts the biggest job impact was and and the biggest economic impact was the drop in april so that's when we saw the most pain our biggest return was in june so if you think you know uh uh the the the biggest uh uh the the biggest pain was in in the early part of the second quarter and the biggest benefit was near the early part of the third quarter so what are we seeing now uh we're seeing while it appears the economy is still growing we are seeing slowing so we especially with the with the pandemic starting to spread more widely we're going through the you know kind of the third wave we're starting to see more shutdowns we're starting to see more struggles the uh the ability of the economy to continue to see the kind of increases that we saw in the third quarter is uh is not very likely uh most economists uh agree that it will probably not be until uh late 2021 or even possibly 2022 until the economy returns back to its uh pre-crisis levels if we break down gdp a little bit uh so that if you kind of think back to your college econ class what is gdp you know it's c plus i plus g plus net exports so that's consumption uh or in other words uh consumer spending um plus investment which is business spending uh plus g is government spending and then our net exports that's the your main components but uh what really matters for gdp there's really only one thing that really matters you can see it right here in dark blue on the right is consumer spending consumer spending dwarfs everything else it's about two-thirds of the entire economy so if the consumers fear feel good and they spend then the economy is okay if consumers get nervous and pull back then the economy will will suffer and you see that in the second quarter of this year where it was really the impact of consumer spending or consumers uh no longer spending pulling back that really pulled the the economy into a recession and then again in the third quarter as consumers started to spend again it pulled the economy out of the recession so let's look at the consumer real quick kind of breaking that down how does how does how do consumers feel about the economy right now you can see that there was so kind of this green line across the middle uh is the level where people feel like the economy is prosperous they feel like it's a good time to be spending it's a good time to be buying things we saw a big jump uh in uh 2016 and 2017 consumer confidence went up uh uh quite a bit and stayed at a very high level for the last three years for you know 17 uh 18 and 19 consumer confidence was hovering between 120 and 140 great level but then right there is the shock right in the beginning of 2020 consumer confidence got a shock dropped all the way down to levels we haven't seen since 2014 and while consumers feel a little better than they did earlier this year uh we're not back to those levels uh that that we saw earlier in the year and consumers still don't feel like the economy is prosperous on the other hand another one of these crazy indicators that we've never seen before so this is looking at the personal savings rate uh of uh of uh people in the economy and uh this this series is going back to 1963 the highest level we've ever seen was in 1975 when it was about 17 so where did we get in april 33.7 of people were uh were saving their money rather than spending it so rather than putting their money into the economy they were putting it into their savings accounts now it's down from there but it's down to 14.4 percent which is still close to an all-time high so why is this happening so if you think about it it was a combination of the uh of the the the economy shutting down of the state homeowners so there were not opportunities for people to spend and then also you have the federal government pushing out literally trillions of dollars to households in the country through things like the paycheck protection program uh through the direct payments to individuals and households through the enhanced unemployment insurance benefits they were pushing out money and the goal of that right the goal of the 3.2 trillion dollar uh cares act was to inject money into the economy you know put money in people's pockets put money in businesses so they'll turn around and put that money back into the economy which will spur economic growth the struggle is uh it hasn't been as effective as uh they had hoped because there weren't opportunities to spend and there's still that low consumer confidence and so people are uh continue to hold on to a lot of the the money that they've received because of uh kind of higher levels of uncertainty another sign of that uh is uh the the impact on uh on oil prices this is just such an interesting story if you you know if you kind of think about your econ 101 what are the drivers of the economy it's supply and demand right and so what we're showing here this is a great example of supply versus demand driven changes in prices so essentially what we're looking at so let me just walk through this the the green line is uh oil prices prices per barrel while the blue line is active u.s oil rigs so we're talking about extraction uh now if we jump back kind of on the left side of the of the graph you see oil prices were hovering around a hundred dollars a barrel for many years leading into 2014 and extraction uh was about uh we we topped off right around here in 2014 of 1600 active u.s oil rigs now we saw a big shock to the system right around it was literally right around this time in 2014 that was a supply uh driven shock to the system essentially what happened was saudi arabia flooded the the world market with very cheap oil and it drove down those oil prices until they dropped all the way down to about 25 dollars a barrel and we saw that extraction also dropped all the way down uh to about 350 uh active u.s oil rigs so that was their goal their goal was to push people out and make it uh economically unviable for them to extract but then uh oil prices recovered uh we've been uh in kind of a range of forty to sixty dollars a barrel for the last uh six years uh and extraction recovered somewhat you see that it never got back to that level of 1600 where it was uh in pre-2015 but it got back to around 900. now what did we see this year here's the exact opposite effect this is reflecting rather than a supply shock in 2014 and 2015 this is a demand shock as none of us uh or i should say as many fewer people are now traveling there's less demand for oil you know we're not going on cruises we're not going on airplanes we're not uh commuting to the extent that we used to and so that demand for oil dropped very quickly uh and dropped from around sixty dollars a barrel to uh if you remember back in the spring there were a couple days where the price of oil dropped to negative forty dollars a barrel now imagine what you know what does that mean that means that you have to if you're a an oil producer you have to pay someone forty dollars a barrel to take that oil off your hands i mean it was it it was uh you know kind of the the indication that the markets were breaking down that only happened for a few days but we've never seen that before now the prices have come back up again and we're around forty dollars a barrel now but look at that extraction number in blue uh we're we're now uh active u.s oil rigs uh today are 193. so again we were 1600 in 2014 then we were at around 900 in 2019 we're now at 193. so even though the price is back extraction has dropped way down which is having a sustained and dramatic impact on on oil companies on the extraction industries and on many parts of the country as well so what's the what's the response to this so this is a kind of a really nerdy chart that i love though uh if you think about the federal reserve we always talk about jerome powell but jerome powell while he's the the chair of the federal reserve there's actually a the federal reserve has a board of governors and each one of those governors gets a vote on where the what the fed will do with interest rates and so each one of these little dots if you look at it each one of those dots represents a vote of one of the governors of the federal reserve uh federal open market committee and so they when they meet uh on a on a regular basis they vote on where the rates should be right now i should say where the federal funds rate will be right now and then they say where do we think it should be going ahead so what we're looking at here is 2020 2021 2022 and 2023 and then a longer run uh indication the point here is the federal reserve intends to keep uh interest rates very low for an extended period of time you don't even see especially 20 and 21 no one thinks they're that the fed funds rate should be above zero and then it's not until 22 that you see one governor thinking they need to start raising rates and 23 we only have four governors so i expect that we are going to see very low interest rates continue for an extended period of time really until we start to see robust economic growth again also comparing so this one if you think of this chart this slide is taking that chart and applying it uh over time so you see that in september of 19 the the fed expected had rates much higher and they were expecting to be increasing rates going forward uh in in december of 19 they started to drop down those expectations a little bit if you remember a year ago there's a little bit of weakness and the uh a little bit of uncertainty then we get the shock and they've dropped those all the way down uh to essentially and effectively zero now the fed says they're going to be back to two and a half percent but that's so far off i kind of discount that they're they're just saying someday we'd like to be back to where we were before the other thing the fed has been doing is aggressively uh buying bonds we call this the fed's balance sheet and uh it's one of the ways that the fed tries to have a uh to influence uh the the overall direction of the market now coming into the great recession the fed
ad a balance sheet of about 800 billion dollars and then through a series of what they called quantitative easing or bond buying the fed got its balance sheet all the way up to about 4.5 trillion dollars now over the past few years they've been trying to sell that off until now and they have completely reversed that and just in the period of of the last couple months the fed's balance sheet has jumped up to now it's seven trillion dollars you see how slowly they tried to ease up in the quantitative easing before this time they just went crazy and bought three trillion dollars remember that's consistent with the cares act the cares act was three trillion dollars the fed bought three trillion dollars in bonds now one of the fears is always that this will result in big inflation uh that you know flooding money in the market uh will cause inflation but on the contrary we are not seeing signs of that uh in fact the fed's biggest fear is not high inflation but but they're concerned about deflation which we saw deflation in the great recession as housing prices collapsed we saw deflation again in 2015 as the oil market collapsed and we almost saw it this year if it had not been for that dramatic confusion uh from the uh from congress and uh and the fed we would have seen deflation we we could have seen uh certain sectors uh see prices collapsing and so that's their biggest uh uh goal right now is to to move up that inflation we're still below the fed's target but uh we are seeing a little bit of inflation coming back in and again most of that is kind of the opposite of what we saw in the great recession well it's really what we saw pre-2008 which is housing price appreciation is causing some inflation one other area i want you to think about this isn't a problem for an act right now i get it uh our primary concern right now needs to be recovery and and uh bringing the the nation back from the recession but we uh when the time is appropriate we need to start thinking seriously about our national debt uh because not only is it uh uh has it been historically increasing but now after this year for the first time uh the national debt is surpassing the level that we saw uh in world war ii and then on the right if you look at that that yellow line so this is looking at uh the august 2019 projection compared to the january 2020 of projection compared to september 20 uh 2020 projection see that jump in that yellow line that's because of the cares act so our expectation of the national debt has gone up dramatically uh just in the last few months uh and uh we don't know how or when uh it will become a a a real problem uh but uh the the national debt is something we've got to get serious about and start addressing as soon as we can one other thing i want to touch on real quick at the national level is just kind of looking at uh we've been looking at some of the implications of different scenarios and i should say i th these are not analyses that zion's bank has personally done this is kind of looking outside looking what other groups have done i just want to stress also that zion's bank is non-partisan we don't endorse anyone we don't endorse any parties or platforms or individuals this is just looking at different scenarios and what they could uh produce in terms of impacts on the economy so scenario one is looking at what what what's called a blue sweep this is where joe biden wins the white house uh democrats uh win the uh when the senate uh the the scenarios don't even anticipate uh any changes in the house there's not expected to be change changing the in the control of the house of representatives at the national level the scenario number one is expected to have the highest probability it's about 60 to 70 percent probability of happening what would we see there so again we've got biden in the white house and uh democrats controlling both houses of of congress much more and much higher fiscal stimulus so that if you think back after the cares act the house of representatives passed a another three-point i think it was like a three trillion dollar what they called the heroes act so following up on the three trillion dollars of the cares act they passed three three trillion dollar heroes act uh the senate on the other hand uh the their latest proposal is a 500 billion uh dollar stimulus so we've got a big difference between uh what the senate is proposing and what uh the houses proposed really between what republicans in the senate have proposed and democrats in the houses proposed so if we've got that blue suite we'll see that fiscal stimulus much closer to what the what the house has already proposed close to that three trillion dollar level the on the now that that will have uh definitely have a bigger boost to the uh short-term economy we'll see uh additional gdp growth uh we'll see additional job growth and we'll see the unemployment rate coming down again primarily in the those are the short-term impacts on the other side uh the uh mr biden has talked about reversing some of the trump tax cuts specifically he's talked about uh reversing those uh those tax cuts for those making uh over four hundred thousand dollars a year now that will have a uh that will have a kind of a reverse effect of the stimulus it'll have a more depressing impact on economic growth uh but uh my guess is that if that were to happen uh it would not be until uh after the economy has started to recover after we're through uh kind of this uh this danger period and we know that we're back in a a growth period again that probably won't happen until about 2021 end of 21 or beginning of 22 which is similarly when uh most people are expecting gdp to return back to its pre-recession level scenario number two is kind of a a split outcome uh joe biden wins the white house republicans retain the senate and then the the house is democrat controlled the probability of this one is about 20 to 25 percent what we see here is smaller uh fiscal stimulus because essentially the again remember the the senate's plan has been much lower stimulus so it would probably be uh somewhere closer to that um that 500 billion that the senate is proposing or has proposed it could be a little bit higher because uh the the you would have a republic or excuse me a democrat biden uh working with the house on on getting a larger stimulus so it might end up the some of the talk right now is somewhere between 1.5 and true two trillion dollars i could see something closer to that but the other thing we would see and we've already seen this with president obama and president trump uh when we we have increased gridlock in congress and more difficulty getting uh laws passed in congress we will see uh kind of that trend of more executive orders and more action through agencies and regulatory change will continue to be used the other result of that is we'll have greater fiscal uncertainty just because when we've got that gridlock with congress a lot less gets done and there's a lot uh many more questions about kind of where our direction will be looking at scenario number three so this is essentially that president trump is re-elected and stays in office and republicans retain control of the senate this has a about a five to ten uh percent probability so much lower uh than the other two uh what you would see here would definitely be that fiscal stimulus uh closer to uh what we what the the senate has proposed at the 500 billion dollars however what's really interesting is uh at least in the last few weeks we've really seen it's been the house and president trump that have been pushing for a larger stimulus and it's been the senate that's been pushing for the smaller stimulus so i would guess that if if president trump wins re-election he'll continue to push for that larger stimulus again that the house proposal is 3 trillion the trump administration has really been kind of coalescing around a number around 2 trillion and i would guess that number would be closer to that 2 trillion level rather than 500 billion you would also see a much more aggressive push for trade deals which has been a focus of the trump administration they've kind of been put on the back burner for the past a little while because of the election but i think those would definitely be uh have renewed interest especially with areas like china and other parts of asia you would also see another big push for uh more infrastructure spending which has been another push as well in fact that in scenario four we've really started to see that now this only has like a five percent probability because it's very unlikely that you're going to see president trump reelected and not be uh not be able to carry over uh others in his party but just kind of looking at kind of rounding out the scenarios what we see here is um probably much higher fiscal stimulus um maybe even closer to the three trillion dollar level but you know probably north of 2 trillion then a real push for the trade deals but also push for infrastructure spending that infrastructure spending is actually an area where uh donald trump is broken with uh many in his party um and has really been pushing uh uh his push was for a one trillion dollar uh infrastructure spending deal and it kind of uh languished and didn't happen but i you could see a return to that push uh if uh if the president were uh president trump trump were re-elected okay kind of looking locally um so what we're seeing is idaho continues to be uh doing surprisingly and uh surprisingly well especially given the the national uh changes that we're seeing so this is going back a little while the one of the struggles with population data is it's always uh you know if you kind of think of real-time economics and kind of the lagged population is always very lagged um and so but what we know is that we have a long-term trend of very strong population growth how does that population grow overwhelmingly through migration we've um we've seen an acceleration in our migration or people moving into the state over many years and even though we don't have the hard data we are i will guess that when we see the data for this year what's happening right now we're going to see a an even higher uh migra in migration from many parts of the country but specifically from the coast uh we're seeing a lot of a lot of people moving into the state uh uh looking for a better quality of life looking to kind of get out of uh big cities and and move to areas where uh there's more open space and more you know breathable air um and and you can really see that uh kind of our hot areas uh again this is really remarkable uh ada grew uh 2.7 now it's it's very rare for uh kind of the the areas where the population is concentrated to also see the biggest growth it's usually and we can't kind of see that with uh with canyon and gem grew a little bit higher because those are areas that have more potential for growth or you know areas like bonneville and teton or or the uh the northern part of the state but for ada to see 2.7 uh growth which is above the state average is is really remarkable and it just shows how strong uh the the boise area is doing when we look at uh job growth well i should say job loss um every state in the country has lost jobs over the last year however idaho's job loss is the lowest in the country and you know what's good is you know it's consistent with what we're seeing kind of in our region uh you know idaho utah arizona uh uh are all seeing uh relatively uh uh low job losses but then you know look at the differences though look at nevada negative down 9 california down 8.5 new york down 11.2 and then hawaii 18.4 job loss in the last year so there's some dramatic differences uh between what we are seeing and what some of our neighbors are seeing um in terms of uh job losses and uh to put that in perspective you'll remember this from the the national level idaho lost 84 000 jobs in the spring most of those almost 80 000 of those were in april however we've been bringing those jobs back uh uh almost every month since then what's one anomaly and i'm gonna talk about this in just a minute we did lose about a thousand jobs in september but we've seen some big increases and now we're just 13 000 just well i guess just under 14 000 from being back to where we were uh before the great recession um you know every state is jealous of the kind of uh recovery that idaho is seeing right now when we look at those sectors again uh the big drop is that uh information sector uh dropping 14.4 percent um by the way i just want to point out there's there's often a misunderstanding about the information sector people think that it's high tech but it's not uh the information sector is uh is newspaper production magazine production it's uh you know kind of your media and then internet service providers and so it's a really small sector um relative to the the rest of the economy and so that's why it tends to fluctuate a lot and if you think about an area that's suffering it is um you know kind of those uh those uh traditional media uh uh areas and so that's why we kind of see that that big drop but then um you know surprisingly strong growth in natural resources compared compared to the nation um and then financial activity a lot of that is because the way that uh the the federal money is being distributed is uh uh through the financial system when we look at the number of jobs that have uh changed trade transportation and utilities uh growing 4 300. manufacturing i mean that's great nationwide manufacturing is really struggling but we're seeing growth there construction of course is really strong but then you see leisure and hospitality uh is probably the it would not probably is the biggest loser in absolute terms uh followed by uh education and health care that's mostly uh education um health care of course is is uh straining because of the the demands right now what's interesting here is if you think about that and and you have to think about the differences in the time periods um so that that last graph that i showed you was a population growth this is showing the employment growth uh while uh the the the state is very close you see the ada is still just a little bit um below it is actually consistent with the state uh contraction rate of about uh 0.5 i would i wouldn't be surprised if in the next month or two would see that uh go back positive again but then um uh kind of a well we see kind of a mixed bag of some you know really high growth uh in in parts of the state and then continued paying in others uh bannock still down 3.6 for instance unemployment rate this was one that i was that at the top level i was a little surprised about so last month idaho had the third lowest unemployment rate in the country this month that slipped to the 16th lowest and it actually went up to 6.1 percent and so uh you know you you might have you know asked the question well if we're doing so well why is the unemployment rate going up and why did our ranking drop so dramatically well let me show you kind of why that might be happening this is this is one of the kind of the really interesting things as an economist that i'm watching um so you can see the big spike uh in in in the spring you know topping off almost 12 percent we drop down uh to uh about four percent now we're at 6.1 but here's the next one this is what we call labor force participation so what we're saying is of the entire population that's working age uh 18 to 64. how many of those that those people are actually working or looking for a job that's your labor force participation and look at the nation um that both idaho and the nation have been dropping uh since the great recession but look right here with a shock the nation's drops dramatically labor force participation because people gave up uh on the labor force and just walked away now it's coming back but it's still much lower than it was pre-recession however look at idaho i know there's the shock dropping down a little bit as well but now the recovery has been even stronger than the shock so idaho's labor force participation is now the highest it's been in 10 years so what that means is that we've got more and more people coming off the sidelines and coming back into the labor mark
t and looking for jobs now one of the results of that is you see unemployment jump because they they're looking for a job but they don't have it yet so they're unemployed so so it actually might be a good indication to see that jump in unemployment because labor force participation in idaho has jumped up so dramatically um and it's very different than what we're seeing nationally people are hearing the story of how well things are doing in idaho and they're responding uh by you know by moving in greater numbers and uh and looking for jobs in the uh in the idaho economy when we look at unemployment rates uh i we we really have been living through a black swan event uh over the you know really started in in march and april but uh the uncertainty has continued throughout this entire year no one knows for sure exactly you know what's going to come next well we have another uh recession where we have a a larger resurgence of the of the virus will uh congress you know be able to uh pass another uh act but um what what i am expecting is that we will continue to see kind of that constrained growth we've still got a lot of ground to cover on that jobs recovery nationally on economic recovery nationally those sectors that have been impacted by the pandemic will continue uh to struggle and that's why it is really important as well while we do need to be concerned in the long term about national debt our primary concern right now needs to be helping those industries those businesses and those individuals that are struggling right now i want to stress remember our economy was really strong going into the recession going into the pandemic and those businesses that are suffering right now are suffering not because of anything they did wrong they're suffering because people can't travel they're suffering because people can't go to restaurants like they used to people aren't working in their offices like they used to so they're not going to the downtown restaurant like they used to and so it's a it's essential that we have that kind of federal and state uh support but um ultimately the economy will not be able to return to back to where it was before until we until nationally and even worldwide we have the ability to treat the virus to uh to have an effective way to move forward so we can improve that overall consumer confidence get people feeling better and get people back to where they were before however last point um idaho you know we are we're really lucky uh to be in an area like idaho where uh that as tough as things are in other parts of the country our biggest struggle right now is dealing with all the new people moving in um because the economy is so strong quality of life is so good that it uh where the economy is attracting a lot of people and i know idaho continues to be the the shining star in our country so thanks for so much for having me
