Important Details
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Consumer Confidence

The Zions Bank Utah Consumer Attitude Index decreased 7.5 points to 109.3 in December. The U.S. Consumer Confidence Index increased 1.6 points to 92.6 in the same period.

Housing Market

In November, the CoreLogic® Home Price Index (HPI) for Utah, which measures home price appreciation, experienced a 5.0% year-over-year increase. Nationally, the HPI increased 5.5% during the same period.

Inflation

The Zions Bank Utah Consumer Price Index decreased 0.2% from October to November for a trailing 12-month inflation of 0.5%. In the same period, the U.S. CPI decreased 0.5% for a trailing 12-month inflation of 1.3%.

Job Report

Utah’s unemployment rate remained at 3.6% in November, while the national unemployment rate also held steady at 5.8% in November.

February 2015

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Randy Shumway January 2015

Utah Economic Outlook

Randy Shumway, Zions Bank Economic Advisor

What one type of business in Utah supports almost every other business in the state? Here’s a hint: it contributes to Utah’s low unemployment rate, top-ranked business climate, and diverse workforce. Here’s a more specific hint: it is responsible for bringing domestic and international business travelers, tourists, and cargo into and out of the state. Answer: the airports. Utah’s airports have a significant economic impact on the state—in addition to successfully transporting people and goods, airports employ many Utahns in operations and terminal redevelopment.

Airports cater to numerous business travelers who work in Utah, thereby boosting the state economy. Some of these travelers may ultimately choose to relocate their operations to the state, which would bring future benefit. Throughout the year, tourists also flock to Utah via the airport. While they head for Utah’s beautiful cities, canyons, and deserts, tourists bring revenue that remains in the state. Each year, more than 3 million people come into and go out of the state via Utah’s airports—regardless of the purpose of their travel, they support employment and economic growth in the state.

Airports serve the state in a variety of capacities. Many industries in Utah are dependent upon air transport for success, including the postal service, hospitals and medical facilities, restaurants and grocery stores, manufacturing companies, and religious organizations. For some quick numbers: Utah’s airports are home to 1,700 aircraft. They accommodate more than 1.3 million takeoffs and landings each year, enplane over 18.6 million airline passengers, and handle more than 476 million pounds of cargo. They also assist numerous police, fire, and paramedic operations.

Apart from the business it brings to the state, the Salt Lake City International Airport generated an estimated $1.1 billion in wages and income for employees in 2013. During the same year, it yielded the equivalent of 35,290 full-time jobs, including 1,481 in airport operations, 511 in capital investments, 4,138 in nonairline tenant operations, and 29,161 jobs in visitor spending. In addition, the airport supports jobs related to upgrades and redevelopment. For example, the new Terminal Redevelopment Program will generate an estimated 23,919 full-time jobs and $1 billion in wages and income. For perspective, this will contribute $1.5 billion to GDP, and result in $3 billion in total economic output over the life of the project.

Utah’s airports play a key role in critical medical care, agriculture, search and rescue, wild land firefighting, recreation, and environmental services. By providing access to the global market, Utah’s airports support industries and commerce across the state. They enable smooth transit for business travelers, citizens, and tourists. Add the aforementioned factors to the fact that they create stable jobs for residents in airline operations and maintenance, and it is clear that Utah’s airports have a significant economic impact in the state.

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passenger jet on runway

Short-Term U.S. Outlook

The United States economy kicked off 2015 with the most significant momentum witnessed in the last decade. At the end of December 2014, the third-quarter GDP growth estimate was revised upwards to 5 percent annualized growth. The upward revision indicates that the economy grew in the third quarter at its fastest pace in over ten years. The third quarter of 2014 represented the strongest single quarter of GDP growth since 2003. This growth was attributed in part to strong consumer spending, business investment, and net exports. Real gross domestic income, an alternative measure of the overall size of the economy, rose 4.7 percent in quarter three. When the third-quarter growth estimate revision was released, Macroeconomic Advisors revised its fourth-quarter growth projection upward to 2.8 percent, and Goldman Sachs revised its projection from 2.2 percent to 2.6 percent.

In late December, the Dow Jones Industrial average broke 18,000 for the first time, and the S&P 500 stock index also reached a record high. The positive outlook of several combined economic indicators shows that the average consumer is confident about his or her economic future. The labor market continues to improve, and payrolls in the United States grew in November by more than 300,000—significantly exceeding expectations. Consumer spending appears to have increased in the fourth quarter, as falling gasoline prices translated into higher amounts of discretionary income.

Short-term interest rates have remained near zero since the beginning of the financial recession in 2008. Despite strong economic recovery, the Federal Reserve remains cautious about raising interest rates for fear of destabilizing growth. However, the Central Bank is expected to raise interest rates in mid-2015 upon confirmation that current growth rates are sustainable and will translate into long-term hiring.

Crude oil prices decreased by nearly half in 2014, which represents the steepest decline since 2008. Oversupply of oil on the global market and lackluster demand combined to lower prices. Despite falling prices, oil production in the United States is expected to grow in 2015, according to a report issued by the U.S. Energy Information Administration. Production is expected to reach an average of 9.3 million barrels per day, which represents an increase of 0.7 million barrels per day from 2014. Oil-producing countries around the world—including the United States, Saudi Arabia, and Iraq—have voiced intentions to continue production at current or higher levels in spite of falling prices.

Long-Term U.S. Outlook

U.S. growth in 2015 is expected to continue at a modest 2.6–2.8 percent. According to projections published by the Conference Board, global growth should hold at 3.4 percent barring major geopolitical upheaval.

National long-term growth depends in part on how well the global economy recovers and stabilizes. At this point, Russia’s economy is suffering from high inflation and currency devaluation. Japan’s prime minister approved a $29.1-billion stimulus package at the end of 2014 to help move the country out of recession. Greece’s internal politics could destabilize economics in the short term. Overall, the global economy is still trailing behind the U.S. economy in terms of growth. Although the United States bears the signs of a strong economy at the beginning of 2015, this status hinges on our ability to trade with global partners and stimulate more growth.

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Utah Consumer Price Index decreased 0.2% between October and November National Consumer Price Index decreased 0.5% between October and November

U.S. Consumer Price Index

The Zions Bank Wasatch Front Consumer Price Index (CPI) decreased 0.2 percent from October to November on a nonseasonally-adjusted basis. The index has increased 0.5 percent since this same time last year. The national Consumer Price Index, released by the Bureau of Labor Statistics, decreased 0.5 percent from October to November on a nonseasonally-adjusted basis and has increased 1.3 percent over the past twelve months. Inflation continues to remain below target levels nationally and statewide.

Transportation prices dropped for the third month in a row, declining 1.2 percent from October to November. Gas prices alone decreased 7.2 percent in November. Gasoline prices affect inflation because they are consistently part of the average person’s purchase decisions. The average price of gasoline in November was $3.11—down from $3.35 the month prior and $3.55 the month before that. In contrast to falling oil and gasoline prices, airfare increased significantly in November just in time for the holiday season, jumping 13.7 percent from October.

Prices for food at home—food items purchased at the grocery store—accounted for the largest increase in the consumer price index this month, increasing 0.7 percent from October to November. Fluctuations in food prices often result from seasonal food price changes. Prices of meat, beef, poultry, eggs, some citrus fruits, and produce increased. Apple prices fell slightly, while most other food prices remained steady.

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National Unemployment Rate remains at 5.8% in November Utah unemployment rate remained at 3.6% in November

Labor Market

The employment situation held relatively steady in the month of November both nationally and in Utah. In Utah, the labor market expanded by 43,400 jobs compared to November 2013, and all ten private sector industry groups saw net job increases. The largest gains came in trade, transportation, and utilities, which added 10,100 jobs, and in construction, which added 7,400 jobs. Nationally, nonfarm payroll employment rose by 321,000—well above the 224,000 that the economy has averaged for the past 12 months. Despite this job growth, the unemployment rate remained unchanged both for Utah, which held at 3.6 percent, and the nation, which remained at 5.8 percent.

How is it possible for an economy to experience both high job growth and a stagnant unemployment rate? Since people who are not actively looking for a job are not included in the labor force (according to the U.S. Census Bureau’s calculations), one explanation is that formerly-discouraged workers are returning to the job market. Seeing an improving economy and correspondingly improving job prospects, some of these workers are looking for work again. While this is undoubtedly good news for those workers and for the economy, it creates additional competition for jobs and keeps the unemployment rate higher than it otherwise might be.

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Utah Consumer Attitude Index declined 7.5 points in December National Consumer Attitude Index increased 1.6 points in December

U.S. Consumer Attitude Index

The Zions Bank Utah Consumer Attitude Index (CAI) declined 7.5 points to 109.3 in December, returning to its September level after significant increases in recent months. Consumers are more concerned about job availability, but attitudes are still quite high in Utah and indicate a strong economy. The index currently sits 13.2 points higher than its level one year ago. Consumers in Utah are more confident than consumers nationally: the national Consumer Confidence Index® (CCI) increased 1.6 points to 92.6 from November to December.

The Present Situation Index, which measures how consumers feel about current economic conditions, decreased 0.5 points to 117.4 this month. The Expectations Index, the sub-index of the CAI that reflects how consumers feel about economic conditions six months from now, dropped 12.2 points to 103.9 in December.

Just over a third of consumers expect interest rates for borrowing money to stay the same. Seventy percent of Utahns expect prices of consumer goods to increase, down 1 percent from November. Twenty-five percent of Utahns expect consumer goods prices to remain the same, down 2 percent in December. There was no change in expectations of investment interest rates from November to December—38 percent of Utahns expect a $1,000 investment in their 401K to be worth more than $1,000 one year from now.

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Utah CoreLogic Home Price Index rose 5.0 points in November National CoreLogic Home Price Index rose 5.5% in November

Housing Market

Housing prices continued to remain mostly flat in November, with a slight decrease in Utah and a slight increase across the nation. According to the CoreLogic Home Price Index, home prices decreased 0.3 percent in Utah from October to November, which represents a 5.0-percent rise compared to November 2013. Nationally, home prices increased 0.1 percent month over month, representing a 5.5-percent rise compared to November 2013. Nationally, home prices are still 12.9 percent below their pre-recession high, and home prices in Utah are still 17.4 percent below their pre-recession high.

The number of contracts to purchase existing homes in the U.S. increased 0.8 percent in November. While this might not seem like a substantial rise, it is a welcome improvement over the 1.2-percent decrease in October. In large part, this increase stems from the improving job market. “The consistent economic growth and steady hiring we’ve seen in the second half of this year is giving buyers enough assurance to consider purchasing a home before year’s end,” said National Association of Realtors chief economist Lawrence Yun in 2014. The link between the labor market and the housing market is evident: as more people are employed, the pool of prospective home purchasers grows. High employment gives potential home buyers confidence in their financial security, making them more likely to buy a home.

Read more Read more
barrels of oil

The Winners and Losers of Cheap Oil

Who doesn’t love low gasoline prices? Travel is cheaper, plastic goods are less expensive, and it’s easier to transport products and run farm equipment. Many consumers are leveraging the money they save at the gas pump to increase personal spending on other goods and services, further propelling our economic recovery. The U.S. Energy Information Administration (EIA) believes that gasoline prices will remain low through 2015—averaging a whopping 91 cents less per gallon than in 2013.

The dollars and cents we pay each time we visit the pump actually reflect complex global politics. Since its formation in 1960, the Organization of Petroleum Exporting Countries (OPEC) has historically been very effective at manipulating the supply of oil—and its resulting cost—according to the organization’s interests. Given its majority share of total worldwide oil production, OPEC has often ensured its market control by increasing production to lower cost. Thanks to new extraction methods, however, the United States has replaced Saudi Arabia as the largest producer of oil in the world. With such a boom in U.S. oil production, OPEC can no longer independently control global supply and price.

In a bid to hedge its crumbling share of the market, OPEC has announced that it will not decrease short-term production. That’s the catch in our current low prices: they result from supply outpacing demand. And simultaneous to countries outside the control of OPEC increasing global supply, weak economies in Europe, Russia, and Japan have reduced global demand. This oil glut could drive the price of oil sufficiently low to stymie U.S. energy investment, as has happened many times in the last few decades.

Energy independence has been a U.S. goal since the 1970 oil embargo; however, each time we have made strides toward that goal, OPEC has successfully undermined our investment in domestic energy. For example, in the 1980s Saudi Arabia began to produce oil at full capacity to maintain its market share, and the price of oil plunged to less than $20 a barrel. With oil so cheap, U.S. organizations reduced their investment in domestic energy innovation and exploration in favor of low-priced foreign oil—a move that simply reestablished our enduring dependence on OPEC. Subsequently, OPEC decreased global oil supply, and prices returned to their original highs. Once again, in 2015, OPEC has strategically decided to keep oil supply elevated.

If the U.S. can continue investing in energy production innovations, we can outlast OPEC’s attempt to ultimately regain control over global oil supply. Unfortunately, this endeavor will strain domestic energy companies. Analysts estimate that the break-even point for U.S. energy companies is anywhere from $45 to $80 per barrel of oil. The EIA’s 2015 estimate of $68 per barrel sits squarely within those estimates, putting U.S. energy companies in jeopardy of experiencing losses in times of much-needed research and development investment. And in the absence of profit, the incentive and capacity to continue investing in domestic energy innovations begins to diminish.

Although energy companies may lose money in the short term by maintaining full production, they could realize meaningful return if the U.S. is able to ultimately achieve true energy self-sufficiency. Not only would energy independence positively impact U.S. energy company profits, but it would provide far-reaching macro-economic benefits—improving domestic jobs and economic growth. Most importantly, but more nuanced, if we can outlast OPEC in this bid for market control, the U.S. could move forward with a less entangled foreign policy, geared toward less conflict and loss of life. So while we enjoy low prices at the pump, we must maintain our collective hope that domestic energy companies will continue their investment in energy innovations and exploration.

Read more Read more
Life Flight medical helicopter

Aviation Aids Life Flight

Aviation in Utah is closely tied to the medical industry, especially in terms of life flights and rescue missions. Intermountain Healthcare, in particular, depends on flights to access and transport people who need medical attention.

Fourteen years ago, Intermountain Life Flight was given FAA approval to conduct external load hoist rescue operations. It is currently the only rescue hoist operation in the intermountain region. The hoist search and rescue team goes through extensive training in order to rescue victims in difficult-to-reach areas and carry them to safe landing areas. Aviation reduces the time it takes for teams to reach and transfer patients in need of critical care. It also cuts down on man hours that other search and rescue teams have to invest since hoist teams are able to fly directly to a victim in a matter of minutes.

By connecting aviation with medical care, Utah’s regional and local airports and helipads help lower costs and increase the speed with which patients receive critical medical care. By supporting jobs in the sky and on the ground at airports and medical centers, life flight services benefit Utah’s economy.

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Consumer Confidence

The U.S. Consumer Confidence Index® increased 1.6 points to 92.6 in December. The Present Situation Index increased 4.9 points to 98.6, while the Expectations Index decreased 0.8 points to 88.5.

Housing Market

In November, the CoreLogic® Home Price Index (HPI) for Idaho, which measures home price appreciation, experienced a year-overyear increase of 0.4%. Nationally, the HPI increased 5.5% during the same period.

Inflation

The U.S. Consumer Price Index decreased 0.5% from October to November. The Index saw a year-over-year increase of 1.3%, which is below the Federal Reserve’s target annual inflation pace of 2–3%.

Job Report

Idaho’s unemployment rate decreased 0.2 percentage points to 3.9% in November, while the national unemployment rate remained at 5.8% in November.

February 2015

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Randy Shumway January 2015

Idaho Economic Outlook

Randy Shumway, Zions Bank Economic Advisor

What one type of business in Idaho supports almost every other business in the state? Here’s a hint: it is responsible for bringing domestic and international business travelers, tourists, and cargo into and out of the region. Answer: the airports. Idaho’s airports have a significant economic impact—in addition to providing reliable transportation, they employ many Idaho residents and support critical services like medical care and firefighting.

Every 10 years the Idaho Department of Transportation conducts a study that analyzes the air industry in Idaho. The most recent study, conducted in 2009, found that 75 of Idaho’s 119 airports represented 87 runways; 38 airports offered fuel service; and eight airports had more than 100 based aircraft. Eighteen airports utilized onsite automated weather reporting, and 14 airports logged more than 25,000 annual operations. The functions of each airport vary from commercial service to regional business, community business, local recreation, or basic service. It is projected that by 2017 Idaho airports will have a total of 3,889 based aircraft, 1.74 million annual operations, and 2.96 million commercial airline enplanements. These numbers indicate that Idaho is well equipped to transport business travelers to and from the state—many of whom may consider relocating their operations to the Gem state.

Idaho’s airports also serve tourists, who bring critical revenue to winter sports, touring, and other recreation industries. According to airport data, 60 percent of Boise airline passengers travel for pleasure while 40 percent travel for business. In addition to supporting business and tourism, Idaho’s airports provide employment for many residents. According to the 2009 study, approximately 23,000 Idaho citizens owed their jobs to aviation, directly or indirectly. This figure represented 2.9 percent of all jobs in the state at that time. Annual payroll totaled $718.5 million that same year, and the airports generated $2.1 billion in economic activity. Aviation’s total economic output comprised 4 percent of the state’s estimated gross domestic product in 2009. Looking specifically at the Boise airport—the largest commercial service airport in the state—total employment in 2011 comprised 15,559 jobs, total payroll was $510.7 million, and total economic activity represented $1.3 billion.

Idaho’s airports clearly have a significant economic impact in the state. They play a key role in critical medical care, agriculture, search and rescue, wild land firefighting, recreation, and environmental services. By providing access to the global market, Idaho’s airports support industries and commerce across the state. They enable smooth transit for business travelers, citizens, and tourists. Add the aforementioned factors to the fact that they create stable jobs for residents in airline operations and maintenance, and it is clear that Utah’s airports have a significant economic impact in the state.

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passenger jet on runway

Short-term U.S. Outlook

The United States economy kicked off 2015 with the most significant momentum witnessed in the last decade. At the end of December 2014, the third-quarter GDP growth estimate was revised upwards to 5 percent annualized growth. The upward revision indicates that the economy grew in the third quarter at its fastest pace in over ten years. The third quarter of 2014 represented the strongest single quarter of GDP growth since 2003. This growth was attributed in part to strong consumer spending, business investment, and net exports. Real gross domestic income, an alternative measure of the overall size of the economy, rose 4.7 percent in quarter three. When the third-quarter growth estimate revision was released, Macroeconomic Advisors revised its fourth-quarter growth projection upward to 2.8 percent, and Goldman Sachs revised its projection from 2.2 percent to 2.6 percent.

In late December, the Dow Jones Industrial average broke 18,000 for the first time, and the S&P 500 stock index also reached a record high. The positive outlook of several combined economic indicators shows that the average consumer is confident about his or her economic future. The labor market continues to improve, and payrolls in the United States grew in November by more than 300,000—significantly exceeding expectations. Consumer spending appears to have increased in the fourth quarter, as falling gasoline prices translated into higher amounts of discretionary income.

Short-term interest rates have remained near zero since the beginning of the financial recession in 2008. Despite strong economic recovery, the Federal Reserve remains cautious about raising interest rates for fear of destabilizing growth. However, the Central Bank is expected to raise interest rates in mid-2015 upon confirmation that current growth rates are sustainable and will translate into long-term hiring.

Crude oil prices decreased by nearly half in 2014, which represents the steepest decline since 2008. Oversupply of oil on the global market and lackluster demand combined to lower prices. Despite falling prices, oil production in the United States is expected to grow in 2015, according to a report issued by the U.S. Energy Information Administration. Production is expected to reach an average of 9.3 million barrels per day, which represents an increase of 0.7 million barrels per day from 2014. Oil-producing countries around the world—including the United States, Saudi Arabia, and Iraq—have voiced intentions to continue production at current or higher levels in spite of falling prices.

Long-Term U.S. Outlook

U.S. growth in 2015 is expected to continue at a modest 2.6–2.8 percent. According to projections published by the Conference Board, global growth should hold at 3.4 percent barring major geopolitical upheaval.

National long-term growth depends in part on how well the global economy recovers and stabilizes. At this point, Russia’s economy is suffering from high inflation and currency devaluation. Japan’s prime minister approved a $29.1-billion stimulus package at the end of 2014 to help move the country out of recession. Greece’s internal politics could destabilize economics in the short term. Overall, the global economy is still trailing behind the U.S. economy in terms of growth. Although the United States bears the signs of a strong economy at the beginning of 2015, this status hinges on our ability to trade with global partners and stimulate more growth.

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National Consumer Price Index decreased 0.5% between October and November

U.S. Consumer Price Index

The U.S. Consumer Price Index (CPI) decreased 0.5 percent from October to November on a nonseasonally-adjusted basis, and has increased 1.3 percent over the past twelve months. The decline represents the Index’s largest decline in six years.

The gasoline price index was responsible for the majority of the decrease: it recorded its steepest decline since December 2008. The combined energy index—which includes fuel oil, natural gas, and gasoline—fell 3.8 percent. Oil prices have declined steadily since June 2014, and consumers have responded positively to lower gas prices, although low prices have had a major impact in slowing inflation. The food price index rose 0.2 percent from October to November.

Stripping out food and energy prices, the core CPI edged up 0.1 percent after rising 0.2 percent in October. In the 12 months through November, the core CPI rose 1.7 percent after increasing 1.8 percent in October. The shelter index rose 0.3 percent, and the indices for medical care, airline fares, and alcoholic beverages also rose. In contrast, the indices for apparel, used cars and trucks, recreation, household furnishings and operations, personal care, and new vehicles all declined in November.

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National Unemployment Rate remains at 5.8% in November Idaho unemployment rate decreased to 3.9% in November

Labor Market

It was a good month for the labor market in Idaho as unemployment dropped two-tenths of a percentage point from 4.1 percent in October to 3.9 percent in November. This is the first time Idaho’s unemployment rate has dropped below 4 percent since March 2008. November saw 15,000 new hires, mostly to fill job openings made available because of retirements, and the Idaho economy added 12,000 jobs compared to November 2013. Nationally, nonfarm payroll employment rose by 321,000—well above the 224,000 that the economy has averaged for the past 12 months. Despite this job growth, the national unemployment rate remained unchanged at 5.8 percent.

How is it possible for an economy to experience both high job growth and a stagnant unemployment rate? Since people who are not actively looking for a job are not included in the labor force (according to the U.S. Census Bureau’s calculations), one explanation is that formerly-discouraged workers are returning to the job market. Seeing an improving economy and correspondingly improving job prospects, some of these workers are looking for work again. While this is undoubtedly good news for those workers and for the economy, it creates additional competition for jobs and keeps the unemployment rate higher than it otherwise might be.

Read more Read more
National Consumer Attitude Index increased 1.6 points in December

U.S. Consumer Confidence Index

The U.S. Consumer Confidence Index (CCI) increased to 92.6 in December from 91.0 in November. The Present Situation Index, which measures how consumers feel about current economic conditions, rose 4.9 points to 98.6. The Expectations Index, the sub-index of the CCI that reflects how consumers feel about economic conditions six months from now, dropped 0.8 points to 88.5 in December.

Consumer confidence increased in December largely due to more favorable assessments of current economic and labor market conditions. The Present Situation Index is at its highest level since February 2008. Consumers were more confident about current conditions in December: those who claimed business conditions were good stood unchanged at 24.8 percent, and those who thought business conditions were bad declined 2.2 points to 19.6 percent.

The percentage of consumers who expect business conditions to improve over the next six months edged down 0.3 points to 18.0 percent. However, slightly fewer consumers expect business conditions to worsen: only 10.1 percent in December compared with 10.4 percent in November. The percentage of people who anticipate more jobs in the months ahead dropped 0.8 points to 14.7 percent, while the percentage of people who anticipate fewer jobs rose from 16.1 percent to 16.9 percent. The proportion of consumers expecting growth in their incomes declined from 16.9 percent to 16.4 percent; however, the proportion expecting a decrease also declined, from 11.0 percent to 10.0 percent.

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Idaho CoreLogic Home Price Index rose 0.4 points in November National CoreLogic Home Price Index rose 5.5% in November

Housing Market

Housing prices continued to remain mostly flat in November, with a slight decrease in Idaho and a slight increase across the nation. According to the CoreLogic Home Price Index, home prices decreased 1.4 percent in Idaho from October to November, which represents a 0.4-percent rise compared to November 2013. Nationally, home prices increased 0.1 percent month over month, representing a 5.5-percent rise compared to November 2013. Nationally, home prices are still 12.9 percent below their pre-recession high, and home prices in Idaho are still 19.1 percent below their pre-recession high.

The number of contracts to purchase existing homes in the U.S. increased 0.8 percent in November. While this might not seem like a substantial rise, it is a welcome improvement over the 1.2-percent decrease in October. In large part, this increase stems from the improving job market. “The consistent economic growth and steady hiring we’ve seen in the second half of this year is giving buyers enough assurance to consider purchasing a home before year’s end,” said National Association of Realtors chief economist Lawrence Yun in 2014. The link between the labor market and the housing market is evident: as more people are employed, the pool of prospective home purchasers grows. High employment gives potential home buyers confidence in their financial security, making them more likely to buy a home.

Read more Read more
barrels of oil

The Winners and Losers of Cheap Oil

Who doesn’t love low gasoline prices? Travel is cheaper, plastic goods are less expensive, and it’s easier to transport products and run farm equipment. Many consumers are leveraging the money they save at the gas pump to increase personal spending on other goods and services, further propelling our economic recovery. The U.S. Energy Information Administration (EIA) believes that gasoline prices will remain low through 2015—averaging a whopping 91 cents less per gallon than in 2013.

The dollars and cents we pay each time we visit the pump actually reflect complex global politics. Since its formation in 1960, the Organization of Petroleum Exporting Countries (OPEC) has historically been very effective at manipulating the supply of oil—and its resulting cost—according to the organization’s interests. Given its majority share of total worldwide oil production, OPEC has often ensured its market control by increasing production to lower cost. Thanks to new extraction methods, however, the United States has replaced Saudi Arabia as the largest producer of oil in the world. With such a boom in U.S. oil production, OPEC can no longer independently control global supply and price.

In a bid to hedge its crumbling share of the market, OPEC has announced that it will not decrease short-term production. That’s the catch in our current low prices: they result from supply outpacing demand. And simultaneous to countries outside the control of OPEC increasing global supply, weak economies in Europe, Russia, and Japan have reduced global demand. This oil glut could drive the price of oil sufficiently low to stymie U.S. energy investment, as has happened many times in the last few decades.

Energy independence has been a U.S. goal since the 1970 oil embargo; however, each time we have made strides toward that goal, OPEC has successfully undermined our investment in domestic energy. For example, in the 1980s Saudi Arabia began to produce oil at full capacity to maintain its market share, and the price of oil plunged to less than $20 a barrel. With oil so cheap, U.S. organizations reduced their investment in domestic energy innovation and exploration in favor of low-priced foreign oil—a move that simply reestablished our enduring dependence on OPEC. Subsequently, OPEC decreased global oil supply, and prices returned to their original highs. Once again, in 2015, OPEC has strategically decided to keep oil supply elevated.

If the U.S. can continue investing in energy production innovations, we can outlast OPEC’s attempt to ultimately regain control over global oil supply. Unfortunately, this endeavor will strain domestic energy companies. Analysts estimate that the break-even point for U.S. energy companies is anywhere from $45 to $80 per barrel of oil. The EIA’s 2015 estimate of $68 per barrel sits squarely within those estimates, putting U.S. energy companies in jeopardy of experiencing losses in times of much-needed research and development investment. And in the absence of profit, the incentive and capacity to continue investing in domestic energy innovations begins to diminish.

Although energy companies may lose money in the short term by maintaining full production, they could realize meaningful return if the U.S. is able to ultimately achieve true energy self-sufficiency. Not only would energy independence positively impact U.S. energy company profits, but it would provide far-reaching macro-economic benefits—improving domestic jobs and economic growth. Most importantly, but more nuanced, if we can outlast OPEC in this bid for market control, the U.S. could move forward with a less entangled foreign policy, geared toward less conflict and loss of life. So while we enjoy low prices at the pump, we must maintain our collective hope that domestic energy companies will continue their investment in energy innovations and exploration.

Read more Read more
plane crop-dusting field

Crop Dusting in Idaho

Since 8.7 percent of Idaho’s 2012 total industry output came from the agricultural sector, keeping crops healthy and growing is very important to the state’s economy. Idaho’s regional and local airports play a key role in the booming agriculture industry by providing air access for aerial applicator pilots—more commonly known as crop dusters.

Crop dusting is a critical part of agricultural operations and supports jobs in Idaho’s aviation industry. Specially-trained pilots fertilize crops and apply treatments from the air to fight plant diseases or fungi. Aerial application allows consistent or concentrated application of fertilizers to maximize crop yields. Agricultural pilots fly closer to the ground than commercial or private pilots do, so they have to be very skilled at maneuvering their equipment. Constant threats to safety include power lines, wind turbines, and unmarked objects.

Crop dusting also supports business developments in the science of agriculture. Scientists are constantly incorporating new understanding of biology and agriculture into the equipment and application process to keep pace with advancing technology. Businesses in the state deliver upgraded products to support farmers and agriculture in the process of dusting crops with essential fertilizer and treatments.

By linking the industries of aviation, science, business, and agriculture, crop dusting has a significant impact not only on Idaho’s agricultural production, but also on the state’s economy as a whole.

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This page was last modified on Thu Mar 05 15:56:51 MST 2015