Important Details
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Consumer Confidence

The Zions Bank Utah Consumer Attitude Index decreased 8.8 points to 105.6 in April. The U.S. Consumer Confidence Index decreased 6.2 points to 95.2 in the same period.

Housing Market

In March, the CoreLogic® Home Price Index (HPI) for Utah, which measures home price appreciation, experienced a year-over-year increase of 5.5%. Nationally, the HPI increased 5.9% during the same period.

Inflation

The Zions Bank Utah Consumer Price Index increased 0.1% from February to March for a trailing 12-month inflation of -0.4%. In the same period, the U.S. CPI increased 0.6% for a trailing 12-month inflation of -0.1%.

Job Report

Utah’s unemployment rate remained steady at 3.4% in March, while the national unemployment also remained flat at 5.5% in March.

June 2015

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Randy Shumway January 2015

Utah Economic Outlook

Randy Shumway, Zions Bank Economic Advisor

Utah plays a major role in not only developing machinery and tools for national defense, but also in providing a labor force that contributes significantly to the United States’ military operations. Investing in defense positively impacts Utah’s economy by bringing in more federal dollars, greater employment opportunities, and higher wages for Utahns.

U.S. spending on federal defense averaged 3.8 percent of GDP from 2010 to 2014 and was estimated at $696.3 billion in 2014. Utah makes a meaningful contribution to those numbers as it is home to facilities and suppliers of some of the largest defense companies in the country.

Lockheed Martin, Hexcel, Boeing, and ATK are some of the major defense industry contractors that base at least some of their operations in Utah. These companies bring jobs and financial benefit to the state. Lockheed Martin, the largest defense company in the United States, has situated 10 of its supplier locations in Utah. Lockheed Martin provides 1,889 direct and indirect jobs in the state, and has an economic impact of $161.5 million. Hexcel is the largest U.S.-based manufacturer of high-end carbon fiber, which is a major component in the production of materials for the defense industry. Already boasting a large presence in Utah, Hexcel plans to add roughly 400 new jobs and $1.1 billion in capital investment to its Utah location over the next 15 years.

Similarly, the Boeing Company has a strong and growing presence in Utah, with more than 800 employees and almost 1,300 retirees currently living in the state. Boeing currently utilizes approximately 250 Utah companies as suppliers. ATK manufactures engine structures for the aerospace industry and is located in northern Utah. A recent contract between ATK and Boeing will bring hundreds of jobs to the area in the next few years, adding at least 100 employees this year and 200 a year for the next two years. By 2017, ATK hopes to have about 3,500 employees in Utah.

In looking at the industry overall, there were about 110 aerospace and defense-related companies in Utah in 2013 that employed 21,114 people. The industry accounts for 1.6 percent of all jobs in Utah but represents 2.9 percent of all state wages. In other words, Utahns in the aerospace and defense industry earn on average about 75 percent more than the median wage in the state.

Defense spending positively impacts Utah’s economy by bringing in more federal and local dollars, more employment opportunities, and higher wages for Utahns. These excellent defense-related companies and organizations provide a vital service to our nation and improve the quality of life for local communities.

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Wall Street with US flags on display

Short-Term U.S. Outlook

Slow economic growth in the first quarter of 2015 feels a bit like déjà vu from last year’s first quarter—months of harsh winter weather seem to have deterred shoppers. The Commerce Department’s initial estimate of first quarter GDP growth came in at a seasonally-adjusted annual rate of 0.2 percent, down from 2.2 percent in the fourth quarter of 2014. Economists had expected first quarter growth to be 1 percent, so the initial estimate is disappointing.

Harsh weather can’t take all of the blame for slower than expected economic growth, however. Overall, the economy is experiencing low demand, which is a problem Federal Reserve Chair Janet Yellen can’t fix. Consumer spending makes up more than two-thirds of U.S. economic activity, and it grew only 1.9 percent in the first quarter compared to 4.4 percent in the fourth quarter of 2014. Despite slow growth and sluggish economic indicators, the U.S. dollar is still strong compared to weak European and Asian currencies. Unfortunately, a strong dollar cramps demand for U.S. products by making them more expensive for foreigners. Exports dropped 7.2 percent as manufacturers lost sales to other countries with more favorable currency exchange rates.

U.S. energy investment has declined amid the plunge in oil prices. Investment in nonresidential structures dropped 23.1 percent in the first quarter as energy companies sharply reduced the number of oil drilling rigs. Many economists expect consumers to start spending the money they saved from lower gasoline prices now that the weather is better. If consumers rise to the expectations, GDP could grow at an annual rate of 3 percent this year, which would be the economy’s best GDP growth in nearly 6 years. Although consumer spending was down in early 2015, retail sales rose in March for the first time in four months, indicating that increased spending is a real possibility.

The Federal Open Market Committee, which is the Federal Reserve Committee that discusses monetary policy and interest rate increases, met at the end of April and did not decide on a date to raise interest rates. Speculation on the timing of interest rate rises continues on both sides of the issue—many economists expect rate hikes in September, while others are skeptical of changes anytime soon.

Jobless claims dropped significantly in the last weeks of April, and the employment-cost index, a broad measure of wage and benefit expenses, rose a seasonally-adjusted 0.7 percent in the first quarter, up from its 0.5-percent gain in the fourth quarter 2014. Private-industry wages and salaries increased to 2.8 percent annual growth from 2.2 percent the previous quarter, which is their strongest annual growth since the third quarter of 2008. Wages still have a way to go, but they appear to be increasing slightly.

Long-Term U.S. Outlook

The long-term outlook of the U.S. economy depends in large part on the nation’s external trade partners. The U.S. economy is doing well overall despite lower than optimal figures for several economic indicators. Beyond the issues raised by a strong dollar, decreased external demand is hampering the U.S. economy as China experiences a slowdown, Europe faces financial instability in Greece, and Japan begins its economic recovery. Current performance is divergent, so the coming months will likely give greater indication of what lies ahead for the U.S. economy.

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National US Consumer Price Index increased 0.6 percent Zions Bank Utah Consumer Price Index increased 0.1 percent

U.S. Consumer Price Index

The Zions Bank Wasatch Front Consumer Price Index (CPI) increased 0.1 percent from February to March on a non-seasonally-adjusted basis. The index has decreased 0.4 percent since this same time last year. The national Consumer Price Index increased 0.6 percent from February to March and has decreased 0.1 percent over the past twelve months.

While price changes across the board contributed to the 0.1-percent increase in the Consumer Price Index this month, transportation prices had the greatest upward influence, swelling 3.5 percent from February to March. The largest increase came from higher gasoline prices, but costs for vehicle rentals and airfare decreased at similar rates. Gasoline prices in Utah have increased steadily since the beginning of February and are higher than the national average. National gasoline prices have also been increasing recently, but at a slightly slower rate than in Utah.

Food at home prices, which can be quite volatile, fell 0.9 percent in March after increasing marginally in February. Most forms of produce declined in price slightly, including bananas, citrus fruits, pears, and lettuce. Bell peppers and tomatoes increased in price from February to March. Speculation over the past several months that food prices would increase due to the severity of the drought in California continues to be unfounded so far. While California’s contribution to the food market is substantial, it is not large enough to outweigh the production of similar items imported from Mexico, Chile, and other food-growing countries. Food prices are likely to continue to experience minor fluctuations, but weather conditions in California may ultimately have a lesser impact than expected.

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National Unemployment Rate remained at 5.5 percent Utah Unemployment Rate remained at 3.4 percent

Labor Market

Utah’s labor market showed no signs of slowing in March as the unemployment rate remained at 3.4 percent. Since March 2014, Utah’s employment has grown by an estimated 4.0 percent, adding 53,000 jobs. Approximately 49,200 Utahns were unemployed and actively seeking work in the month of March, a decrease of 200 from the previous month. The national unemployment rate also remained unchanged at 5.5 percent. Over the last year, the largest job increases have come in the following sectors: The trade, transportation, and utilities sector added 13,800 jobs, leisure and hospitality added 8,700 jobs, and professional and business services added 8,100 jobs.

Looking at the national labor market, it seems to be common wisdom that manufacturing jobs are fleeing the U.S. for China and other East Asian countries. The numbers, however, paint a different picture: the U.S. is actually adding manufacturing jobs. According to a study from the Reshoring Initiative, 60,000 manufacturing jobs were added in the U.S. in 2014, and only 50,000 were offshored, creating a net gain of 10,000 jobs. This was the first net increase in at least 20 years. While the future of the U.S. economy is still likely to depend more and more on service sector jobs, the bounce in manufacturing jobs is evidence that manufacturing will always have a place in the U.S. economy.

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The Zions Bank Utah Consumer Attitude Index increased 7.9 points to 114.4 National US Consumer Confidence Index decreased 6.2 points

U.S. Consumer Attitude Index

The Zions Bank Utah Consumer Attitude Index (CAI) decreased 8.8 points to 105.6 in April. However, according to Utah consumers, the current employment outlook remains strong, and a high percentage of Utah consumers assess business conditions in their area as either good or normal. The Utah CAI currently sits 2.7 points higher than its level twelve months ago. The national Consumer Confidence Index® (CCI) decreased 6.2 points from March to April and currently sits at 95.2.

The Present Situation Index, the sub-index of the CAI that measures how consumers feel about current economic conditions, currently sits at 109.1 points. The percentage of consumers who rate current business conditions as “good” decreased to 48 percent in April from 53 percent in March. Forty-five percent of consumers simply assess business conditions as “normal,” and 8 percent think they are “bad.” Consumers are more positive about employment—41 percent describe jobs in their area as “plentiful,” which is up 6 percent from last month.

Expectations for the next six months decreased overall, but not across the board. Thirty percent of consumers expect business conditions to be better six months from now, which represents no change from March, although 1 percent more believe business conditions will be worse. The employment situation for the next six months reflects slightly less optimism, as 26 percent of Utahns believe more jobs will be available, compared to 30 percent last month. On a more positive note, the percentage of people who expect their household income to be higher six months from now increased 5 percent to 31 percent in April.

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Utah CoreLogic Home Price Index increased 5.5 percent National CoreLogic Home Price Index increased 5.9 percent

Housing Market

Housing prices remained steady in March, both in Utah and across the nation. According to the CoreLogic Home Price Index, home prices increased 1.5 percent in Utah from February to March, which represents a 5.5-percent increase compared to March 2014. Nationally, home prices increased 2.0 percent, which represents a 5.9-percent rise over March 2014’s prices. In Utah, home prices are still 9.0 percent below their September 2007 peak, and home prices nationally are still 11.0 percent below their pre-recession high.

The housing sector is expected to have a significant positive impact on the U.S. economy in the coming months, according to a report by The Commerce Department. This is because household formation increased by 1.5 million from the same period in 2014. As home sales, housing starts, and spending around housing increase to accommodate these new households, the economy will see considerable positive effects. The same report indicated that U.S. homeownership rates hit a 25-year low in the first quarter of 2015, but this rate is expected to stabilize as the government eases credit conditions for first-time home buyers and the labor market continues to improve.

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US and Cuban flags

A New Chapter of U.S.-Cuban Trade Relations

Who doesn’t enjoy relaxing on an idyllic Caribbean beach, being taxied around in retro cars, and taking a break island style? Cuba could be the next big Caribbean island destination if the U.S. continues to soften its decades-long trade embargo with Cuba.

Far beyond talk of vacations, however, the opening of U.S.–Cuban relations could significantly improve human rights in Cuba and the economies of both countries—creating new jobs, boosting U.S. exports, and reducing the need for agricultural subsidies.

The U.S. first imposed an import/export embargo on Cuba after oil disputes in 1962. The embargo has remained in effect for over five decades. In upholding the embargo, the U.S. hoped to coerce Fidel Castro to improve humanitarian conditions in Cuba. However, Fidel used the embargo as a scapegoat for these same poor conditions, fueling anti-American sentiment among the Cuban populace as human rights deteriorated.

At this point, softening the embargo has the potential to measurably improve human rights in Cuba. Under President Raúl Castro, the country is already showing signs of progress: for instance, citizens have been allowed to create private sector businesses to fill voids left unaddressed by government services. Bans have been lifted on many goods, including computers and telecommunications equipment, and a $1 billion Free Trade Zone was recently built outside of Havana. Cuba’s newly-reinstated private sector now employs 450,000 people, or 4 percent of the country’s workforce. The Mariel Free Trade Zone has the potential to be a significant source of new employment. However, its success is somewhat contingent upon the softening of the embargo because ships that dock in Cuba are not allowed to enter the U.S. for six months. Should Raúl Castro and the U.S. come to an agreement, Cuba’s already-improving economy and socioeconomic landscape could see tremendous benefit from the flow of additional capital.

Lifting the embargo could also benefit a relatively small but tangible share of the U.S. economy. A recent American University study conservatively estimated the immediate economic impact to the U.S. of an eliminated embargo with Cuba to be an incremental $1.9 billion annually, including the creation of 6,000 new U.S. jobs in food exports and tourism.

Despite indications of progress in Cuba and the potential humanitarian and economic benefits of lifting the embargo, there remains some resistance in the U.S., ostensibly under the pretext of human rights concerns. However, research suggests a substantial share of the funding for embargo-perpetuating propaganda originates from business owners who may be more concerned about protecting their economic interests from competition with Cuba than they are about actually promoting human rights.

Respected foreign policy experts increasingly point to the inefficacy of sanctions producing any real political change in Cuba. Instead, they highlight how opening trade relations in places like China and Vietnam has improved living standards for average citizens. Perhaps opening trade with Cuba will do far more for human rights than has fifty years of diplomatic ‘cold shoulder treatment.’ In establishing a trade relationship with President Raúl Castro, the United States could fuel a new era of improved living conditions in Cuba. Lifting the outdated embargo would repair tarnished relations between these neighboring countries, promoting economic growth in both and social advancement in Cuba.

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Fighter jet inside aircraft hangar

Aerospace and Aviation

Utah has a long history in Aerospace and Aviation—with over 10,000 people working in the sector, Utah is one of the top states in the nation in aerospace employment. Utah’s Governor’s Office of Economic Development states that the Aerospace and Defense economic cluster represents almost 5 percent of all state wages, boasting an average wage in the industry that is roughly 90 percent higher than Utah’s median annual wage. These outstanding employment opportunities stem in part from the state’s investment in education and in business.

Many colleges across Utah offer courses and programs to train students interested in pursuing a career in the aerospace industry. For example, Utah State University has an Aerospace Engineering program that has put more experiments than any other institution in the country into flight aboard shuttle and satellite missions. Such unique training prepares students for employment in many of the aerospace companies with facilities in Utah, including ATK, L3 Communications, The Boeing Company, Northrop Grumman, and Lockheed Martin.

Many Aerospace companies have expanded production in Utah, which creates jobs, incomes, and tax revenues in the state. Almost two years ago, MSC Aerospace announced the expansion of their current Cedar City facilities in order to increase their manufacturing capabilities throughout a 20-year period. This project will pay an estimated $127 million in new state tax revenue and $1 billion in new state wages. Building on the success of this and other projects, Utah will continue to cultivate opportunities within the Aerospace industry over the coming years.

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Consumer Confidence

The U.S. Consumer Confidence Index® decreased 6.2 points to 95.2 in April. The Present Situation Index decreased 2.7 points to 106.8, while the Expectations Index decreased 8.5 points to 87.5.

Housing Market

In March, the CoreLogic® Home Price Index (HPI) for Idaho, which measures home price appreciation, experienced a year-over-year increase of 6.5%. Nationally, the HPI increased 5.9% during the same period.

Inflation

The U.S. Consumer Price Index increased 0.6% from February to March. Year over year, the index decreased 0.1%, which is below the Federal Reserve’s target annual inflation pace of 2%.

Job Report

The U.S. Consumer Price Index increased 0.6% from February to March. Year over year, the index decreased 0.1%, which is below the Federal Reserve’s target annual inflation pace of 2%.

June 2015

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Randy Shumway January 2015

Idaho Economic Outlook

Randy Shumway, Zions Bank Economic Advisor

The success of an industry and its impact on the economy are often directly proportional to the state-wide investment of money and time in related infrastructure and educational programs. This is true of Idaho’s aerospace industry, which exemplifies how meaningful investment returns economic growth.

The aerospace industry in Idaho began because the many forests in the region created a need for helicopter repair and power line construction. One of the oldest running aerospace companies in the state, Hillcrest Aircraft Co, is federally approved for helicopter repair and has provided specialty aviation services in Idaho for 60 years.

Idaho’s investment in aerospace begins at the high school level with the funding of Pathways in Technology Early College High School (PTECH). PTECH is a pilot program designed to bridge the gap between education and industry by providing students with the credentials and skills needed to secure high-paying jobs in aviation and aerospace. PTECH helps students develop technical skills—including aerospace and aviation skills—that they may not get in a traditional classroom. Northern Idaho is the epicenter of the state’s aerospace development, and North Idaho College has established an Aerospace Center of Excellence that positions the state to meet future demand for a skilled aerospace workforce. Northern Idaho is home to more than three dozen aerospace companies, and more are arriving in the region every year. Several aerospace businesses have relocated to Idaho from California.

Idaho’s investment in aerospace education pays off in employment. According to the most recent data (2012), the Idaho aerospace industry directly employs 2,200 workers from over 200 companies, including 37 suppliers to Boeing. In 2013, the Idaho Department of Labor conducted a study that found an additional 111 companies that weren’t classified as aerospace companies in the tax code, but that were highly associated with the industry. These numbers enlarge the economic impact of aerospace in Idaho beyond what was originally calculated. The average annual salary in aerospace is $59,927, which is more than $10,000 above the state average.

Compared to programs in other states, Idaho’s aerospace industry is relatively small: it is ranked 46th in the nation according to the Census of Employment and Wages. However, Idaho ranks top among states for the emergence of its aerospace cluster and future growth. Before the recession, Idaho ranked 6th nationally for growth percentage in aerospace employment—up 15.2 percent annually. This industry’s employment is projected to grow 21.5 percent from 2012 to 2022.

Idaho’s emphasis on aerospace positively impacts its present economy and provides great opportunities for future development and expansion. With proximity to forests, airports, and education centers, Idaho is uniquely positioned to play a significant role in the research, development, and testing of aviation-related products. Idaho’s investment in aerospace will continue to bring economic growth to the state.

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Wall Street with US flags on display

Short-term U.S. Outlook

Slow economic growth in the first quarter of 2015 feels a bit like déjà vu from last year’s first quarter—months of harsh winter weather seem to have deterred shoppers. The Commerce Department’s initial estimate of first quarter GDP growth came in at a seasonally-adjusted annual rate of 0.2 percent, down from 2.2 percent in the fourth quarter of 2014. Economists had expected first quarter growth to be 1 percent, so the initial estimate is disappointing.

Harsh weather can’t take all of the blame for slower than expected economic growth, however. Overall, the economy is experiencing low demand, which is a problem Federal Reserve Chair Janet Yellen can’t fix. Consumer spending makes up more than two-thirds of U.S. economic activity, and it grew only 1.9 percent in the first quarter compared to 4.4 percent in the fourth quarter of 2014. Despite slow growth and sluggish economic indicators, the U.S. dollar is still strong compared to weak European and Asian currencies. Unfortunately, a strong dollar cramps demand for U.S. products by making them more expensive for foreigners. Exports dropped 7.2 percent as manufacturers lost sales to other countries with more favorable currency exchange rates.

U.S. energy investment has declined amid the plunge in oil prices. Investment in nonresidential structures dropped 23.1 percent in the first quarter as energy companies sharply reduced the number of oil drilling rigs. Many economists expect consumers to start spending the money they saved from lower gasoline prices now that the weather is better. If consumers rise to the expectations, GDP could grow at an annual rate of 3 percent this year, which would be the economy’s best GDP growth in nearly 6 years. Although consumer spending was down in early 2015, retail sales rose in March for the first time in four months, indicating that increased spending is a real possibility.

The Federal Open Market Committee, which is the Federal Reserve Committee that discusses monetary policy and interest rate increases, met at the end of April and did not decide on a date to raise interest rates. Speculation on the timing of interest rate rises continues on both sides of the issue—many economists expect rate hikes in September, while others are skeptical of changes anytime soon.

Jobless claims dropped significantly in the last weeks of April, and the employment-cost index, a broad measure of wage and benefit expenses, rose a seasonally-adjusted 0.7 percent in the first quarter, up from its 0.5-percent gain in the fourth quarter 2014. Private-industry wages and salaries increased to 2.8 percent annual growth from 2.2 percent the previous quarter, which is their strongest annual growth since the third quarter of 2008. Wages still have a way to go, but they appear to be increasing slightly.

Long-Term U.S. Outlook

The long-term outlook of the U.S. economy depends in large part on the nation’s external trade partners. The U.S. economy is doing well overall despite lower than optimal figures for several economic indicators. Beyond the issues raised by a strong dollar, decreased external demand is hampering the U.S. economy as China experiences a slowdown, Europe faces financial instability in Greece, and Japan begins its economic recovery. Current performance is divergent, so the coming months will likely give greater indication of what lies ahead for the U.S. economy.

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National US Consumer Price Index increased 0.6 percent

U.S. Consumer Price Index

The national Consumer Price Index increased 0.6 percent from February to March, and has decreased 0.1 percent over the past twelve months. After several straight months of decreases in energy, this specific index is starting to reverse direction. The energy index rose 1.1 percent from February to March as gasoline and fuel oil prices increased. Electricity and natural gas prices decreased by a small margin.

Food prices declined 0.2 percent in March but were offset by increases in the energy and shelter indices. The food at home price index experienced its largest decline in March since April 2009. Lower food prices stem in part from the strong U.S. dollar and bountiful harvest expectations. Wheat futures have fallen 11 percent this year, and live cattle futures are down 10 percent. Soybeans, corn, and sugar futures have also declined.

Over the last 12 months, the energy index has declined 18.3 percent, food has risen 2.3 percent, and all items less food and energy have risen 1.8 percent. Volatile food and energy prices make the “all items less food and energy” index a more stable predictor of price increases and decreases in the economy.

Several other indices rose in March, including medical care, used cars and trucks, apparel, new vehicles, household furnishings and operations, and recreation. In contrast, airfare declined for the fourth time in five months.

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National Unemployment Rate remained at 5.5 percent Idaho Unemployment Rate decreased to 3.8 percent

Labor Market

Idaho’s labor market showed no signs of slowing in March as the unemployment rate dropped another tenth of one percent to 3.8 percent. In fact, in the largest one-month increase in employment in Idaho’s history, 5,400 workers found jobs. Total employment also reached a record high, passing 757,000 for the first time. Over the last year, Idaho employers have added nearly 20,000 workers, and the unemployment rate has fallen by 1.1 percentage points. The positive effects of Idaho’s employment situation are fairly well distributed, with none of Idaho’s 44 counties posting a double-digit unemployment rate. Just a year ago, three counties—Clearwater, Adams, and Shoshone—all posted double-digit unemployment rates.

Looking at the national labor market, it seems to be common wisdom that manufacturing jobs are fleeing the U.S. for China and other East Asian countries. The numbers, however, paint a different picture: the U.S. is actually adding manufacturing jobs. According to a study from the Reshoring Initiative, 60,000 manufacturing jobs were added in the U.S. in 2014, and only 50,000 were offshored, creating a net gain of 10,000 jobs. This was the first net increase in at least 20 years. While the future of the U.S. economy is still likely to depend more and more on service sector jobs, the bounce in manufacturing jobs is evidence that manufacturing will always have a place in the U.S. economy.

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National US Consumer Confidence Index decreased 6.2 points

U.S. Consumer Confidence Index

The U.S. Consumer Confidence Index declined 6.2 points in April after increasing in March. The index currently stands at 95.2, down from 101.4. The Present Situation Index, which measures sentiment about current economic conditions, decreased 2.7 points to 106.8 in April, and the Expectations Index dropped 8.5 points to 87.5.

April’s decline in consumer confidence likely reflects slower growth in the labor market and apprehension about the short-term outlook for the U.S. economy. Consumers are skeptical that economic momentum will speed up in the coming months. The percentage of consumers who think business conditions are good decreased marginally from 26.7 to 26.5 percent this month. However, the percentage of consumers who think business conditions are poor also decreased, falling from 19.4 percent in March to 18.2 percent in April. The bigger lack of confidence came in the labor market as the percentage of consumers who see jobs as plentiful dropped from 21.0 percent to 19.1 percent.

The percentage of consumers who expect business conditions to improve over the next six months decreased from 16.8 percent in March to 16.0 percent in April. More people expect business conditions to worsen, rising from 8.1 percent last month to 9.4 percent this month. Fewer people expect jobs to be plentiful six months from now—13.8 percent, as opposed to 15.3 percent last month. Generally speaking, Americans are less optimistic about income growth, with 18.3 percent expecting their incomes to grow in the next twelve months, down 0.5 points from March.

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Idaho CoreLogic Home Price Index increased 6.5 percent National CoreLogic Home Price Index increased 5.9 percent

Housing Market

Housing prices showed solid increases in March, both in Idaho and across the nation. According to the CoreLogic Home Price Index, home prices increased 2.6 percent in Idaho from February to March, which represented a 6.5-percent increase compared to March 2014. Nationally, home prices increased 2.0 percent, which represented a 5.9-percent rise over March 2014’s prices. In Idaho, home prices are still 15.4 percent below their September 2007 peak, and home prices nationally are still 11.0 percent below their pre-recession high.

The housing sector is expected to have a significant positive impact on the U.S. economy in the coming months, according to a report by The Commerce Department. This is because household formation increased by 1.5 million from the same period in 2014. As home sales, housing starts, and spending around housing increase to accommodate these new households, the economy will see considerable positive effects. The same report indicated that U.S. homeownership rates hit a 25-year low in the first quarter of 2015, but this rate is expected to stabilize as the government eases credit conditions for first-time home buyers and the labor market continues to improve.

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US and Cuban flags

A New Chapter of U.S.-Cuban Trade Relations

Who doesn’t enjoy relaxing on an idyllic Caribbean beach, being taxied around in retro cars, and taking a break island style? Cuba could be the next big Caribbean island destination if the U.S. continues to soften its decades-long trade embargo with Cuba.

Far beyond talk of vacations, however, the opening of U.S.–Cuban relations could significantly improve human rights in Cuba and the economies of both countries—creating new jobs, boosting U.S. exports, and reducing the need for agricultural subsidies.

The U.S. first imposed an import/export embargo on Cuba after oil disputes in 1962. The embargo has remained in effect for over five decades. In upholding the embargo, the U.S. hoped to coerce Fidel Castro to improve humanitarian conditions in Cuba. However, Fidel used the embargo as a scapegoat for these same poor conditions, fueling anti-American sentiment among the Cuban populace as human rights deteriorated.

At this point, softening the embargo has the potential to measurably improve human rights in Cuba. Under President Raúl Castro, the country is already showing signs of progress: for instance, citizens have been allowed to create private sector businesses to fill voids left unaddressed by government services. Bans have been lifted on many goods, including computers and telecommunications equipment, and a $1 billion Free Trade Zone was recently built outside of Havana. Cuba’s newly-reinstated private sector now employs 450,000 people, or 4 percent of the country’s workforce. The Mariel Free Trade Zone has the potential to be a significant source of new employment. However, its success is somewhat contingent upon the softening of the embargo because ships that dock in Cuba are not allowed to enter the U.S. for six months. Should Raúl Castro and the U.S. come to an agreement, Cuba’s already-improving economy and socioeconomic landscape could see tremendous benefit from the flow of additional capital.

Lifting the embargo could also benefit a relatively small but tangible share of the U.S. economy. A recent American University study conservatively estimated the immediate economic impact to the U.S. of an eliminated embargo with Cuba to be an incremental $1.9 billion annually, including the creation of 6,000 new U.S. jobs in food exports and tourism.

Despite indications of progress in Cuba and the potential humanitarian and economic benefits of lifting the embargo, there remains some resistance in the U.S., ostensibly under the pretext of human rights concerns. However, research suggests a substantial share of the funding for embargo-perpetuating propaganda originates from business owners who may be more concerned about protecting their economic interests from competition with Cuba than they are about actually promoting human rights.

Respected foreign policy experts increasingly point to the inefficacy of sanctions producing any real political change in Cuba. Instead, they highlight how opening trade relations in places like China and Vietnam has improved living standards for average citizens. Perhaps opening trade with Cuba will do far more for human rights than has fifty years of diplomatic ‘cold shoulder treatment.’

In establishing a trade relationship with President Raúl Castro, the United States could fuel a new era of improved living conditions in Cuba. Lifting the outdated embargo would repair tarnished relations between these neighboring countries, promoting economic growth in both and social advancement in Cuba.

Read more Read more
Men in military uniforms standing in line

Military Operations

Idaho is home to two military installations that bring great benefits to state and local economies: Mountain Home Air Force Base and the Air National Guard at Gowen Field. The Mountain Home Air Force Base currently has approximately 4,500 assigned military personnel and over 7,000 military retirees living throughout the local area. A previous economic analysis by the U.S. Air Force, assisted by Boise State University, estimated the annual economic impact of the Mountain Home Air Force Base at approximately $1 billion.

The Air National Guard at Gowen Field employs about 1,300 Idaho Air National Guard members and its sole mission has been with the A-10 fighter jet. Gowen Field has a strong economic impact of $210 million on the local community. Recently, the Air Force decided to retire its fleet of A-10 Thunderbolt jets over the course of 2016. Idaho leaders, including Governor Otter, have been in discussions with the U.S. Air Force regarding the future of Gowen Field after the A-10 jets have been retired.

The Air Force Base and Air National Guard are strong economic drivers in the state and are integral to the local communities. Governor Otter has indicated that those who have worked at the Air Force Base tend to stay in Idaho or return after retirement at rates higher than most other military bases. This trend boosts the numbers of skilled residents in the state. Idaho benefits greatly from these two military installations and from the men and women who choose to serve their country.

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This page was last modified on Thu Jun 25 15:22:44 MDT 2015