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Consumer Confidence

The Zions Bank Utah Consumer Attitude Index increased 7.9 points to 114.4 in March. The U.S. Consumer Confidence Index increased 2.5 points to 101.3 in the same period.

Housing Market

In February, the CoreLogic® Home Price Index (HPI) for Utah, which measures home price appreciation, experienced a year-over-year increase of 5.4%. Nationally, the HPI increased 5.6% during the same period.

Inflation

The Zions Bank Utah Consumer Price Index increased 0.8% from January to February for a trailing 12-month inflation of 0.2%. In the same period, the U.S. CPI increased 0.4% for a trailing 12-month inflation of 0.0%.

Job Report

Utah’s unemployment rate remained steady at 3.4% in February, while the national unemployment rate decreased 0.2 point to 5.5% in February.

May 2015

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Randy Shumway January 2015

Utah Economic Outlook

Randy Shumway, Zions Bank Economic Advisor

The 2015 Utah Legislative Session concluded in March after 45 days of deliberation and the passage of 528 bills—42 more than last year. The session began with 1,224 requested bills that ranged in topic from education to Medicaid expansion to transportation funding. Many bills focused on critical issues that will be particularly pertinent to Utah’s economy this year, such as education, transportation, and health care.

Congruent with past years, education remains a top priority for Governor Herbert. The Utah legislature and the governor worked together to increase overall public education funding by $510 million. This figure includes $48.6 million in new funding for enrollment growth and a 4-percent increase to the state’s funding formula for public education, also known as the weighted pupil unit.

In Utah, property tax revenues comprise 40 percent of school funding. Statewide, property taxes have not increased since 1981. In the most recent legislative session a $75-million-dollar tax increase for education was passed. The tax increase for education will help overcome losses in funding due to inflation experienced in the past 25 years and will average a $46 tax increase per family per year. This rise in funding will help schools obtain resources and improve public education in Utah.

Another statewide tax that had not increased in nearly two decades is the gasoline tax. Just before the legislative session ended, the House (which had sought no tax increase) and the Senate (which had sought a 10-cent increase) compromised on a plan to convert the current 24.5-cents-per-gallon tax rate to a percentage that will adjust with the price of gas. That percentage will start at 12 percent, which equates to an approximate 5-cent increase from the current rate.

Medicaid expansion was not resolved during the legislative session, and Governor Herbert and legislative leaders are working toward a compromise that must be ready by July 31. The governor’s proposed Healthy Utah program would have initiated a two-year program with a price tag of $25 million designed to cover health insurance for Utahns who earn less than 138 percent of the federal poverty rate. The governor’s plan would bring hundreds of millions of federal dollars to the state. House leaders countered Healthy Utah by proposing a plan called Utah Cares, in which primary care network benefits would be expanded to adults who earn less than 100 percent of the federal poverty level. Because approximately 60,000 Utahns fall into the so-called health insurance coverage gap and will receive no federal subsidies without expansion of some sort, it is important for Utah government to achieve resolution before the deadline at the end of July.

Overall, this year’s legislative session brought significant improvements to funding for a number of sectors key to Utah’s economy, both in the short- and long-term. In this session, the legislature also explored cleaner air standards, increased funding for college athletics, government official pay raises, and important anti-discrimination measures. As always, the overarching goal of these efforts is to continue Utah’s legacy of effective governance and economic growth.

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Wall Street with US flags on display

Short-Term U.S. Outlook

Overall, the United States economy is growing, but based on a number of key indicators, there remains significant room for improvement. Federal Reserve Chair Janet Yellen noted at the end of March, “If underlying conditions had truly returned to normal, the economy should be booming.” She pointed to several issues that must be considered when evaluating the strength of the economy, including the job market and the health of all economic sectors.

The Federal Reserve wants to see the unemployment rate drop to about 5 percent before it will consider the job market healthy. Currently, the unemployment rate sits at 5.5 percent, and jobless claims have fallen below 300,000 in recent weeks. However, many people are still working part-time jobs, and wage growth has been slow. Lower oil prices have led to decreased drilling in the United States, and the recovery in housing construction has been subdued. According to Yellen, much of the increase in hiring has been due to the Fed’s accommodative monetary policy that makes it inexpensive for businesses to expand, rather than because actual demand is pushing business growth. Looking ahead, most experts believe the Fed is not likely to raise interest rates before September.

U.S. GDP grew at a 2.2-percent annualized rate in the fourth quarter of 2014 according to the Commerce Department’s third revised estimate released at the end of March. In the fourth quarter, businesses actually decreased inventory and equipment investment, but strong consumer spending negated the decline. Businesses accumulated $80 billion of inventory in the fourth quarter, in contrast to $88.4 billion in the previous estimate.

After-tax corporate profits declined 1.6 percent last quarter after increasing at a 4.7-percent pace in the third quarter. Corporate profits from outside the U.S. fell at an 8.8-percent rate, which represents the steepest decline since the 2007–2009 recession. Economists had expected fourth-quarter after-tax corporate profits to be revised upward to a gain of 1 percent. For all of 2014, after-tax corporate profits fell 8.3 percent.

The dollar gained 7.8 percent against the currencies of the U.S.’s main trading partners between June and December last year. Export growth was actually higher in the fourth quarter despite slower global demand, but strong consumer spending meant more imports, which led to a trade deficit that negatively impacted GDP growth.

Long-Term U.S. Outlook

The U.S. economy continues to grow at a healthy pace. The Conference Board estimates that U.S. GDP growth in 2015 will average 2.9 percent. Meanwhile, Chinese authorities recently reduced their growth target for 2015 to 7 percent. China grew 7.4 percent last year, and the International Monetary Fund (IMF) has forecast this year’s growth to be 6.8 percent.

China is still projected to grow more quickly than almost every other nation in the world, but its momentum is clearly declining. In comparison, Russia and Brazil—economies that are oriented toward exporting commodities—are in or near recession. Confidence in Europe’s economic forecast is improving, however: it was revised upward at the end of March to 2 percent annual growth by 2017 by the European Central Bank.

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The US Consumer Price Index increased 0.4% The Zions Bank Wasatch Front Consumer Price Index increased 0.8%

U.S. Consumer Price Index

The Zions Bank Wasatch Front Consumer Price Index (CPI) increased 0.8 percent from January to February on a non-seasonally-adjusted basis. The index has increased 0.2 percent since this same time last year. The national Consumer Price Index increased 0.4 percent from January to February and has remained flat over the past twelve months.

Transportation prices drove the increase in the consumer price index this month, triggered primarily by higher car insurance, airfare rates, and vehicle prices. Recreation prices also increased, ticking up 2.1 percent in February. Recreation prices make up 7 percent of the average Utahn’s expenditures and include items such as television subscriptions, pets, sporting goods, and newspapers, among others. The main drivers of recreation price increases in February were satellite and cable television. Medical care prices increased for the third month in a row as a result of rising prices for both prescription and nonprescription drugs. Prescription drug prices increased most in January after two months of small declines. Nonprescription drugs have just recently begun to trend upwards.

Food at home prices overall saw a net increase of 0.1 percent from January to February. Several categories declined in price, including produce, citrus fruits, and apples. Decreasing food prices largely reflect lower gasoline prices as well as a strong U.S. dollar, which makes imports cheaper for the United States. However, to counterbalance February’s decreases in price for several food categories, poultry, meat and cucumbers all registered price increases, thereby contributing to the marginal net increase.

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The National Unemployment Rate decreased to 5.5% The Utah Unemployment Rate remains steady at 3.4%

Labor Market

The labor market continues to show strength both in Utah and across the nation. Utah’s unemployment rate remained steady at 3.4 percent in February, and the national unemployment rate decreased 0.2 percentage points from 5.7 percent to 5.5 percent. The number of unemployed Utahns actively seeking work decreased by about 400 from January to February to approximately 49,400. The largest increases in employment in the state occurred in three sectors: the Trade, Transportation, and Utilities sector, which added 13,200 jobs over the past twelve months, the Professional and Business Services sector, which added 9,400 jobs over the past twelve months, and the Leisure and Hospitality sector, which added 8,000 jobs over the past month.

The current 5.5 percent is a much-improved unemployment rate for the United States, but the Fed sees room for growth. The NAIRU measurement (non-accelerating inflation rate of unemployment) released by the Fed indicates the unemployment rate which they believe represents full employment. While 5.5 percent had been the previous NAIRU level, the Fed recently lowered it to 5.2 percent. The good news is that, for the first time in a long time, the U.S. is close to the NAIRU and is likely to reach that level in the coming months.

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The Zions Bank Utah Consumer Attitude Index increased 7.9 points to 114.4 The National US Consumer Confidence Index increased 2.5 points to 101.3

U.S. Consumer Attitude Index

The Zions Bank Utah Consumer Attitude Index (CAI) increased 7.9 points to 114.4 in March. The Utah CAI currently sits 15.2 points higher than its level twelve months ago. The national Consumer Confidence Index® (CCI) increased 2.5 points from February to March and currently sits at 101.3.

The Expectations Index for the next six months jumped significantly in March—10.7 points—and sits just below the Present Situation Index at 113.4. The Expectations Index is the sub-index of the CAI that measures how consumers feel about economic conditions six months from now. The percentage of Utahns who think business conditions in their area will be better six months from now increased 2 points to 30 percent this month, and the percentage of those who think more jobs will be available six months from now also reached 30 percent, jumping 4 points from last month. Utahns are less optimistic about their income growth potential in the next six months—only 27 percent believe their income will be higher than it is currently.

The Present Situation Index is the sub-index of the CAI that measures how consumers feel about current economic conditions, and it sits at 115.9. The perception that business conditions are good increased 3 points to 53 percent. Overall, consumer attitudes about the present situation are 16.6 points higher than they were a year ago.

The most notable change from February to March is the number of Utahns who expect gasoline prices to increase. Eighty-nine percent of Utahns expect gasoline prices to go up over the next twelve months, compared to 81 percent in February and 67 percent in January. The large percentage is not surprising considering recent trends—gasoline prices fell from an average of $3.73 per gallon last July to an average of $1.93 per gallon in February, and have risen to an average of $2.34 per gallon in March. The average expected increase over the next 12 months is $0.67, which represents the highest expected increase on record for the CAI.

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The Utah CoreLogic Home Price Index increased 5.4% The National CoreLogic Home Price Index increased 5.6 points

Housing Market

Housing prices continued to climb in February, both in Utah and nationally. According to the CoreLogic Home Price Index, home prices increased 1.0 percent in Utah from January to February, which represented a 5.4-percent rise compared to February 2014. Nationally, home prices increased 1.1 percent in February, which represented a 5.6-percent rise compared to February 2014’s prices. In Utah, home prices are still 10.00 percent below their September 2007 peak, and home prices nationally are still 12.2 percent below their pre-recession high.

New home sales in February reached a seven-year high, according to data from the Commerce Department. Purchases increased 7.8 percent from January, reaching an annualized rate of 539,000. Much of this increase came in the North region, where January numbers were low because of winter snow storms. According to Patrick Newport, U.S. economist at research firm IHS, “There is a chance of really strong housing numbers, which may be showing up for the first time. But we need two to three months before we can say whether a new trend is being established.” It remains to be seen whether February’s new home sales indicate a trend, or simply a one-month aberration caused by pent-up demand from January’s bad weather. In any case, February’s housing numbers came as a pleasant surprise.

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Paper money and pills spilling from pill bottle

A Cure for the Tapeworm of the Economy?

About two years ago, I wrote about the “Tapeworm of the Economy,” in which I opined that ballooning healthcare costs are overwhelming the U.S. economy. As a recap, consider these three facts:

  • In the past 30 years, healthcare spending as a percentage of GDP has nearly doubled in the United States—rising from 9 percent to 17.6 percent.
  • While we were once in line with other developed countries in per capita healthcare spending, today no other developed country in the world spends more than 12 percent of its GDP on healthcare—and most spend far less. The average developed country spends $3,153 per capita for healthcare, compared with $8,233 in the U.S.
  • Moreover, if the U.S. spent the same GDP percentage on healthcare as the average developed economy does, nearly $1.2 trillion would be saved—roughly equivalent to the federal government’s 2011 corporate and individual tax revenue combined.

Fortunately, a partial solution to our astonishing predicament may be arriving in the form of predictive analytics and preventive medicine. New technologies and data strategies have the potential to improve outcomes while simultaneously lowering costs.

For example, the $73-billion diagnostic lab industry, which performs blood tests on hundreds of thousands of Americans each year, is in the process of disrupting itself. Diagnostic companies will shortly be able to perform nearly 1,000 of the most commonly-ordered blood diagnostic tests—a critical component of care, given that these tests drive nearly 70 percent of doctors’ medical decisions—while only taking a drop or two of blood through what could be described as a gentle pinch.

More importantly, some diagnostic companies are doing this at a fraction of the current cost—as low as one-tenth of the traditional cost. In addition to these short-term savings, they offer long-term solutions to healthcare savings. Due to its reduced cost and less-intrusive nature, these products enable preventive medicine by increasing access to blood diagnostics. For example, instead of simply getting your blood drawn once a year, at most, you will be able to get your blood tested relatively painlessly for about $2.99 at your local Walgreens. This creates a baseline for monitoring: as opposed to using a blood sample as a snapshot of your health, you instead will be able to check it frequently and watch for irregularities. With this information, providers will be able to identify early-stage cancers or advance signs of disease onset, such as diabetes. By addressing these issues early (or preventing them altogether), we will save billions of dollars and improve our quality of life.

Beyond the many technological improvements helping to improve care and reduce costs in a range of different sectors in healthcare, the healthcare industry is on the precipice of data explosion. While the healthcare industry is not necessarily producing more data, it is producing far more, highly-accessible digital data. Over the past decade, hospitals, clinical labs, and physician offices have transitioned from stacks of manila folders to bits and bytes and cloud storage. Electronic health record (EHR) use has increased five-fold in healthcare institutions since 2008, and now 9 out of 10 hospitals possess EHR technology.

As an example of how data can be utilized to change the face of healthcare, hospital networks across the nation are tapping into the power of preventive medicine by using electronic health records to reduce costs. For example, one nine-hospital network in Pennsylvania has has successfully saved money and improved patient health by analyzing its vast stores of data to identify the most at-risk patients, and then intervening with appropriate prevention and treatment. This hospital network can predict which patients are at the greatest danger of developing conditions like heart failure, diabetes, strokes, etc., and then provide preventive care before the illness reaches a critical (and very expensive) state.

We are just beginning to scratch the surface of preventive medicine and the power of predictive analytics. Although we will need to carefully balance prediction and prevention with ethical and privacy concerns, we are making progress. Looking into the future of healthcare, it is clear that new technologies and predictive analytics will be critical to taming healthcare costs in America.

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Young student raising hand in classroom

EDUCATION FUNDING

The state education budget increased during the Utah Legislature this year, providing much-needed funding for Utah schools. Compared to the rest of the states in the country, last year Utah had the lowest amount of funding per student at $6,206. During the 2015 legislature, spending per student increased by 4 percent, essentially doubling the 2 and 2.5-percent increases of 2013 and 2014. Legislators also adjusted a property tax that creates a spending floor for Utah’s poorest schools. The tax will generate $75 million each year and cost the average family $46 per year. These increases represent a significant investment in education.

In December, Governor Herbert presented a plan that would provide $500 million in education funding, restoring funding to pre-recession levels. If the new education funding is combined with the property tax increases passed by the legislature, funding for education comes close to the $500 million, albeit in a round-about way.

The groundwork for expanding technology in the classroom will be possible with $5 million set aside by the state legislature. Although the original request totaled $75 million, $5 million is enough to get started and take school technology to the next step.

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Consumer Confidence

The U.S. Consumer Confidence Index® increased 2.5 points to 101.3 in March. The Present Situation Index decreased 3.0 points to 109.1, while the Expectations Index increased 6.0 points to 96.0.

Housing Market

In February, the CoreLogic® Home Price Index (HPI) for Idaho, which measures home price appreciation, experienced a year-over-year increase of 5.1%. Nationally, the HPI increased 5.6% during the same period.

Inflation

The U.S. Consumer Price Index increased 0.4% from January to February. Year-over-year, the index saw a flat rate of 0.0%, which is below the Federal Reserve’s target annual inflation pace of 2%.

Job Report

Idaho’s unemployment rate decreased 0.2 percentage point to 3.9% in February, while the national unemployment rate decreased 0.2 percentage point to 5.5% in February.

May 2015

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Randy Shumway January 2015

Idaho Economic Outlook

Randy Shumway, Zions Bank Economic Advisor

Since the Idaho Legislative Session commenced on January 12, state legislators have worked together to effect changes that will positively impact Idaho’s economy. The bills discussed and passed in the legislature highlight issues critical to Idaho’s economy, many of which address issues that are particularly pertinent this year, such as education, infrastructure, and transportation.

During his State of the State and budget address, Governor Otter proposed a budget just over $3.08 billion for this year—$152 million higher than last year’s budget. Education funding is a high priority for Governor Otter, as evidenced by his proposed 7.4-percent increase to $1.47 billion to fund Idaho schools. His proposed increase represents his highest hike in education funding since 2008, just prior to the economic downturn. In his speech, Otter explained its importance: “In Idaho, public schools [. . .] are essential to the health of our families, our communities, and our economy. They are the key to our prosperity and Idaho’s competitiveness in the global marketplace.” Apart from his 7.4-percent funding increase, the Governor also called for a $20-million bump in what he called ‘discretionary operating funds’ for local school districts throughout the state.

Related to increased school funding, Governor Otter signed a career ladder teacher pay bill passed by the legislature. The bill will increase teacher salaries over the next five years, which will cost about $125 million. The increase in teacher pay is meant to counteract the 7-percent drop in the number of certified teachers in Idaho over the past five years.

Another major issue tackled by the legislature this year involves infrastructure funding for roads and bridges. Idaho has more than 175 bridges that are over 50 years old and are structurally insufficient. For every dollar invested in infrastructure now, it is estimated that Idahoans will save $6 to $14 in the future. At the time this article went to print, transportation legislation remained the major to-do item before the close of the session.

Overall, this year’s legislative session has resulted in significant improvements to funding for public education—a key sector that affects Idaho’s present and future economics. Other topics that the legislature explored in this session included income and sales taxes, increasing state broadband, and making utility upgrades. The collaborative improvement of Idaho’s economy remains the primary purpose of state leaders.

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Wall Street with US flags on display

Short-term U.S. Outlook

Overall, the United States economy is growing, but based on a number of key indicators, there remains significant room for improvement. Federal Reserve Chair Janet Yellen noted at the end of March, “If underlying conditions had truly returned to normal, the economy should be booming.” She pointed to several issues that must be considered when evaluating the strength of the economy, including the job market and the health of all economic sectors.

The Federal Reserve wants to see the unemployment rate drop to about 5 percent before it will consider the job market healthy. Currently, the unemployment rate sits at 5.5 percent, and jobless claims have fallen below 300,000 in recent weeks. However, many people are still working part-time jobs, and wage growth has been slow. Lower oil prices have led to decreased drilling in the United States, and the recovery in housing construction has been subdued. According to Yellen, much of the increase in hiring has been due to the Fed’s accommodative monetary policy that makes it inexpensive for businesses to expand, rather than because actual demand is pushing business growth. Looking ahead, most experts believe the Fed is not likely to raise interest rates before September.

U.S. GDP grew at a 2.2-percent annualized rate in the fourth quarter of 2014 according to the Commerce Department’s third revised estimate released at the end of March. In the fourth quarter, businesses actually decreased inventory and equipment investment, but strong consumer spending negated the decline. Businesses accumulated $80 billion of inventory in the fourth quarter, in contrast to $88.4 billion in the previous estimate.

After-tax corporate profits declined 1.6 percent last quarter after increasing at a 4.7-percent pace in the third quarter. Corporate profits from outside the U.S. fell at an 8.8-percent rate, which represents the steepest decline since the 2007–2009 recession. Economists had expected fourth-quarter after-tax corporate profits to be revised upward to a gain of 1 percent. For all of 2014, after-tax corporate profits fell 8.3 percent.

The dollar gained 7.8 percent against the currencies of the U.S.’s main trading partners between June and December last year. Export growth was actually higher in the fourth quarter despite slower global demand, but strong consumer spending meant more imports, which led to a trade deficit that negatively impacted GDP growth.

Long-Term U.S. Outlook

The U.S. economy continues to grow at a healthy pace. The Conference Board estimates that U.S. GDP growth in 2015 will average 2.9 percent. Meanwhile, Chinese authorities recently reduced their growth target for 2015 to 7 percent. China grew 7.4 percent last year, and the International Monetary Fund (IMF) has forecast this year’s growth to be 6.8 percent.

China is still projected to grow more quickly than almost every other nation in the world, but its momentum is clearly declining. In comparison, Russia and Brazil—economies that are oriented toward exporting commodities—are in or near recession. Confidence in Europe’s economic forecast is improving, however: it was revised upward at the end of March to 2 percent annual growth by 2017 by the European Central Bank.

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The US Consumer Price Index increased 0.4%

U.S. Consumer Price Index

The U.S. Consumer Price Index (CPI) increased 0.4 percent from January to February on a non-seasonally-adjusted basis. The Index has essentially remained flat over the last 12 months. The increase in the CPI stemmed from a combination of increases in shelter, energy, and food. The energy index increased 1 percent as gasoline and oil prices rose after several months of decline. The food index, which had not changed in January, rose in February as various items increased in price.

The sub-index of the CPI that tracks all items less food and energy rose 0.2 percent in February, which mirrors January’s increase. In addition to shelter, other indexes that increased from January to February included used cars and trucks, apparel, new vehicles, tobacco, and airline fares. Medical care did not change, and personal care prices declined.

Over the last 12 months the food index increased 3 percent, and the index for all items less food and energy increased 1.7 percent. Overall increases have been subdued as a result of the large effect energy has on the index, since energy comprises a large percentage of an individual’s purchases. The energy index has declined 18.8 percent over the past 12 months.

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The National Unemployment Rate decreased to 5.5% The Idaho Unemployment Rate decreased to 3.9%

Labor Market

The labor market continues to show strength both in Idaho and throughout the nation. Idaho’s unemployment fell 0.2 percentage points from 4.1 percent in January to 3.9 percent in February, and the national unemployment rate decreased by the same amount—falling from 5.7 percent to 5.5 percent. Total employment in Idaho exceeded 750,000 for the first time as 5,000 additional workers found jobs in the month of February. Goods production jobs slipped slightly, but service sector employers added more than 7,000 jobs. Service jobs now account for 84.3 percent of all jobs in Idaho—an all-time high.

The current 5.5 percent is a much-improved unemployment rate for the United States, but the Fed sees room for growth. The NAIRU measurement (non-accelerating inflation rate of unemployment) released by the Fed indicates the unemployment rate which they believe represents full employment. While 5.5 percent had been the previous NAIRU level, the Fed recently lowered it to 5.2 percent. The good news is that, for the first time in a long time, the U.S. is close to the NAIRU and is likely to reach that level in the coming months.

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The National US Consumer Confidence Index increased 2.5 points to 101.3

U.S. Consumer Confidence Index

The U.S. Consumer Confidence Index increased 2.5 points to 101.3 in March after declining in February. The Expectations Index rose 6.0 points to 96.0, and the Present Situation Index declined 3.0 points to 109.1.

For the second month in a row, present-day conditions were less favorable. The percentage of Americans who think current business conditions are “good” remained at 26.7 percent, while those who claim business conditions are “bad” increased from 16.7 percent to 19.4 percent. Assessment of the job market was mixed: the proportion who stated jobs are plentiful increased marginally from 20.3 percent to 20.6 percent, but the percentage of those who think jobs are hard to get also increased from 25.1 percent to 25.4 percent.

However, expectations for the next six months improved overall. While fewer people expect business conditions to improve over the next six months—16.7 percent compared to 17.6 percent last month—the percentage of those who expect business conditions to worsen fell from 8.9 percent to 8.0 percent. The positive job outlook had the biggest impact on the Expectations Index as the percentage of people expecting more jobs in the month ahead increased from 13.8 percent to 15.5 percent. Simultaneously, the percentage of those who expect fewer jobs declined from 14.8 percent in February to 13.5 percent in March. Consumers are also optimistic about their income trajectories: 18.4 percent expect their incomes to increase in the next six months, up from 16.4 percent last month.

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The Idaho CoreLogic Home Price Index increased 5.1% The National CoreLogic Home Price Index increased 5.6 points

Housing Market

Housing prices continued to climb in February, both in Idaho and nationally. According to the CoreLogic Home Price Index, home prices increased 0.9 percent in Idaho from January to February, which represented a 5.1-percent rise compared to February 2014. Nationally, home prices increased 1.1 percent in February, which represented a 5.6-percent rise compared to February 2014’s prices. In Idaho, home prices are still 17.6 percent below their September 2007 peak, and home prices nationally are still 12.2 percent below their pre-recession high.

New home sales in February reached a seven-year high, according to data from the Commerce Department. Purchases increased 7.8 percent from January, reaching an annualized rate of 539,000. Much of this increase came in the North region, where January numbers were low because of winter snow storms. According to Patrick Newport, U.S. economist at research firm IHS, “There is a chance of really strong housing numbers, which may be showing up for the first time. But we need two to three months before we can say whether a new trend is being established.” It remains to be seen whether February’s new home sales indicate a trend, or simply a one-month aberration caused by pent-up demand from January’s bad weather. In any case, February’s housing numbers came as a pleasant surprise.

Read more Read more
Paper money and pills spilling from pill bottle

A Cure for the Tapeworm of the Economy?

About two years ago, I wrote about the “Tapeworm of the Economy,” in which I opined that ballooning healthcare costs are overwhelming the U.S. economy. As a recap, consider these three facts:

  • In the past 30 years, healthcare spending as a percentage of GDP has nearly doubled in the United States—rising from 9 percent to 17.6 percent.
  • While we were once in line with other developed countries in per capita healthcare spending, today no other developed country in the world spends more than 12 percent of its GDP on healthcare—and most spend far less. The average developed country spends $3,153 per capita for healthcare, compared with $8,233 in the U.S.
  • Moreover, if the U.S. spent the same GDP percentage on healthcare as the average developed economy does, nearly $1.2 trillion would be saved—roughly equivalent to the federal government’s 2011 corporate and individual tax revenue combined.

Fortunately, a partial solution to our astonishing predicament may be arriving in the form of predictive analytics and preventive medicine. New technologies and data strategies have the potential to improve outcomes while simultaneously lowering costs.

For example, the $73-billion diagnostic lab industry, which performs blood tests on hundreds of thousands of Americans each year, is in the process of disrupting itself. Diagnostic companies will shortly be able to perform nearly 1,000 of the most commonly-ordered blood diagnostic tests—a critical component of care, given that these tests drive nearly 70 percent of doctors’ medical decisions—while only taking a drop or two of blood through what could be described as a gentle pinch.

More importantly, some diagnostic companies are doing this at a fraction of the current cost—as low as one-tenth of the traditional cost. In addition to these short-term savings, they offer long-term solutions to healthcare savings. Due to its reduced cost and less-intrusive nature, these products enable preventive medicine by increasing access to blood diagnostics. For example, instead of simply getting your blood drawn once a year, at most, you will be able to get your blood tested relatively painlessly for about $2.99 at your local Walgreens. This creates a baseline for monitoring: as opposed to using a blood sample as a snapshot of your health, you instead will be able to check it frequently and watch for irregularities. With this information, providers will be able to identify early-stage cancers or advance signs of disease onset, such as diabetes. By addressing these issues early (or preventing them altogether), we will save billions of dollars and improve our quality of life.

Beyond the many technological improvements helping to improve care and reduce costs in a range of different sectors in healthcare, the healthcare industry is on the precipice of data explosion. While the healthcare industry is not necessarily producing more data, it is producing far more, highly-accessible digital data. Over the past decade, hospitals, clinical labs, and physician offices have transitioned from stacks of manila folders to bits and bytes and cloud storage. Electronic health record (EHR) use has increased five-fold in healthcare institutions since 2008, and now 9 out of 10 hospitals possess EHR technology.

As an example of how data can be utilized to change the face of healthcare, hospital networks across the nation are tapping into the power of preventive medicine by using electronic health records to reduce costs. For example, one nine-hospital network in Pennsylvania has has successfully saved money and improved patient health by analyzing its vast stores of data to identify the most at-risk patients, and then intervening with appropriate prevention and treatment. This hospital network can predict which patients are at the greatest danger of developing conditions like heart failure, diabetes, strokes, etc., and then provide preventive care before the illness reaches a critical (and very expensive) state.

We are just beginning to scratch the surface of preventive medicine and the power of predictive analytics. Although we will need to carefully balance prediction and prevention with ethical and privacy concerns, we are making progress. Looking into the future of healthcare, it is clear that new technologies and predictive analytics will be critical to taming healthcare costs in America.

Read more Read more
Teacher in classroom in front of chalkboard

CAREER LADDER TEACHER PAY

Teacher pay was a major issue in the Idaho Legislature this year and has been top of mind for policy makers, legislators, and citizens in Idaho for some time. While Idaho’s quality of education ranks near the middle when compared against other states in the nation, funding per student is second from the bottom: at $6,659 it is just a step above Utah, where funding per student is $6,206. Salaries and wages are low, and the concern is that talented teachers are leaving Idaho for work elsewhere due to low pay. The number of certified teachers in Idaho has declined 7 percent in the past 5 years, while the number of students has increased 5 percent. The number applicants for teacher certification in Idaho dropped 27 percent between 2013 and 2014. Increasingly, districts are unable to fill teaching positions.

Idaho’s minimum teacher salary is currently $31,750, which applies to about a third of teachers in the state. The new career ladder pay legislation is meant to reward successful teachers, as well as to raise the minimum salary tier to $37,000 over the course of five years. Successful teachers who earn additional degrees and in essence become “master teachers” would earn additional pay.

The career ladder pay legislation will cost Idaho $125 million over five years to implement. The first salary adjustment is scheduled to occur this July, increasing minimum salaries to $32,700. Teachers will be split into two tiers in terms of determining salary increases—beginning and professional. After eight years, a teacher is presumed to have advanced through the professional teacher levels, and he or she will be eligible to work toward bonuses based on performance.

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This page was last modified on Thu May 21 14:31:39 MDT 2015