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Consumer Confidence

The Zions Bank Utah Consumer Attitude Index increased 0.6 points to 96.8 in February. The U.S. Consumer Confidence Index® decreased 1.3 points to 78.1 in the same period.

Housing Market

In January, the CoreLogic® Home Price Index (HPI) for Utah—which measures home price appreciation—saw a year-over-year increase of 10.0%. Nationally, the HPI increased 12.0% during the same period.

Consumer Prices

The Zions Bank Utah Consumer Price Index decreased 0.1% from December to January for a trailing 12-month inflation of 1.8%. In the same period, the U.S. CPI increased 0.4% for a trailing 12-month inflation of 1.6%.

Job Report

Utah’s unemployment rate fell 0.2 percentage points to 3.9% in January, while the national unemployment rate increased 0.1% to 6.7 % in February.

Apr 2014

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Randy Shumway, Zions Bank Economic Advisor

Utah Economic Outlook

Randy Shumway, Zions Bank Economic Advisor

With the pending arrival of the annual tax filing deadline, Utahns are gathering and preparing documents to meet state and federal requirements. While the process of actually filing and paying taxes is one that few look forward to, Utahns can take solace in the findings of a MSN Money report that revealed that Utah residents enjoy the tenth-lowest tax burden nationally—a ranking driven by having the third-lowest property tax rate ($837 per capita) and the fifth-lowest corporate tax rate (5 percent flat tax) in the nation. Not only do Utahns pay less tax than residents of most other states do, but the methods used for appropriating tax revenue are unique to the state.

The majority of Utah’s tax revenue comes from three main sources: general sales and use tax, personal income tax, and property tax. Sales taxes support Utah’s General Fund, from which distributions for public education, corrections, public safety, Medicaid and other social services are made. A portion of the sales tax collected in cities and counties is distributed locally, but the majority goes to statewide funding initiatives. Income taxes supply the state’s Education Fund, which supports K-12 public education and Utah’s public universities. In this area, Utah has a unique tax policy that separates it from other states: under the Utah Constitution, 100 percent of personal income tax revenues are earmarked for public education funding. Additionally, close to half of all property taxes are also used to fund public education.

Despite this allocation of funds for Utah’s public schools, a recent report from 24/7 Wall Street ranks Utah last in funding for public education nationally. Utah spends only $6,212 per student—over $700 less than the next lowest-ranked state. However, the same report showed Utah’s students are in the middle of the pack when it comes to reading and math proficiency.

Utah’s lawmakers have prioritized enhancing public education, and the state budget for FY 2015 includes nearly $170 million in additional funding for improving public education based on the specific needs of individual schools and districts as determined by local officials. Other taxes also support the state’s funding needs. A liquor tax of 13 percent is imposed on the purchase of all alcoholic beverages, representing the 9th highest rate in the nation. Utah is also one of 17 states that operate a liquor monopoly—all profits from state-owned liquor stores support the state’s General Fund, and are earmarked for public education. The state’s cigarette and tobacco tax is relatively high—$1.70 per pack, the 19th-highest rate nationally—and it is used to fund public health initiatives.

While Utah’s challenges in the appropriation of tax revenue and funding are similar to those faced by other states in terms of prioritization and expediency, the state is recognized for its fiscally-responsible practices—Utah’s credit worthiness is the best in the nation, enabling the state to borrow cheaply when needed. Each year, Utah’s lawmakers work to create a balanced budget that is fiscally conservative, limiting unnecessary spending. This cooperation has ultimately led to historically responsible appropriation decisions, benefitting the state by promoting strong economic growth. Future cooperation among Utah’s key stakeholders will ensure that the state continues to make sound decisions when it comes to tax allocation and funding, thereby bolstering economic success.

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U.S. Economic Outlook

Short-term U.S. Outlook: After beginning weakly, the 2014 national economy has recently shown encouraging signs. January’s lower-than-expected hiring levels and decreased retail sales left many experts uneasy, but recent data suggests that the economy’s early-2014 softness was likely temporary, and almost certainly impacted by particularly harsh winter conditions in densely-populated areas. Looking ahead, many experts have an optimistic outlook on the economy’s progress for the remainder of the year. This optimism, coupled with promising economic data, could very well signal positive short-term growth.

The economy got off to a slow start in 2014: sales at U.S. retailers declined 0.4 percent in January—the largest decline in over 18 months. Auto sales fell 2.1 percent in January, representing the first year-over-year drop in sales since mid-2010. Additionally, the Labor Department reported that the U.S. economy created only 113,000 new jobs in January—over 70,000 fewer positions than expected—furthering concerns regarding inconsistency in hiring levels and impacting business confidence. Many experts, including Federal Reserve Chair Janet Yellen, believe a number of these negative indicators were influenced substantially by severe weather.

As the year has progressed and the weather has abated, positive economic signs point to a strengthening recovery. Orders for durable goods (excluding transportation-related goods) jumped 1.1 percent in January. This is the largest increase since May of last year and a signal that the manufacturing sector is picking up momentum after a disappointing 4th quarter in 2013. February’s jobs report showed the economy created 175,000 jobs—a significant increase from the month prior. In January, the Commerce Department reported that consumer spending increased 0.4 percent from the month prior, driven by the highest spending on services since October of 2001. Moreover, the Federal Deposit Insurance Corporation reported that builder borrowing levels increased in the 4th quarter of 2013, marking the 3rd consecutive quarter of increases. The outstanding balance on loans for land acquisition, development and construction increased to $209.9 billion, which signals that originations of new loans are increasing and that builder sentiment is strengthening. These positive indicators are consistent with many expert predictions that hiring, business investment, and construction activity will continue to make gains throughout the rest of 2014.

Long-term U.S. Outlook: Global factors will influence the nation’s long-term economic outlook. Investors are keeping an eye on developments in Ukraine, hoping that regional tensions will not escalate further into a conflict that causes geopolitical unrest and global financial instability. Additionally, forecasts of tepid growth in the European Union—and doubts that the region can overcome its substantial debt burden while dealing with possible deflation—could impact the U.S. economy, since the EU represents a critical trading relationship.

While global factors will certainly impact the nation’s long-term economic growth, domestic developments—including the White House’s proposal to increase the minimum wage—will also influence future economic progress. A report from the Congressional Budget Office (CBO) suggests that the proposal to increase the minimum wage to $10.10 would bring roughly 900,000 Americans out of poverty, but result in the elimination of 500,000 jobs. The White House raised concerns that the CBO overstated potential job loss, but these statistics have led Republican lawmakers to view the proposal negatively.

Although the nation’s economy sent mixed signals in early 2014, experts predict that the America’s slow economic recovery will continue in the foreseeable future.

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In April, Utah employment fell to 3.9% null

Labor Market

The labor market made small improvements in the month of January in both the state of Utah and across the nation. Because extraordinarily adverse weather conditions in the East, South, and Midwest negatively affected the market and made hiring more difficult, any positive movement at the national level can be taken as a good sign.

In Utah, the unemployment rate dropped 0.2 percent, from 4.1 percent in December to 3.9 percent in January. 34,700 jobs have been added since January of last year. The construction industry was a large part of Utah’s growth this last month, as employment within the industry increased by 6.6 percent. The leisure and hospitality industry was also a big factor, growing at a rate of 5.0 percent. The only industry to lose ground was natural resources, which decreased by 100 jobs.

Nationally, the unemployment rate increased slightly from 6.6 percent to 6.7 percent, but 175,000 jobs were added in February, beating analyst expectations. As winter storms disrupted economic activity in many parts of the country, this data shows positive movement in the face of figurative and literal headwinds. The country appears to be pacing itself on the path of slow recovery: a recent White House forecast released with the proposed budget predicted that the unemployment rate will not fall below 6 percent until 2017.

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In April, the Utah CoreLogic home price index was up 10% over last year null

Housing Market

Despite taking a beating during the Great Recession, the housing market is a key part of Utah’s economic recovery and ongoing vitality. January’s housing data for the state showed home prices increasing 0.7 percent from December and 10.0 percent from the same time last year, representing steady recovery. The national market is also showing signs of solid growth, with a one-month increase of 0.9 percent and a one-year increase of 12.0 percent. A growing housing market is good news for virtually everyone, as it contributes significantly to the overall health of the economy.

While housing prices continue to rise across the country, national prices are not expected to reach their pre-recession high until 2018 according to a new study by the Demand Institute. Although 2013 was a particularly strong year in the real estate market—with prices rising 11.5 percent nationally—the study predicts that prices will rise by a much more modest average annual rate of 2.1 percent between 2015 and 2018. This lower rate does not reflect recessionary movement; rather, it is the natural consequence of an economy that is in transition from recovery to stability.

Another study by the Demand Institute predicts uneven growth across the United States, with Utah’s prices expected to increase by 17 percent between 2012 and 2018. The Salt Lake City metropolitan area is expected to see prices rise by 21 percent. This level of growth, in both Salt Lake City and Utah as a whole, reflects steady improvement and is indicative of a stable, sustainable housing recovery.

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In Feb, the Utah consumer confifence index grew .1% In Feb, the US consumer confifence index grew 3.2%

Zions Bank Utah Consumer Attitude Index

The Zions Bank Consumer Attitude Index (CAI) increased 0.6 points to 96.8 from January to February. Although some monthly increases have been relatively modest, this marks the fourth straight month that the CAI has increased, and it is once again at its highest level since its inception in 2011. For comparison, this month’s national Consumer Confidence Index® (CCI) decreased 1.3 points to 78.1.

Consumer attitudes regarding labor were mixed in February. Twenty-six percent of Utahns believe available jobs in their area are plentiful, up 4 percentage points from the month prior, and 21 percent of Utahns consider jobs in their area hard to get, down 3 percentage points. However, consumers became less optimistic about the labor market’s anticipated trajectory in February. Utahns who think there will be more jobs in their area six months from now declined from 34 percent in January to 29 percent in February, while those who think there will be fewer jobs six months from now remained at 14 percent. This likely indicates that more Utahns believe the labor market is currently at a peak, or nearing one, since 1) fewer believe there will be more jobs in the future, and 2) more think jobs in their area are currently plentiful.

Despite residents’ fear of a possible slowdown in the labor market, Utahns became more optimistic about their earning potential this month, and are subsequently more likely to increase their spending. Those who think their household income will increase by more than the rate of inflation during the next two years increased to 26 percent from 23 percent. This presumably affects Utahns’ expectations of purchasing major household items in February—the number of people likely to purchase a major household item in the next 60 days increased 4 percentage points from January to February and now sits at 26 percent.

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Zions Bank Utah Consumer Price Index

The Zions Bank Wasatch Front Consumer Price Index (CPI) decreased 0.1 percent from December to January on a non-seasonally-adjusted basis. Over the last twelve months, prices have increased in Utah by 1.8 percent. The national Consumer Price Index, released by the Bureau of Labor Statistics, increased 0.4 percent from December to January on a non-seasonally-adjusted basis and increased 1.6 percent over the past twelve months.

Consumers paid more for food from grocery stores this month, with food at home prices increasing 0.7 percent month-over-month. For the third straight month, produce prices have risen significantly due, in part, to cold and drought weather conditions in some key fruit- and vegetable-growing regions. Overall beef prices in the state also jumped about 3 percent last month. This reflects national trends, as choice-grade beef prices are up more than 15 percent year-over-year in national commodity markets. According to agricultural commodity research firm Allendale, Inc., beef supplies are already tight, and U.S. beef production will hit a 20-year low in 2014 largely due to a three-year drought in key beef production states.

Although overall transportation costs fell again in January—largely due to a decrease in the price of used and new vehicles—Utahns saw gasoline prices rise again after they had declined for four straight months. Utahns paid an average of $3.11 per gallon of gasoline in January, up from $3.06 in the month prior. Still, the average price of gasoline in Utah at the end of January was about 5 percent lower than the national average price per gallon, and about 6 percent lower than the average price per gallon of gasoline in Utah during the same period last year.

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Google Fiber® Considering Salt Lake City

Google Fiber officially launched in Provo earlier this year. The California-based internet services company has been installing the new high-speed internet service in homes and neighborhoods, and customers are enjoying one-gigabit-per-second download and upload capacity.

In late February, Google® announced plans to expand its service to new metropolitan areas across the nation, and Salt Lake City is one of nine areas under consideration (among cities in Arizona, California, Georgia, North Carolina and Texas). Google representative Angie Welling stated, “Google chose to work with Salt Lake City because of how tech-savvy the area is. Google would love to see what local entrepreneurs would do with a high-speed gig connection.”

The company’s interest in Salt Lake City is further evidence of the metro’s growing reputation as a technology hub. The number of technology-related businesses along the Wasatch Front has been steadily increasing thanks to its highly-educated workforce and local universities’ contributions to student entrepreneurial endeavors in technology fields. Installation of Google Fiber in Salt Lake City would accelerate this trend and likely increase the number of tech start-ups in the area, while attracting the expansion and relocation of existing tech companies.

By the end of the year, Google will select cities for expansion, and company officials revealed that their choice is largely dependent on the potential cities’ ability to proactively prepare for installation. In other words, cities with an existing infrastructure that will accommodate the service, and cities that are willing to document and share their infrastructure maps with Google will have a leg up on the competition as this groundwork will significantly speed up the process of installation.

To determine if Salt Lake is the right fit for their service, Google plans to conduct a feasibility study later this year. Based on early feedback from satisfied businesses and customers in Provo, Salt Lake City’s economy would clearly benefit from Google’s installation of high-speed internet service.

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Can Tax Reform Jumpstart Our Economy?

How much could our economy benefit if Americans had an additional $160 billion, along with 7.6 billion man-hours to invest annually? Currently, taxpayers drain that amount of money and time each year in feverish efforts to prepare and file their taxes in alignment with our overwrought tax code. While taxes are necessary for a stable society—funding crucial investments in infrastructure, education, welfare, and defense—Americans have the right to a navigable and consistent system. Simply put, the complexity of the code is constraining our economic prosperity.

April 15th has become an annual pinnacle of grievance for corporations and individuals alike because of our country’s arduous tax code. Our last major national tax reform occurred in 1986, and since then lawmakers have made over 15,000 changes to the code. In that time, the Form 1040 instruction manual has swelled from 14 pages to over 40 pages. However, after many years of rhetoric, empty promises, bad ideas and excuses, a viable solution for a simplified tax code may finally be on the horizon!

In late February, Representative Dave Camp from Midland, Michigan introduced a new plan to simplify and disaggregate our tax system. Seeking to balance funding levels with reasonable demands on America’s individuals, families, and companies, lawmakers are discussing the idea’s potential impact on our economic growth.

At minimum, the revised system would make filing taxes easier and less expensive. The proposed plan consolidates today's seven tax brackets into three main brackets, and eliminates many tax deductions and exemptions. Proponents of the plan also assert that it would: 1) boost economic growth by lowering the income tax rate and thereby incentivize people to work more, 2) reduce many of the burdens associated with filing taxes, and 3) remain revenue neutral—meaning the government will still get the same amount of money.

This new plan also revives a decades-old, overarching question: is it the role of government to dictate where each of us invests and spends our money? Our current system of deductions and tax incentives asserts that the answer is yes. It allows deductions for such things as providing a foster home for pets, pregnancy tests, and, believe it or not, clarinet lessons for children with overbites. While the idea of using deductions and write-offs to focus economic activity makes sense theoretically, our tax code has become inundated with complex—and often unfair—initiatives, loopholes, exceptions, and incentives.

Recently, leaders from both sides of the political aisle have been exploring simpler and more independent approaches to taxation, which would allow citizens to follow their own priorities for investing and spending money. Current debate is stirring a constructive dialogue that could provide a foundation for a new, simplified tax code. This dialogue encourages us to give real consideration to metaphorically pressing the “reset” button on our tax code.

Although Washington is not known for its ability to turn on a dime—particularly when it comes to making comprehensive change in a reasonable timeframe—lawmakers should take seriously the imperative of de-cluttering the current tax code to further jumpstart the economy. If such an overhaul could make our tax code fairer, simpler, and less prescriptive in terms of how and where people spend their money, we would all be better for it.

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Consumer Confidence

The U.S. Consumer Confidence Index® decreased 1.3 points to 78.1 in February. The Present Situation Index rose 4.4 points to 81.7, while the Expectations Index decreased 5.1 points to 75.7.

Housing Market

In January, the CoreLogic® Home Price Index (HPI) for Idaho—which measures home price appreciation—experienced a year-over-year increase of 11.1%. Nationally, the HPI increased 12.0% during the same period.

Inflation

The U.S. Consumer Price Index increased 0.4% from December to January. The index saw a year-over-year increase of 1.6%, which is below the Federal Reserve’s target annual inflation pace of 2–3%.

Job Report

Idaho’s unemployment data is not available this month due to a delay for end of year calculations. The national unemployment rate increased 0.1% to 6.7% in February.

Apr 2014

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Randy Shumway, Zions Bank Economic Advisor

Idaho Economic Outlook

Randy Shumway, Zions Bank Economic Advisor

With the pending arrival of the annual tax filing deadline, Idahoans are well aware of the requirements and intricacies involved in meeting federal and state demands. However, Idaho residents can take solace in the findings of a recent report from the Idaho State Tax Commission, which revealed that Idaho enjoys the third-lowest tax burden on the basis of taxes paid per person when compared with other states —over 30 percent lower than the national average. Drivers of this low tax burden are found in Idaho’s property tax rates (nearly 40 percent lower than the national average) and the state’s corporate income tax rates (31 percent lower than the national average). Idahoans pay less tax than residents of almost all other states do, and the methods used for appropriating tax revenue are unique to the state.

The bulk of Idaho’s tax revenue comes from three main sources: general sales and use tax, personal income tax, and property tax. General sales and use tax and personal income tax support Idaho’s General Fund, from which distributions are made for public education, corrections, public safety, natural resource management, Medicaid and other social services. Almost half of the funding for Idaho’s state government services comes from individual income tax, and sales tax generally contributes around 40 percent. Historically, nearly half of the tax revenues from Idaho’s General Fund go to K-12 public education. If we include funding for colleges, universities, public television and agricultural research, more than 60 percent of Idaho’s total yearly budget is allocated for education.

Despite the large percentage of funds allocated toward education, a recent report from 24/7 Wall Street ranks Idaho second-to-last in funding for public education nationally. Idaho spends only $6,824 per pupil—situating Idaho above only Utah in national rankings. Moreover, a study conducted by the Education Law Center suggests that Idaho doesn’t distribute educational funding evenly: because a portion of local property taxes are used to fund local schools, Idaho’s wealthiest school districts receive roughly $800 more per pupil than do the state’s poorest districts. This inequity affects wages for teachers, as well as access to early-childhood education.

To tackle this challenge, Idaho’s lawmakers have prioritized improving public education. In his State of the State address, Governor Otter declared “Any effort to provide additional tax relief for our citizens must be in the context of advancing our goals for Idaho’s public education system.” The proposed state budget for FY 2015 includes $37.5 million in additional funding for improving public education based on the specific needs of individual schools and districts as determined by local officials.

Like other states, Idaho faces challenges in the appropriation of tax revenues and general tax policy, but cooperation between key stakeholders will ensure the responsible use of the state’s tax contributions.

In particular, the priority of improving public education, shared by the vast majority of Idaho’s lawmakers, will bolster the development of a strong workforce and future economic success.

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U.S. Economic Outlook

Short-term U.S. Outlook: After beginning weakly, the 2014 national economy has recently shown encouraging signs. January’s lower-than-expected hiring levels and decreased retail sales left many experts uneasy, but recent data suggests that the economy’s early-2014 softness was likely temporary, and almost certainly impacted by particularly harsh winter conditions in densely-populated areas. Looking ahead, many experts have an optimistic outlook on the economy’s progress for the remainder of the year. This optimism, coupled with promising economic data, could very well signal positive short-term growth.

The economy got off to a slow start in 2014: sales at U.S. retailers declined 0.4 percent in January—the largest decline in over 18 months. Auto sales fell 2.1 percent in January, representing the first year-over-year drop in sales since mid-2010. Additionally, the Labor Department reported that the U.S. economy created only 113,000 new jobs in January—over 70,000 fewer positions than expected—furthering concerns regarding inconsistency in hiring levels and impacting business confidence. Many experts, including Federal Reserve Chair Janet Yellen, believe a number of these negative indicators were influenced substantially by severe weather.

As the year has progressed and the weather has abated, positive economic signs point to a strengthening recovery. Orders for durable goods (excluding transportation-related goods) jumped 1.1 percent in January. This is the largest increase since May of last year and a signal that the manufacturing sector is picking up momentum after a disappointing 4th quarter in 2013. February’s jobs report showed the economy created 175,000 jobs—a significant increase from the month prior. In January, the Commerce Department reported that consumer spending increased 0.4 percent from the month prior, driven by the highest spending on services since October of 2001. Moreover, the Federal Deposit Insurance Corporation reported that builder borrowing levels increased in the 4th quarter of 2013, marking the 3rd consecutive quarter of increases. The outstanding balance on loans for land acquisition, development and construction increased to $209.9 billion, which signals that originations of new loans are increasing and that builder sentiment is strengthening. These positive indicators are consistent with many expert predictions that hiring, business investment, and construction activity will continue to make gains throughout the rest of 2014.

Long-term U.S. Outlook: Global factors will influence the nation’s long-term economic outlook. Investors are keeping an eye on developments in Ukraine, hoping that regional tensions will not escalate further into a conflict that causes geopolitical unrest and global financial instability. Additionally, forecasts of tepid growth in the European Union—and doubts that the region can overcome its substantial debt burden while dealing with possible deflation—could impact the U.S. economy, since the EU represents a critical trading relationship.

While global factors will certainly impact the nation’s long-term economic growth, domestic developments—including the White House’s proposal to increase the minimum wage—will also influence future economic progress. A report from the Congressional Budget Office (CBO) suggests that the proposal to increase the minimum wage to $10.10 would bring roughly 900,000 Americans out of poverty, but result in the elimination of 500,000 jobs. The White House raised concerns that the CBO overstated potential job loss, but statistics have led Republican lawmakers to view the proposal negatively.

Although the nation’s economy sent mixed signals in early 2014, experts predict that the America’s slow economic recovery will continue in the foreseeable future.

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null In April, US unemployment increased to 6.7%

Labor Market

The labor market improved across the nation in February. Because extraordinarily adverse weather conditions in the East, South, and Midwest negatively affected the market and made hiring more difficult, any positive movement at the national level can be taken as a good sign.

Though Idaho’s unemployment data for the month of January was unavailable at the time of publication for this article, hopes are high that it will continue to decrease as it has ever since it reached peak unemployment in 2010. The announcement this month that food processing company Materne North America will be building a new facility that will provide more than 200 jobs in Idaho was a positive development. It is an example of state and local officials using proper incentives to relocate a company that will contribute to the local economy.

Nationally, the unemployment rate increased slightly from 6.6 percent to 6.7 percent, but 175,000 jobs were added in February, beating analyst expectations. As winter storms disrupted economic activity in many parts of the country, this data shows positive movement in the face of figurative and literal headwinds. The country appears to be pacing itself on the path of slow recovery: a recent White House forecast released with the proposed budget predicted that the unemployment rate will not fall below 6 percent until 2017.

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In April, the US price index rose .4%

U.S. Consumer Price Index

The national Consumer Price Index (CPI), released by the Bureau of Labor Statistics, increased in January for the first time since September of last year, rising 0.4 percent from December to January on a non-seasonally-adjusted basis. This month’s increase was primarily due to escalating energy prices (up 2.1 percent)—consumers paid substantially more for natural gas (up 4.1 percent), electricity (up 2.5 percent), and gasoline (up 1.4 percent). The CPI has now increased 1.6 percent over the past twelve months.

Consumers also saw a jump in food prices this month. Overall food prices increased 0.4 percent, with food at home increasing 0.7 percent and food away from home increasing 0.1 percent. Not surprisingly given the severe, ongoing drought in California and inclement weather in a number of key fruit- and vegetable-growing regions, fruit and vegetable prices increased 1.4 percent from December to January. According to the U.S. Bureau of Reclamation, California is in the midst of one of its driest periods ever; because of this, Federal officials announced that many California farmers can expect to receive no irrigation water this year from the state’s reservoirs and rivers. This could increase the price of both produce and beef products by as much as 25 percent this year, according to some industry estimates. Beef prices have already begun to rise—up more than 10 percent in commodity markets—and fruit and vegetable prices will continue to swell as agriculture costs are passed onto consumers at grocery stores.

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In April, the US consumer confifence index fell 1.3%

U.S. Consumer Confidence Index

After increasing in January, consumer confidence stumbled slightly in February. The national Consumer Confidence Index® (CCI) (how consumers feel about the economy) decreased 1.3 points to 78.1. Although the Present Situation Index (how consumers feel about their current business and employment situation) increased 4.4 points to 81.7, it was offset by the Expectations Index (how consumers feel about the economy six months from now), which decreased 5.1 points to 75.7. This implies that consumers feel that the economy has improved, but also that economic conditions may be reaching a peak because their expectations about the economy’s trajectory have fallen.

Looking at the data more closely, consumers were more confident in the current state of the economy for the fourth consecutive month. Those claiming business conditions are good increased to 21.5 percent from 20.8 percent, while those claiming business conditions are bad declined to 22.6 percent from 23.4 percent. Consumers’ assessment of the current condition of the labor market also improved. Those claiming jobs are plentiful increased to 13.9 percent from 12.5 percent, while those saying jobs are hard to get was relatively unchanged. Although the unemployment rate has been slowly decreasing over the past few months, consumers were less optimistic about the trajectory of the labor market in February. Those expecting more jobs six months from now declined to 13.3 percent from 15.1 percent, and those anticipating fewer jobs increased to 20.6 percent from 19.0 percent.

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In April, the Idaho CoreLogic home price index was up 11.1% over last year In April,  the National CoreLogic home price index was up 12% over last year

Housing Market

Despite taking a beating during the Great Recession, the housing market is a key part of Idaho’s economic recovery and ongoing vitality. While January’s housing data for the state showed home prices decreasing 0.4 percent from December, prices are still up 11.1 percent from the same time last year. Though growth in home prices has stalled in the short term, it appears Idaho is still on trajectory for recovery. The national market is also showing signs of solid growth, with a one-month increase of 0.9 percent and a one-year increase of 12.0 percent. A growing housing market is good news for virtually everyone, as it contributes significantly to the overall health of the economy.

While housing prices continue to rise across the country, national prices are not expected to reach their pre-recession high until 2018 according to a new study by the Demand Institute. Although 2013 was a particularly strong year in the real estate market—with prices rising 11.5 percent nationally—the study predicts that prices will rise by a much more modest average annual rate of 2.1 percent between 2015 and 2018. This lower rate does not reflect recessionary movement; rather, it is the natural consequence of an economy that is in transition from recovery to stability.

Another study by the Demand Institute predicts uneven growth across the United States, with Idaho’s prices expected to increase by 25 percent between 2012 and 2018. That rate is the twelfth highest of all the states in the nation, signifying that Idaho will continue its path toward a stable, sustainable housing recovery.

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Trail Blazers End Relationship With Idaho Stampede

The NBA’s Portland Trail Blazers recently announced that they will end their relationship with the NBA Developmental League (D-League) Idaho Stampede at the end of the 2013–14 basketball season. Over the last two seasons, Portland has had what is referred to as a “hybrid” relationship with the Stampede. This means that Portland’s front office was responsible for basketball operations—including hiring coaches, assigning players, and determining the offensive and defensive structure of the team—while local owners ran the business side of the Stampede’s operations. Some NBA teams have the same hybrid relationship with other D-League affiliates, while other NBA teams own D-League teams outright.

As the Stampede look forward to next season, the team has an opportunity to find another NBA partner. Portland’s general manager, Neil Olshey, stated that the team is no longer in a position to maximize the value that an affiliate D-League team like the Stampede affords—which is to provide game-time experience and development for underutilized players. In fact, this season, Portland has sent only one player to Boise. The Stampede’s managing investor, Bill Ilett, noted that Portland was very open in their decision-making process and provided the Stampede with ample time to search for a new NBA parent team. As the Stampede search for a new partner, many experts believe that a hybrid relationship with the NBA’s Utah Jazz would make sense given Utah’s relatively close proximity and past connections between the two teams.

The team is expected to remain in Boise where it has a significant impact on the local economy, playing in the downtown Century Link Arena. A recent study conducted by Boise State University’s Center for Business Research and Economic Development revealed that the Stampede—and fellow tenant, the Idaho Steelheads hockey team—generate nearly $8 million new dollars to the local economy annually. This figure includes what outside teams and visitors contribute to the local economy, but it does not include arena receipts. Additionally, the study found that the two teams create 50 full-time jobs directly and 38 full-time jobs indirectly. While the future is uncertain for the Stampede, keeping the team in Boise will benefit Idaho’s economy in the long term.

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Can Tax Reform Jumpstart Our Economy?

How much could our economy benefit if Americans had an additional $160 billion, along with 7.6 billion man-hours to invest annually? Currently, taxpayers drain that amount of money and time each year in feverish efforts to prepare and file their taxes in alignment with our overwrought tax code. While taxes are necessary for a stable society—funding crucial investments in infrastructure, education, welfare, and defense—Americans have the right to a navigable and consistent system. Simply put, the complexity of the code is constraining our economic prosperity.

April 15th has become an annual pinnacle of grievance for corporations and individuals alike because of our country’s arduous tax code. Our last major national tax reform occurred in 1986, and since then lawmakers have made over 15,000 changes to the code. In that time, the Form 1040 instruction manual has swelled from 14 pages to over 40 pages. However, after many years of rhetoric, empty promises, bad ideas and excuses, a viable solution for a simplified tax code may finally be on the horizon!

In late February, Representative Dave Camp from Midland, Michigan introduced a new plan to simplify and disaggregate our tax system. Seeking to balance funding levels with reasonable demands on America’s individuals, families, and companies, lawmakers are discussing the idea’s potential impact on our economic growth.

At minimum, the revised system would make filing taxes easier and less expensive. The proposed plan consolidates today's seven tax brackets into three main brackets, and eliminates many tax deductions and exemptions. Proponents of the plan also assert that it would: 1) boost economic growth by lowering the income tax rate and thereby incentivize people to work more, 2) reduce many of the burdens associated with filing taxes, and 3) remain revenue neutral—meaning the government will still get the same amount of money.

This new plan also revives a decades-old, overarching question: is it the role of government to dictate where each of us invests and spends our money? Our current system of deductions and tax incentives asserts that the answer is yes. It allows deductions for such things as providing a foster home for pets, pregnancy tests, and, believe it or not, clarinet lessons for children with overbites. While the idea of using deductions and write-offs to focus economic activity makes sense theoretically, our tax code has become inundated with complex—and often unfair—initiatives, loopholes, exceptions, and incentives.

Recently, leaders from both sides of the political aisle have been exploring simpler and more independent approaches to taxation, which would allow citizens to follow their own priorities for investing and spending money. Current debate is stirring a constructive dialogue that could provide a foundation for a new, simplified tax code. This dialogue encourages us to give real consideration to metaphorically pressing the “reset” button on our tax code.

Although Washington is not known for its ability to turn on a dime—particularly when it comes to making comprehensive change in a reasonable timeframe—lawmakers should take seriously the imperative of de-cluttering the current tax code to further jumpstart the economy. If such an overhaul could make our tax code fairer, simpler, and less prescriptive in terms of how and where people spend their money, we would all be better for it.

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This page was last modified on Thu Jul 30 13:52:40 MDT 2015