BREAKFAST March 29, 2016 · 2020. 7. 20. · Performance Indicator Major Findings REI vs S&P 400 REI underperforming compared to the benchmark Value Line® • REI: Average to below-average

BREAKFASTMarch 29, 2016

• P R E S E N T E D B Y •

• W I T H T H E H E L P O F •

ECONOMIC TRENDS IMPACTING THE 15-COUNTY REGION

Austin Kuhn

Bureau of Business and Economic Research Labovitz School of Business and Economics, UMD

REIF UNEMPLOYMENT RATE

© 2016 REIF • National Bank of Commerce • University of Minnesota Duluth

Source: Local Area Unemployment Statistics, 2016

8.8% 8.8%

7.8%

6.6%6.3%

7.2% 7.1%

6.0%

5.0%

3.9%

REIF U-Rate MN-WI U-Rate

Beginning of Mining Layoffs

REIF UNEMPLOYMENT RATE



8.8% 8.8%

7.8%

6.6%6.3%

8.5%

7.0%

6.1%

4.8%

REIF U-Rate U.S. U-Rate


CITY UNEMPLOYMENT RATE



0%

2%

4%

6%

8%

10%

12%

14%

Duluth Superior Hibbing Virginia





0%

2%

4%

6%

8%

10%

12%

14%

Duluth Superior





0%

2%

4%

6%

8%

10%

12%

14%

Hibbing Virginia





0%

2%

4%

6%

8%

10%

12%

14%

Duluth Superior Hibbing Virginia


EMPLOYMENT BY INDUSTRY


Source: DEED Quarterly Census of Employment & Wages (QCEW), 2016

-7%

-5%

-3%

-2%

-1%

0%

0%

1%

1%

3%

4%

13%

Mining

Financial Activities

Information

Leisure and Hospitality

Professional and Business Services

Public Administration

Manufacturing

Education and Health Services

Trade, Transportation and Utilities

Other Services

Construction

Agriculture, Forestry, Fishing & Hunting

WEEKLY WAGES BY INDUSTRY


Source: DEED Quarterly Census of Employment & Wages (QCEW), 2016

-23%

-4%

-3%

1%

2%

2%

4%

4%

4%

6%

9%

14%

Mining

Information

Agriculture, Forestry, Fishing & Hunting

Other Services

Education and Health Services

Manufacturing

Trade, Transportation and Utilities

Public Administration

Construction

Professional and Business Services

Leisure and Hospitality

Financial Activities

UNEMPLOYMENT INSURANCE CLAIMS


-31%-11%-11%-9%-4%

0%4%8%19%23%24%25%36%37%40%48%

72%83%100%

200%850%

Arts, Entertainment, and RecreationOther Services

Health Care and Social AssistanceReal Estate and Rental and Leasing

UnclassifiedRetail Trade

Public AdministrationFinance and Insurance

Transportation and WarehousingConstruction

Accommodation and Food ServicesAgriculture, Forestry, Fishing & Hunting

ManufacturingEducational Services

Administrative and Waste ServicesManagement of Companies and Enterprises

Wholesale TradeProfessional and Technical Services

InformationUtilitiesMining

• REIF Unemployment Rate

• “Tale of Two Areas”

• Mining Impact

• Recent News


CONCLUSIONS

CONSUMER CONFIDENCE INDICATORS

Brian HonnessUniversity of Wisconsin-Superior


• INDEX OF CONSUMER SENTIMENT (ICS)Consumer outlook on personal finances, business conditions and consumption spending

• INDEX OF CURRENT CONDITIONS (ICC)Gauges current state of the economy

• INDEX OF CONSUMER EXPECTATIONS (ICE)Projects future economic and financial conditions

© 2015 REIF • National Bank of Commerce • University of Wisconsin-Superior



107.16

104.34

106.02

100101102103104105106107

Fall 2013 Spr 2014 Fall 2014 Spr 2015 Fall 2015 Spr 2016

ICS

ICC

ICE

PUBLIC SURVEY (RANDOM SAMPLE)



94.85

92.409293949596979899

100101102

Fall 2014 Spr 2015 Fall 2015 Spr 2016

ICS

ICC

ICE

SURVEY of REIF PARTICIPANTS (NON-RANDOM SAMPLE)

93.39



Indicator Public Survey (Random)

REIF Survey(Non-Random)

ICSRising optimism about short-term economic outlook

Weakening short-term economic outlook

ICC Economy is slowing down

Economy is slowing down

ICE Expectations of continued economic expansion

Expectations of future economic slowdown

0

20

40

60

80

100

Positive Impact Negative Impact No Impact or Unsure

% of Respondents

PublicREIF

31%

62%

7%

IMPACT OF MINING LAYOFFS ON LOCAL REGION

© 2015 REIF • National Bank of Commerce • University of Wisconsin, Superior

2%

93%

6%

LENGTH OF THE IMPACT OF MINING LAYOFFS

0

10

20

30

40

50

60

70

Less than 1- 3 Years 3-5 Years Not Sure

% of Respondents

PublicREIF

13%

41%

© 2015 REIF • National Bank of Commerce • University of Wisconsin, Superior

62%

36%

23% 25%

REGIONAL EQUITY INDEX

Donald SimmonsUniversity of Wisconsin-Superior


Methodology• Equally weighted index• 12 companies with significant employment in the region


Allete Cliffs Natural Resources Polymet

Ascena Retail Group Enbridge Energy Partners Sappi Limited

Calumet Ikonics UnitedHealth GroupCanadian National Railway Louisiana-Pacific US Steel



-60.00%

-50.00%

-40.00%

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

Allete Ascena Retail Group Calumet

YTD Returns vs. Previous Performance

YTD Average

-40.00%

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

Canadian NationalRailway

Cliffs NaturalResourses

Enbridge EnergyPartners


YTD Average



-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

Ikonics Louisiana-Pacific Polymet


YTD Average

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Sappi Limited UnitedHealth Group US Steel


YTD Average


REI VS S&P 400 INDEX

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

S&P 400

REI

PerformanceIndicator

Major Findings

REI vs S&P 400 REI underperforming compared to the benchmark

Value Line® • REI: Average to below-average expected price performance over the next 6-12 months

• Average to above-average risk• Average to below-average expected price

change over the next 3-6 monthsMorningstar®

Overall implications:

Average short interest ratio is up slightly to 6.89

Underperformance relative to benchmark expected to continue

SUMMARY OF FINDINGS


BUSINESS CONFIDENCEINDICATORS

James Hinrichs

The School of Business and Technology, Economics Department

The College of St. Scholastica

CONFIDENCE INDICATOR

Fall 2014 110Spring 2015 108Fall 2015 108

Spring 2016 109

© 2016 REIF • National Bank of Commerce • The College of St. Scholastica

Last 6 Months• Company Outlook

• 35% saw an overall improvement

• 31% saw their outlook worsen

• General Activity • 36% saw an

improvement • 37% saw a decline

Next 6 Months• Company Outlook

• 20% anticipate a decline in the outlook

• 42% expect an improvement

• General Activity • 44% anticipate an

improvement • 24% expect a decline

© 2016 REIF • National Bank of Commerce •The College of St. Scholastica

GENERAL BUSINESS CONFIDENCE

SPECIFIC CONFIDENCE INDICATORS

Last 6 Months• Sales Revenue

• 36% saw a moderate increase

• 27% experienced an overall decrease

• Profits• 31% experienced a

decline• 32% saw an overall

increase

Next 6 Months• Sales Revenue

• 47% anticipate an increase

• 16% expect a decrease

• Profits• 41% anticipate an

increase• 17% expect a decline



FACTORS LIMITING BUSINESS ACTIVITY

BUSINESS DEPENDENCE ON THE MINING SECTOR


Not Dependent

Moderately Dependent

Significantly Dependent

36%

44%

20%

SPECIFIC EFFECTS OF THE DECLINEIN THE MINING SECTOR

Last 6 Months• Sales Revenue

• 36% experienced a negative impact

• Number of Employees• 15% saw a reduction

• Level of General Business Activity

• 32% reported a moderate decrease

• 10% experienced a significant decrease


SUMMARY OF STUDENT PRESENTATIONS

• Regional economic health depends greatly on location, industry (Tale of Two Areas)

• Consumer confidence mixed• Regional stocks are underperforming• Business confidence remains high

© 2015 REIF • National Bank of Commerce

TEXT YOUR QUESTIONS at any time during this presentation to

218.721.8318


TOBY MADDEN


Economist and Founder of Power Parametrics

Toby is an experienced economist, speaker, author, consultant, and the founder of Power Parametrics LLC, a boutique financial advising firm that uses statistical models and surveys to forecast the economy. With over 20 years of experience at the Federal Reserve Bank of Minneapolis, he recently authored the book Club Fed, which takes an inside look at the good, the bad, and the fixable of the Federal Reserve.

Are you prepared?Are you prepared?

www.tobiasmadden.com

Agenda

• Overall Economy

• Mining

• Are you Prepared?

World Economy Continues to Grow

U.S. economy is in a long expansion

United States GDP ($17 t)(21% of World Economy) Finance

Insurance & Real Estate

Other

GovernmentManufacturing

Business Services

Trade

Education and Health

Construction Mining

Slow Growth is Expected in U.S.

Source: Minneapolis Fed

Minnesota GDP ($317b)(2% of U.S. Economy)

Finance Insurance & Real Estate

Other

GovernmentManufacturing

Business Services

Trade


Construction Mining

Regional Economy Constrained

Duluth MSA GDP ($12 b)(4% of Minnesota Economy) Finance

Insurance & Real Estate

Other

Government

ManufacturingBusiness Services

Trade


Construction

Mining

DULUTH/SUPERIOR

Finance Insurance & Real Estate

Other

Government

ManufacturingBusiness Services

Trade


Construction

Mining

U.S. MN

Duluth Area Employment(in thousands)

100

105

110

115

120

125

130

135

140

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: BEA.gov

MN Mining & Logging Employment(in thousands)

5

5.5

6

6.5

7

7.5

8

8.5

9

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: BEA.gov

Iron Ore Prices($ per ton)

0

20

40

60

80

100

120

140

160

180

Jan‐12

Jul‐1

2

Jan‐13

Jul‐1

3

Jan‐14

Jul‐1

4

Jan‐15

Jul‐1

5

Jan‐16

Source: WorldBank

Iron Ore Production (1.0 b tons (1994))

China

Russia

Brazil

U.S. (ranked 5th)

Other

Source: USGS

Cleveland Cliffs Stock Price

Source: Yahoo Finace

Iron Ore Production (3.3b tons (2015))

China

Australia

Brazil

U.S. (ranked 8th)

Other

Source: USGS

Steel Production (0.7 b tons (1994))

China

Japan

Russia

U.S.

Other

Source: World Steel Association

Steel Production (1.6b tons (2015))

China

JapanIndia

U.S.

Other

Source: World Steel Association

Tariffs on Steel Dumping

• Minnesota Mining Jobs = 7k

• Minnesota Metal Fabricating Jobs = 42K

• US Iron and Steel Mill Jobs = 81k jobs

• US Metal Fabricating Jobs = 1.4 million jobs

Watch for:• Slow labor force growth

• Big unpaid promises to aging –Social security and Medicaid/care

• Higher interest rates

Key Takeaways:

• Be Prepared!

• Diversify

Club Fed Book:

• Money is Power

• Banking is Unstable

• The Fed is F3

Questions?toby@powerparametrics.comtobiasmadden.comclubfedbook.com@TobyCMadden@clubfedbook

TEXT YOUR QUESTIONS at any time during this presentation to

218.721.8318


RESOURCESNational Bank of Commerce

nbcbanking.com

The College of St. Scholastica

Robert Hoffman, Ph.DAssistant Professor of Economics

[email protected]

University of Minnesota Duluth

Monica HaynesDirector of the Bureau of Business

and Economic [email protected]

University of Wisconsin Superior

Rubana Mahjabeen, Ph.D.Assistant Professor of Economics

[email protected]

Sakib Mahmud, Ph.D.Assistant Professor in Sustainable

Management and [email protected]

Zamira S. Simkins, Ph.D.Assistant Professor of Economics

zsimkins@ uwsuper.edu


PARTICIPATE


To participate in the next

round of surveys, please

complete the form on your

table and leave it on the

registration table as you

leave.

SAVE THE DATE

Tuesday, November 1, 2016

Lake Superior Ballroom, DECC

Special Topic – Transportation

THE NEXTREGIONAL ECONOMIC INDICATORS FORUM


Documents

BREAKFAST March 29, 2016 · 2020. 7. 20. · Performance Indicator Major Findings REI vs S&P 400 REI underperforming compared to the benchmark Value Line® • REI: Average to below-average