US, Texas and North Texas 2019 Economic ... - City of Rockwall...The City and County of Rockwall M. Elizabeth Morris CEO / Chief Economist Insight Research Corporation March 20, 2019

US, Texas and North Texas 2019

Economic Overview and ForecastPrepared Especially for

The City and County of Rockwall

M. Elizabeth Morris CEO / Chief Economist

Insight Research Corporation

March 20, 2019

Our Services, Our Perspective

Land Use EconomicsInvestment-Grade Economic, Employment and Tax Revenue Analysis for Public and Private ProjectsMunicipal Land Use and Financial Planning AnalysisSite Selection Data SupportImpact Analysis for Transportation Infrastructure: Passenger and Freight Rail, Highways, Tolled Facilities, Airports, Ports, Bridges, Tunnels, Many Others

Copyright 2019. Insight Research Corporation, P.O. Box 61, Allen, TX 75013 972-238-8838.

As of year end 2018, Insight has performed more than 10,200 economic analyses in North America during its 38 years of practice.

Insight’s MUNICIPAL SUITE: Getting It Together . . .

The FlexTRAK DSM®

The Fast TRAKKER®

The Impact TRAKKER ®

The Z-SnapTM

Can Your City Afford Its Future ?


14

612

11

5

10

13

9

2

8

7

15

4

1

2

3

10

12

7

8

13

6

9

11

4

5

Trinity River Parkway (River Corridor)

SH–183

PGBT Superconnector

SH–360

Dallas North Tollway & Addison Toll Tunnel

PGBT Eastern Extension

LBJ Freeway Improvements & Toll Tunnel

Lake Lewisville Bridge

SH–121, SW Pkwy, Chisholm Trail Pkwy

Loop 9, SE Segment

PGBT I-30 to I-20

SH–121 Denton – Collin County

SH–161 Extension SH-183 to I20

14

3

SH–80 – Trans Reinvestment Zone

DFW CMSA Transportation and Toll Improvements Completed or Underway Using Insight Research Corporation’s

Land Use, Demographic / Employment and Investment-Grade Forecasts

1

15 I–35E – HOV Lane Analysis

Blacklands Turnpike/ Northeast Gateway – Currently Abandoned



Today’s Topics

U.S. Economic, Employment and Population Trends

-10

-8

-6

-4

-2

0

2

4

6

8

10

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Real Economic Growth in the Gross Domestic Product (GDP)

A Recession: Two consecutive quarters of

economic loss

4th Quarter 2018: +2.6%Goal: As close to 4% per

quarter as we can get.

Percent Change from Previous Quarter at Annual Rate


Components of the GDP

Economic Component 2019 Status

Government Spending Continued Unprecedented High

Consumer Spending Measurably More Optimistic

Private Capital Investment Commensurate w/ Stock Market Gains


US, Texas and Texas Metros Unemployment Rates

U.S. Unemployment RatePercent Unemployed In the Civilian Labor Force

1960 to 2019, U.S. Bureau of Labor Statistics


0

2

4

6

8

10

12

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

U.S. Unemployment Rate, U.S. BLSPercent of Unemployed Persons in the Civilian Labor Force

U.S. Unemployment 3.9%Texas 3.7%

Dallas & FW 3.5%

BLS considers 4% of Labor Force as Permanently Unemployed (Churn) 6.4% is Average Unemployment

since the beginning of 1980


5.14.6 4.6

5.8

9.39.6

9.08.1

7.4

6.2 6.2

4.94.4

3.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

U.S. Unemployment Rate, U.S. BLS


Source: US and Texas Data, Bureau of Labor Statistics


Labor Force Tightens, Wages IncreaseEmployers Report Increased Difficulty in Finding Workers


Economic Cycles in the U.S.

100 years of Economic Activity: 1919 to 2019

U.S. Cycles of Capital Investment1919 to 1955

Source: U.S. Bureau of Labor Statistics

“.co

mB

ubbl

e”19

95 to

200

1

Dep

ress

ion

1929

to 1

933

WW

II 1

941

to 1

945

-40

-30

-20

-10

0

10

20

30

40

50

1919

1922

1925

1928

1931

1934

1937

1940

1943

1946

1949

1952

1955

1958

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

2015

Total Employment Construction Employment

High Cycle Points

Low Cycle Points


-40

-30

-20

-10

0

10

20

30

40

5019

1919

2119

2319

2519

2719

2919

3119

3319

3519

3719

3919

4119

4319

4519

4719

4919

5119

5319

5519

5719

5919

6119

6319

6519

6719

6919

7119

7319

7519

7719

7919

8119

8319

8519

8719

8919

9119

9319

9519

9719

9920

0120

0320

0520

0720

0920

1120

1320

1520

1720

1920

21

US Total Employment US Construction Employment

1995

to 2

001

“.co

mB

ubbl

e”

High Cycle Points

Low Cycle Points

Rec

ent

Rec

essi

on20

07 to

201

2

U.S. Cycles of Capital Investment, 1956 to 20212019 Forecast to 2021


Dep

ress

ion

1929

to 1

933

WW

II 1

941

to 1

945

1995

to 2

001

“.co

mB

ubbl

e”

High Cycle Points

Low Cycle Points

Rec

ent

Rec

essi

on20

07 to

201

2

-40

-30

-20

-10

0

10

20

30

40

5019

1919

2119

2319

2519

2719

2919

3119

3319

3519

3719

3919

4119

4319

4519

4719

4919

5119

5319

5519

5719

5919

6119

6319

6519

6719

6919

7119

7319

7519

7719

7919

8119

8319

8519

8719

8919

9119

9319

9519

9719

9920

0120

0320

0520

0720

0920

1120

1320

1520

1720

1920

2120

2320

2520

2720

2920

3120

3320

35


U.S. Cycles of Capital Investment1919 to 2035, Insight’s 2019 Forecast to 2035


Economic Performance Comparisons US, Texas and North Texas

TEXAS METROPOLITAN STATISTICAL AREAS


Houston-Baytown-Sugar Land MSAAustin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, San Jacinto and Waller Counties

Austin-Round Rock MSABastrop, Caldwell, Hays,Travis and Williamson Counties

EL Paso MSAEl Paso Co

Ft Worth Ft. Worth-Arlington MDJohnson, Parker, Tarrant and Wise Counties

Dallas

El Paso

San Antonio

Austin Houston

San Antonio MSAAtascosa, Bandera, Bexar,Comal, Guadalupe, Kendall,Medina and Wilson Counties

Dallas-Plano-Irving MDCollin, Dallas, Delta,Denton, Ellis, Hunt, Kaufman and Rockwall Counties

Odessa

Midland

Odessa MSAEctor County

Midland MSAMidland County


Know Your Data Source . . .BEA Defined Eight-County Dallas Metropolitan Division:

Collin, Dallas, Delta, Denton, Ellis, Hunt, Kaufman, Rockwall

Four-County Fort Worth Metropolitan Division:Johnson, Parker, Tarrant, Wise

NCTCOG Region:Twelve Counties: Drops Delta (+5,300 pop)

Adds Navarro, Palo Pinto, Hood & Somervell (+150,000)

District 11, Federal Reserve BankTexas, Southern New Mexico, Northern Louisiana




U.S. Texas Austin Dallas Ft. Worth El Paso HoustonSan

Antonio

2007 4.6 4.3 3.6 4.3 4.2 5.9 4.3 4.1

2008 5.8 4.9 4.4 5.0 4.7 6.3 4.8 4.7

2009 9.3 7.4 6.8 7.8 7.7 9.0 7.6 6.5

2010 9.6 8.2 7.1 8.0 8.2 9.8 8.5 7.4

2011 9.0 7.9 7.0 7.6 7.5 10.2 8.3 7.52012 8.0 6.9 5.8 6.6 6.5 9.3 6.8 6.5

2013 7.4 6.3 5.1 6.1 6.0 7.9 6.0 5.8

2014 6.2 5.1 4.2 5.0 5.0 6.4 5.0 4.62015 5.3 4.5 3.4 4.0 4.2 5.2 4.6 3.82016 4.9 4.7 3.2 3.8 4.0 5.0 5.2 3.72017 4.4 4.3 3.1 3.6 3.7 4.6 5.0 3.5

2018 3.9 3.7 2.9 3.5 3.5 4.3 4.3 3.3

Year End Unemployment Rates (US BLS)US to Major Texas Cities


38.0

53.6 52.5

64.8 66.7

77.5

93.196.5

113.7

122.1126.6

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

US Consumer Confidence Index at Year EndFrom a Monthly Survey of 5,000 US Households, 1985 = 100

A healthy index is considered to be 90%.

Source: The Conference Board


AREAS OF PUBLIC UTILITY SERVICEAT TWENTY YEAR INTERVALS

Aqua 1970Yellow 1990White 2010

Dallas-Fort WorthPopulation Growth Areas


500,000

1,500,000

2,500,000

3,500,000

4,500,000

5,500,000

6,500,000

7,500,000

8,500,00019

6019

6119

6219

6319

6419

6519

6619

6719

6819

6919

7019

7119

7219

7319

7419

7519

7619

7719

7819

7919

8019

8119

8219

8319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

1620

1720

1820

19

Dallas MD Ft Worth MD

DFW MSA Population1960 through 2019

1960 1,425,775

2019 7,362,762

25.65% of the State


6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

2010 2020 2030 2040 2050

0.0% Scenario 0.5% Scenario 1% Scenario

DFW MSA Population2010 through 2050 at 0%, 0.5% and 1.0% Forecast Ratios

0.0% Scenario

0.5% Scenario 1% Scenario

2010 6,426,214 6,426,214 6,426,2142020 6,957,648 7,404,982 7,920,6712030 7,379,698 8,485,436 9,970,6782040 7,664,893 9,643,009 12,728,9922050 7,796,401 10,838,399 16,367,293


Large Net In-Migration Speeds Population Growth in Texas


. . However, with increased population, some design and density issues

are created for which the Cities, as powerhouses for land use, seek to

manage. . .


The Classic Real Estate Maxim: Location, Location, Location . . .

Continuing Advantages forTexas, especially North Texas

The Biggest Texas Advantage:“Business Friendly”

Texas’ gets it ! The clear understanding that . . .

“All taxes flow from profitable businesses.”

And all Jobs, too!


Texas: A Good Financial Bet

Location – Central Time Zone, Transportation Access

Economic Stability – Oil/Gas, Defense, Transportation

Job Creation and Population Growth

Low Cost of Living / Relatively Low Tax Burden

“Business Friendly” Environment

Favorable Housing Mix, affordable by US standards

Local Control of Zoning, Special District Formation,

Incentive Packages and Negotiations


Statewide Advantages Supporting The Competitive Edge in Texas

• Economic Realities– Lower Cost of Living– Employment Diversity– Energy’s Stabilizing Influence

• Marketing Support– 4A&B Funds– Local Incentive Flexibility– Special Districts – TIF, TIRZ, Others– Texas Enterprise Fund

• Public Policy Benefits– Homestead LOC Cap– No State Income Tax– Right-to-Work State– Speed to Market


KDC/State Farm

July, 2013 Feb., 2014

June, 2014 Feb., 2015Sept., 2014

Oct., 2013

And the State Farm Growth Continues . . . .

KDC/State Farm

The U.S. , Texas and North Texas Economic Forecast from

Insight Research Corporation

PRO-BUSINESS

Policy and Regulation Forecast Drivers in the U.S.

a) Banking Regulations: Dodd-Frank Act (DFA)

b) Affordable Care ActIndustry Impact

c) New Taxes, Fewer Exemptions

d) Trade Policy Uncertainty

a) Increasing Credit Availability and Capital Formation

b) Regulatory Reductions

c) Lower Overall Taxes: Local, State & Federal, Capital Gains and Estate

ANTI-BUSINESS


Assumptions for the U.S. Forecast

Good: Continued business friendly central government, with increasing economic gains, wage increases and housing market activity

Mixed:

► Fed Action: Increasing interest rates & inflation

► Uncertain trade policies, helps some, hurts others

► Domestic oil production and reduced oil prices

Bad: More domestic terrorism, North Korea threats, deteriorating Mid- and Far East . . “Too important to ignore, too expensive to fix.”


United States Total and Construction Employment1981 through 2018 Historic; 2019 through 2035 Forecast

EOY 2018Historic Projected


-20

-15

-10

-5

0

5

10

15

1981

1982

1983

1984

1985

1986

1987

1988

1989

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

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035


Annual % of Change

Texas and North TexasEconomic Forecast

-15

-10

-5

0

5

10

1519

8019

8119

8219

8319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

1620

1720

1820

1920

2020

2120

2220

2320

2420

2520

2620

2720

2820

2920

3020

3120

3220

3320

3420

35

Annual % of Change


State of Texas Total and Construction Employment1980 through 2018 Historic; 2019 through 2035 Forecast

Historic Projected EOY 2018


-25

-20

-15

-10

-5

0

5

10

15

20

25

1981

1982

1983

1984

1985

1986

1987

1988

1989

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

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

Annual % of Change


DFW MSA Total and Construction Employment1981 through 2018 Historic; 2019 through 2035 Forecast


Regional economic slowdowns can be

expected in 2020 and again in 2028


Comparison of U.S, Texas and North Texas Construction Employment1981 through 2018 Historic; 2019 through 2035 Forecast



-25

-20

-15

-10

-5

0

5

10

15

20

25

1982

1983

1984

1985

1986

1987

1988

1989

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

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

US Const. Employment Texas Const. Employment MSA Constuction Employment

Annual % of Change

Information204,100

1.6%

Financial Activities776,900

6.2%

Natural Resources & Mining246,000

2.0%

Professional & Bus Services1,732,900

13.9%

Edu & Health Services1,696,800

13.6%

Other Services433,500

3.5%

Leisure & Hospitality1,355,600

10.9%

Government1,951,800

15.6%

Construction729,100

5.8% Manufacturing881,100

7.1%Trans,

Public Util 559,500

4.5%

Trade1,925,800

15.4%

STATE OF TEXAS NON-AGRICULTURAL EMPLOYMENT 2018


Construction165,100

4.6%Manufacturing

270,7007.5%

Trans, Public Util 198,800

5.5%

Whlsl/Retail Trade568,80015.8%

Information83,8002.3%

Finance Svcs295,800

8.2%Prof/ Bus Svcs

595,50016.6%

Educ & Health Svcs442,30012.3%

Leisure/ Hospitality373,70010.4%

Other Services121,600

3.4%

Government432,40012.0%

Nat Resources/Mining45,9001.3%

DFW METROPOLITAN STATISTICAL AREANON-AGRICULTURAL EMPLOYMENT 2018


Texas – An Energy Producing State

The energy production has a generally stabilizing effect on the Texas economy, with improved revenues when oil and gas prices are high, and lower transportation and logistics costs when energy costs decline.

Oil production fracking techniques are expected to add a 20-year demand for oil field activity in Texas, while natural gas well production is expected to have a 100-year life span in the State.


S

S

Helped

Hurt

Regional Economic Effects ofHigher Energy Prices



U.S. & Texas crude oil production are monthly averages of weekly estimates for November 2018. Sources: Energy Information Administration, International Energy Agency, Oil and Gas Journal


Executive Summary

Insight is Upbeat for 2019, Cautious for 2020

Cautionary Notes

In 2020, a Presidential election year will bring particularly explosive media coverage. However, early coverage is so intense that manyvoters and businesses are choosing to ignore media coverage in 2019.

As always, we can expect a measurable slowing of activity in 2020 nationwide as businesses and families postpone major decisions to see what may affect them.

This happens every Presidential election year as the negative drumbeat of daily media and political ads dominate communications, which will be particularly deafening this cycle.

Notwithstanding, North Texas is poised to continue to outpace the U.S. and Texas averages as well into the next economic cycle.


Meeting Looming Challenges

Stay ahead of the multiple challenges posed by an increasing population using all the economic development tools at our disposal: 4A, 4B, TIRZ, TIF & and locally controlled incentives.

Plan for and provide for Texas’ future water needs.

Manage and finance our transportation, mobility and infra-structure requirements. Tolled facilities are under attack in the State, posing significant challenges to maintaining mobility.

Increasing in-migration also increases political diversity of opinions and expectations. Will Texas turn Blue?


Protect Important Texas Advantages !

Keep Texas one of seven states in the U.S. with no state income tax.

Protect our right-to-work status.

Keep the cost of living down – Insist on professional public management and budget practices at every jurisdictional level. With more income, cities often spend more. . .

Maintain the economic advantages of our 80% homestead cap on home loan debt that protected Texas in the mortgage meltdown as compared to many other parts of the U.S.


In other words, In other words, keep doing the keep doing the ““TexasTexas”” thing !thing !

The circulation of confidenceis better than

the circulation of money.

-- James Madison James Madison --

Dallas / Fort Worth Real Estate Performance Trends

If you would like to receive the real estate update or be present in a future audience for this subject,

please leave your business card or contact

Site under construction! To be released early April. . .

Insight Research Corporation clearly defines the economic

costs and benefits of project alternatives so that decision makers have

fully informed choices.

Our Mission

Documents

US, Texas and North Texas 2019 Economic ... - City of Rockwall...The City and County of Rockwall M. Elizabeth Morris CEO / Chief Economist Insight Research Corporation March 20, 2019