Monday Report
State Revenues Declining? What about Utah? December 17th , 2007

The Ten Things Everyone Should Know About Science Part II

Economic Notes:



State Finances are Weakening

A new report by the National Conference of State Legislatures shows increased concern over state revenue performance - Slow revenue growth rates mean states' budgets continue to weaken, according to a new report by the National Conference of State Legislatures.

  • NCSL's State Budget Update: November 2007 is a result of a survey of legislative fiscal directors in all 50 states and Puerto Rico. The report covers the revenue and expenditure situation for the first four months of fiscal year (FY) 2008 for most states. It includes information on revenue performance, spending overruns, projections of budget gaps or surpluses, and the top fiscal issues anticipated for the 2008 legislative sessions. It also includes a special focus on the effects of the housing sector slump on state revenues.
  • Twenty-four states and Puerto Rico reported state revenues have been hurt by the housing sector slump. At least a dozen states and Puerto Rico are seeing declines in their real estate transfer or recording taxes. Many states anticipated a slowdown in this revenue source, but the drop is even higher than expected.
  • Legislative fiscal directors identified health care and Medicaid, along with transportation, as key budget issues their legislatures will address in 2008. At least 16 states are expected to address a variety of K-12 issues, including funding levels, and at least 13 states and Puerto Rico are expected to consider overall budget issues. Particularly of pressing issues include funding for education and health care, which together account for half of general fund budgets.
  • Twenty-two states have revised their FY 2008 revenue forecast. In one half of those states, including California, Florida and New York, it was lowered. The other 11 states, which include Iowa, Texas and Utah, raised their forecasts. Alaska expects an upward revision to reflect the current oil market and a recent tax change.
  • The report finds that at least nine states and Puerto Rico reported collections were below forecast. The amounts were sizeable in Arizona: collections were 7.3 percent below the estimate. In California collections were $1.1 billion (3.8 percent) below forecast.
  • Fortunately for states spending plans appear to be stable in the early months of FY 2008. A quarter of the states and Puerto Rico report modest overruns. Special education costs are over budget in Connecticut and Kansas. Medicaid is exceeding budgeted levels in Arizona and Maryland. Maryland and Vermont are also seeing a cost increase for low- income energy assistance programs.
  • NCSL is the bipartisan organization that serves the legislators and staff of the states, commonwealths and territories. It provides research, technical assistance and opportunities for policymakers to exchange ideas on the most pressing state issues and is an effective and respected advocate for the interests of the states in the American federal system.

How is Utah doing?

Utah Labor Market Indicators - Oct 2007 (Sep 07)

  • Employment Growth: 4.3% (4.4%)
  • Employment Increase: 52,500 (53,500)
  • Unemployment Rate: 2.7% (2.7%)

Source: Utah Dept of Workforce Services, 11/13/07

U.S. Labor Market Indicators - Oct 2007 (Sep 07)

  • Employment Growth: 1.2% (1.2%)
  • Unemployment Rate: 4.7% (4.7%)

Source: Utah Dept of Workforce Services, 11/13/07


Where Are the New Jobs? - Sep 2007

  • State Total (Market Share) - 52,500 +4.3%
  • Salt Lake County (48%) - 24,581 +4.2%
  • Utah County (15.1%) - 11,406 +6.3%
  • Davis County (8.2%) - 2,933 +2.9%
  • Weber County (7.6%) - 2,633 +2.8%
  • Washington County (4.3%) - 1,955 +3.7%
  • Cache County (4.0%) - 1,694 +3.5%
  • Summit County (1.6%) - 1,541 +8.0%
  • Box Elder County (1.6%) - 1,362 +6.9%
  • Uintah County (1.2%) - 1,230 +9.0%
  • Tooele County (1.3%) - 1,201 +8.0%
  • Iron County (1.4%) - 739 +4.2%

Source: Utah Dept of Workforce Services, 11/13/07

What are our new Jobs? - Oct 2007

  • State Total - 56,822 +4.7%
  • Specialty Trade Contractors - 7,700 +11.2%
  • Health Services and Social Assistance - 4,300 +4.1%
  • Accommodation and Food Services - 3,800 +4.3%
  • Professional, Scientific, and Technical Services - 3,100 +65.0%
  • Finance and Insurance - 2,900 +5.3%
  • Unemployed - 2,800 +2.9%
  • Administration & support & Waste Mgm't & Remediation - 2,100 +2.9%
  • Heavy and Civil Engineering - 1,700 +17.2%
  • Ambulatory Health Care Services - 1,700 +3.9%
  • computer and Electronic Products - 1,400 +12.1%

Source: Utah Dept of Workforce Services, 11/13/07

What kinds of New Jobs? - Oct 2007

  • State Total - 53,500 +4.4%
  • Specialty Trade Contractors - 9,000 +13.1%
  • Professional, Scientific, and Technical Services - 4,300 +6.9%
  • Health Services and Social Assistance - 4,100 +3.9%
  • Accommodation and Food Services - 6,800 +4.2%
  • Food Services and Drinking Places - 3,800 +4.2%
  • Finance and Insurance - 3,100 +5.6%

Source: Utah Dept of Workforce Services, 11/13/07

Economic Snapshot - First Four Months FY2008

Utah State Government

  • Sales and Use Taxes (Gen Gov't) +1.2%
  • Individual Income Taxes (Education) +8.1%
  • Individual Income Tax Withholding (Education) +10.9%
  • Corporate Franchise Taxes (Gen Gov't) -11.7%
  • Motor Fuel Taxes (Transportation) +1.3%
  • Severance Taxes (Gen Gov't) -10.7%
  • Wine and Liquor Taxes (Education) -49.4%

Source: Utah State Tax Commission, TC-23 11/14/07

Economic Snapshot - First Four Months FY2008

Local Government

  • Local Sales and Use Taxes +6.3%
  • Tourism, Recreation, Cultural, Convention +23.2%
  • Public Transit +44.0%

Source: Utah State Tax Commission, TC-23 11/14/07

Development Notes:

  • Trammell Crow High Street Residential partnered with the Dallas suburb of DeSoto to break ground on a mixed-use project which will include 35,000 square feet of retail and 135 residential units.
  • The public-private venture will replace a vacant strip mall.

Urban Revitalization - Creating a catalyst for downtown redevelopment

  • In the early 1990s, Spokane, Wash.'s downtown core was on its way to becoming a vacant, blighted area. Prostitutes and drug dealers had taken up residence on the downtown streets that used to bustle with businesspeople, shoppers and tourists. Only a coordinated effort by city leaders and downtown owners and businesses saved the city, which is built on the banks of the Spokane River about 300 miles east of Seattle.
  • As the hub for the Inland Northwest - a region with a population of nearly 2 million people and encompasses several states including Washington, Idaho, Montana, Oregon and parts of Canada - Spokane always boasted a strong downtown core, says Betsy Cowles, president of the Cowles Company, a Spokane-based company with a variety of holdings including downtown real estate.
  • "We've always been the economic center for hundreds of miles," points out Cowles, a fourth generation Spokanite. For example, Spokane hosted the 1974 World's Fair, which was - by all accounts - a roaring success. The Fair sparked a development boom in downtown Spokane, creating a 100-acre park along the river and a downtown mall called River Park Square, owned by the Cowles Company.
  • Over the next 20 years, Spokane proved that its urban core was vulnerable to the troubles other American cities experienced. "We saw what had happened to other cities' downtowns, and we could definitely see the writing on the wall," Cowles notes, adding that River Center lost two of its four department store anchors within months of each other.
  • The Cowles Company was faced with a dilemma - should it pack up its tent and look for other investment opportunities or stick it out in downtown and try to turn things around? With its long history in the city, the company decided to do everything it could to spark redevelopment in Spokane's core - it invested more than $115 million to redevelop River Park Square, a project that spans almost two city blocks. The new 373,000-square-foot retail center, which features a new 130,000-square-foot Nordstrom's department store and a 20-screen movie theater, launched the city's urban revitalization.
  • "We were motivated by the fear that Spokane would die on the vine," Cowles admits.

    Plan for the best

    Continued Next Week


State Revenues Declining?

What about Utah?

  • Who is up?
  • Who is down?
  • Nationally?
  • Utah?

The Ten Things Everyone Should Know About Science, Pt III

Bob Springmeyer

Bonneville Research

  • The Ten Things Everyone Should Know About Science Part II
  • The Ten Things Everyone Should Know About Science Part III

    • You may be able to quote Shakespeare, but what are you like on Big Bang theory?
    • The Financial Times gives non-scientifically minded readers a leg up the tree of knowledge.


    • If Charles Darwin and his theory of evolution have become the great symbols of 19th-century science, Albert Einstein and relativity play a similar role for the 20th century. Einstein's theory of relativity was published in two parts, both of which have had an immense influence on the subsequent development of physics and cosmology.
    • ''Special relativity'' (1905) showed that time and distance are not absolute but depend on the observer's motion. Key to special relativity is the famous formula e=mc2, where e is energy, m mass and c the speed of light. The formula implies that mass and energy can be converted into one another, that the speed of light in a vacuum is the same for all observers under all circumstances, and that nothing can travel faster than light (300,000km per second).
    • ''General relativity'' (1915) brought gravity into the theory, showing that heavy objects distort the fabric of space and time through their gravitational fields. General relativity passed its first public test during a solar eclipse in 1919, when telescopes showed light from distant stars ''bent'' by the sun's gravity, exactly as the theory predicted. Another prediction, confirmed much more recently, is the existence within galaxies of ''black holes'' from which no matter or light can escape because the force of gravity is so strong.
      Why does it matter?
    • Like cosmology and the Big Bang, relativity underpins the intellectual framework of science.
    • But it has practical applications in space technology; for example, satellite navigation works because the Global Positioning System (GPS) takes account of relativity. And science-fiction writers need to invoke relativistic effects to make time travel possible.
      What next?
    • No one knows. The great unmet challenge of theoretical physics is to combine relativity with quantum mechanics. The two theories still co-exist uneasily without a common base. One day another Einstein will come up with a grand theory to unite them.
      Fear factor: palpitations
    What's next? - Quantum mechanics

    Source: Financial Times, London, 2007

  • Economic Notes:
    • The Federal Open Market Committee
    • The FOMC lowered the federal funds rate by 25 basis points to 4.25% and also lowered the discount rate by 25 basis points to 4.75%. The committee cited weakening economic growth, concern in financial markets and slowing core inflation. The FOMC did not indicate a bias for future monetary policy; there was no discussion of future policy actions, with the FOMC noting that uncertainty has increased in recent months. One member voted to cut the fed funds rate target by 50 basis points.
    • Treasury Budget - (-$98.2 B)
    • The unified deficit for November was $98 billion, slightly below the CBO's preliminary estimate of a $101 billion deficit. The federal government has run a deficit of $154 billion through the first two months of FY2008; this is 26% larger than the deficit at the same point in FY2007. After a few years of improvement, the federal budget deficit is set to widen in the current fiscal year.
    • International Business Confidence
    • Businesses are very nervous. Confidence edged a bit higher during the first week of December, but is consistent with an economy that is contracting. Expectations regarding the outlook over the next six months are eroding and have never been weaker in the five years of the survey. Responses regarding sales strength, inventory investment, and office space are all soft. Businesses are more positive when responding to questions regarding payrolls and equipment investment. Confidence is stronger outside the U.S., but it has notably weakened most everywhere across the globe during the past month.
    • International Trade (FT900)
    • The nominal U.S. trade deficit in goods and services widened by 1.2% in October. The U.S. trade deficit came in at $57.8 billion, $0.7 billion more than September's revised $57.1 billion, according to the Bureau of Economic Analysis. In October, both exports and imports increased, though imports increased more than exports. The goods deficit with China, however, widened to $25.9 billion, increasing 6.3% compared to a year ago. Crude oil prices increased in October, which in turn increased the nation's total import bill for energy-related petroleum products to $30.1 billion.
    • Import and Export Prices
    • The U.S. Import Price Index increased 2.7% in November. The increase was the largest monthly advance since October 1990 and was led by a 9.8% rise in petroleum prices. Export prices rose 0.9% in November, after rising by 0.8% in the previous month.
    • PPI
    • Producer prices for finished goods soared 3.2% in November, the second highest reading since the inception of the series in April 1947. The increase was driven almost entirely by energy prices, which rose 14.1%. The core producer price index posted an above-trend 0.4% gain.
    • Quarterly Services Survey
    • In the third quarter of 2007, the information industry reported 5.8% year-to-year revenue growth. Professional services revenues are up 6.2%. Administrative and support and waste management and remediation services revenue posted 2.5% growth. Revenue in hospitals, nursing and residential care facilities is up 7.0%. The aggregate of services revenue increased 5.8% from the third quarter of 2006.
    • Manpower Employment Outlook Survey - Canada, United States & Western Europe
    • According to the Manpower Employment Outlook Survey, employers in all of the 27 countries and territories surveyed expect to add staff during the first quarter in 2008. Nevertheless, hiring intentions continue to soften in the U.S., with the net employment outlook indicating that 10% (not seasonally adjusted) of employers expect to add staff compared to 18% in the previous quarter. The employment outlook is looking up in the euro area, however, in the U.K. and Ireland employment demand will soften. In Asia Pacific, demand for new workers will weaken slightly but remain strong.
    • Wholesale Trade (MWTR)
    • Wholesale inventories were unchanged in October, falling well below consensus expectations of a 0.5% gain. September's large increase in inventories was revised lower from 0.8% to 0.6%. Sales rose by 0.7% over the prior month in October as compared to September's upwardly revised 1.4% increase. The inventory-to-sales ratio edged down to 1.09 in October.
    • Pending Home Sales
    • The pending home sales index declined by 18.4% in October on a year-ago basis. At 87.2, the index was up by 0.58% from September. September's index was revised upward to 86.7 from 85.7. The index's large fall from a year ago suggests that home sales will slow further over the next several months in light of continued weakness in the nation's housing market.
    • MBA Mortgage Applications Survey
    • Mortgage demand increased 2.5% in the week ending December 7. Purchase applications increased 1.7% and refinance applications increased 4.3%. A second consecutive increase in mortgage applications is a positive sign that could signal improving conditions in the mortgage market.
    • Chain Store Sales
    • Chain store sales rose 0.2% in the week ending December 8, but year-over-year growth fell to 2.3%, as comparisons were difficult. The ICSC reported that consumers continue to delay their purchases relative to recent holiday seasons.
    • Retail Sales (MARTS)
    • Total retail sales soared 1.2% in November, accelerating from 0.2% in October. Non-auto sales grew an even stronger 1.8% as auto sales fell. Sales at gasoline stations led growth but core sales grew a surprisingly strong 1.1%. Growth was strong across virtually all non-auto retail segments. Year-over-year growth rose to 6.3% in total and 7.4% excluding autos. October growth was not revised in aggregate.
    • Oil and Gas Inventories
    • Crude oil inventories fell by 0.7 million barrels for the week ending December 7, according to the Energy Information Administration, below expectations of a 0.1 million barrel build. Distillate supplies fell by 0.8 million barrels, below expectations of a 0.5 million barrel build. Gasoline supplies rose by 1.6 million barrels, above expectations of a 1.3 million barrel build. Refinery capacity utilization fell by 0.6 percentage points to 88.8%. Today's report supports higher oil prices.

    Source: Economy.com 2007

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