December 26, 2013

Economic Forecast OUTPUT AND EMPLOYMENT

WHAT THE TABLE SHOWS:  Wyoming’s GDP forecast is derived from

United States Real GDP $ billions (fourth quarter) % change over the four quarters Nonfarm employment Job count (fourth quarter) % change over the four quarters Average monthly change

2007

2008

2009

2010

2011

2012

2013

2014

$14,996 1.9%

$14,575 -2.8%

$14,540 -0.2%

$14,942 2.8%

$15,242 2.0%

$15,540 2.0%

$15,907 2.4%

$16,464 3.5%

the national forecast by allocating output to each of the 50 states based on employment shares. So, forecast misses reflect surprises in the aggregate forecast as well as

137,943,000 135,153,333 129,526,667 130,283,667 0.9% -2.0% -4.2% 0.6% 99,750 -232,472 -468,889 63,083

132,286,667

134,462,667

136,729,000

138,288,195

unexpected shifts in a state’s GDP share.

1.5% 166,917

1.6% 181,333

1.7% 181,333

1.1% 181,333

 Wyoming has been in a slump for the last couple of years, counter to the national

Wyoming Real GDP $ billions (fourth quarter) % change over the four quarters

$30 4.3%

$32 4.5%

$32 1.6%

$32 -1.7%

$31 -1.4%

$31 0.3%

$32 1.4%

$33 3.1%

Nonfarm employment Job count (fourth quarter) % change over the four quarters Average monthly change

292,733 4.0% 939

299,533 2.3% 567

280,867 -6.2% -1,556

284,433 1.3% 297

289,600 1.8% 431

289,533 0.0% -6

292,217 0.9% 224

294,648 0.8% 203

economic trends, likely reflecting disruptions caused by the inroads made by natural gas as a source of electricity generation.

KEY MESSAGES:  Wyoming’s economy is forecast to fare better soon. Note: GDP figures are based on quarterly values that are interpolated from annual GDP estimates using quarterly employment changes. Unbolded figures are reported actual values and bold figures represent forecasts. Sources: US Department of Commerce; US Department of Labor.

Regional Perspectives: Wyoming Economic Outlook

Commercial Banking

2

December 26, 2013

The Economy’s Structure PERCENT OF TOTAL GDP DERIVED FROM SELECTED INDUSTRIES

WHAT THE CHART SHOWS:  The figure compares the relative importance of selected industries to the state’s economy

35

US industry mix

Wyoming industry mix

with the national footprint of each industry

30

(state and national figures reflect the value

25

added of each industry as a percent of

20

aggregate state or US nominal GDP,

15

respectively).  The energy sector’s outsized footprint in the

10

state was a challenge when energy prices

5

Regional Perspectives: Wyoming Economic Outlook

Government

Other services

Hotel and food service

Arts, entertainment, and recreation

Health care and social assistance

Educational services

Administrative and waste management services

Management of companies

Professional and technical services

Real estate

Finance and insurance

Information

Transportation

Retail trade

Wholesale trade

Nondudrable manufacturing

Durable manufacturing

Construction

Utilities

Mining

Agriculture

0

corrected, but oil’s rebound should prove a benefit in coming months.

KEY MESSAGES:  The robust energy outlook is a plus for the state. Source: US Department of Commerce. Updated through 2011.

Commercial Banking

3

December 26, 2013

Bankruptcies RATIO OF BANKRUPTCY FILINGS TO THE 2007 Q4 NUMBER

WHAT THE CHART SHOWS:  The figure illustrates trends in bankruptcy

9

9

filings by businesses and persons relative to the number of filings in 2007 Q4, prior to the

8

8

Business bankruptcy filings Nonbusiness bankruptcy filings

7

7 All US bankruptcy filings (shaded area)

6

6

5

5

4

4

3

3

2

2

recession.  Bankruptcy filings are relatively low, a testimony to the absence of real estate excesses in the national housing debacle.

KEY MESSAGES:  Indicators of financial stress are a useful coincident indication of economic distress.  Local businesses seem unfazed by the problems others are dealing with.

1

1

0 1990

0 1992

1994

1996

1998

2000

Regional Perspectives: Wyoming Economic Outlook

2002

2004

2006

2008

2010

Source: Administrative Office of the U.S. Courts; Updated through September 2013.

2012

Commercial Banking

4

December 26, 2013

Oil & Gas Activity NUMBER OF DRILLING RIGS ON LAND, INLAND WATERS, AND OFFSHORE

WHAT THE CHART SHOWS:  The number of oil and gas rigs in operation

3,000

125

(Baker Hughes rig count), including activity on land, in inland waters, and offshore.

2,500

United States (left scale) Wyoming (right scale)

 Drilling activity is down from earlier years,

100

2,000

75 1,500

1,000

0 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Regional Perspectives: Wyoming Economic Outlook

KEY MESSAGES:  The absence of support from the energy sector is likely to be a headwind for

50

500

but remains strong.

Wyoming. Source: Baker Hughes rig count. Updated through 2013 Q3.

25

0

Commercial Banking

5

December 26, 2013

FRB KC Business Survey REAL GDP (% CHANGE 12 MONTHS EARLIER)

DIFFUSION INDEXES (0 = NO CHANGE)

WHAT THE CHART SHOWS:  The Kansas City Federal Reserve Bank

8

30 Forecast

6 4 2

Wyoming real GDP (left scale)

FRB-Kansas City's manufacturing survey (right scale)

-4

from last summer’s lull, and that is a positive omen for the economy’s future.

20

 The index readings represent the net

15

difference in the percent expecting

10

improving conditions and those expecting

5

worsening conditions.

0

0 -2

25

survey of local businesses has recovered

 The survey has softened recently.

-5

KEY MESSAGES:

-10

 The business outlook remains favorable in

-15

-20 -25

Wyoming. Sources: Federal Reserve Bank of Kansas City; US Department of Commerce. Updated through November 2013 (surveys) and 2013 Q3 (GDP).

-30

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Regional Perspectives: Wyoming Economic Outlook

Commercial Banking

6

December 26, 2013

Initial Jobless Claims RATIO OF INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE TO THE 2007 Q4 LEVEL

WHAT THE CHART SHOWS:  The figure tracks layoffs in Wyoming and the national level of claims.

3.25

3.25

3.00

3.00

tallies, are illustrated in the figure as a ratio

2.75

to the level of layoffs in the fourth quarter of

2.75

 Weekly layoffs, both the state and national

Wyoming US (solid area)

2.50

2.50

2.25

2.25

2.00

2.00

1.75

1.75

1.50

1.50

1.25

1.25

1.00

1.00

0.75 2007

2007, prior to the recession.  Layoffs are coming down, but remain elevated, perhaps reflecting crosscurrents in the coal and oil and gas industries.

KEY MESSAGES:  Layoffs, because they are reported so promptly, are a useful indicator of changing economic trends. Source: US Department of Labor. Updated through November 16, 2013 (state) and November 23, 2013 (US).

0.75 2008

2009

2010

Regional Perspectives: Wyoming Economic Outlook

2011

2012

2013

2014

Commercial Banking

7

December 26, 2013

Economic Growth REAL GDP GROWTH (PERCENT CHANGE FROM FOUR QUARTERS EARLIER)

WHAT THE CHART SHOWS:  Real GDP growth in Wyoming (the line in

10 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5

Wyoming US Forecast

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Regional Perspectives: Wyoming Economic Outlook

10 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5

the figure) is superimposed on top of US real GDP growth (bars in the figure).  Wyoming’s economy grew faster than the national economy for much of the last decade, supported by booming energy demand and a migration of real estate speculators from the West Coast.  Dislocations in the energy sector, as natural gas becomes a more competitive alternative to coal, may be holding the state’s growth back.

KEY MESSAGES:  Wyoming’s economy is forecast to speed up a bit in the coming year. Source: US Department of Commerce. Updated through 2012 (state) and 2013 Q3 (US). Quarterly estimates for states after 2012 are interpolated from employment figures, based on the historical correlation of state and national employment changes.

Commercial Banking

8

December 26, 2013

Economic Output REAL GDP LEVEL (RATIO TO 2000 Q4)

WHAT THE CHART SHOWS:  The figure illustrates the evolution of real

1.50

1.50

1.45

GDP of the state and the overall US economy since the fourth quarter of 2000,

1.45

the peak of the previous business cycle—

1.40

1.40

that is, at any point in time the lines trace the

1.35

1.35

ratio of real GDP to its level in 2000 Q4.

1.30

Forecast

Wyoming

 Wyoming has outperformed the national

1.30

economy since the mid-2000s, but now is

1.25

1.25

falling back in terms of growth.

1.20

1.20

1.15

1.15

1.10

1.10

1.05 1.00

1.05 US

0.95

1.00 0.95

KEY MESSAGES:  Wyoming’s economy is on a steady expansion path. Source: US Department of Commerce. Updated through 2012 (state) and 2013 Q3 (US). Quarterly estimates for states after 2012 are interpolated from employment figures, based on the historical correlation of state and national employment changes.

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

Regional Perspectives: Wyoming Economic Outlook

Commercial Banking

9

December 26, 2013

Employment Growth NONFARM PAYROLL EMPLOYMENT (PERCENT CHANGE FROM 12 MONTHS EARLIER)

WHAT THE CHART SHOWS:  Wyoming’s employment trend, compared

6

6 Wyoming US

5 4

5 Forecast

 Employment has stalled for now.

4

3

3

2

2

1

1

0

0

-1

-1

-2

-2

-3

-3

-4

-4

-5

-5

-6

-6

-7

with the nation’s.

KEY MESSAGES:  Wyoming’s job market is expected gradually to pick up speed in 2014 Source: US Department of Labor. Updated through October 2013.

-7

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Regional Perspectives: Wyoming Economic Outlook

Commercial Banking

10

December 26, 2013

Employment NONFARM PAYROLL EMPLOYMENT (RATIO TO THE 2000 Q4 LEVEL)

WHAT THE CHART SHOWS:  The figure illustrates the evolution of

1.30

1.30 Wyoming

1.25

Forecast

1.25

1.20

1.20

1.15

1.15

1.10

1.10

US

employment in the state compared with the nation since 2000 Q4, the peak of the previous business cycle. The lines trace out the ratio of employment at the time to employment in 2000 Q4.  Wyoming’s job market pulled away from the national economy in the last decade, but now has stabilized albeit at a higher relative elevation.

KEY MESSAGES:

1.05

1.05

1.00

1.00

0.95

0.95

 Although Wyoming is taking a couple steps back, compared with the national norms, the boom earlier in the decade has left employment still 20% above levels at the

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

beginning of the decade. Source: US Department of Labor. Updated through October 2013.

Regional Perspectives: Wyoming Economic Outlook

Commercial Banking

11

December 26, 2013

Intrastate Employment NONFARM PAYROLL EMPLOYMENT IN SELECTED COMMUNITIES (RATIO TO 2000 Q4 LEVEL)

WHAT THE CHART SHOWS:  Employment trends in selected areas.

1.30

 Lines are the cumulative percent change in

1.30 US forecast

1.25

employment since 2000 Q4, the peak of the previous business expansion.

1.25

 Communities not represented in the

1.20

1.20

US

illustration account for the recent strength in employment.

Forecast

1.15 1.10

1.15

Casper

 The growth isn’t concentrated only in

1.10 Cheyenne

1.05

1.05

1.00

1.00

0.95

0.95 200120022003200420052006200720082009201020112012201320142015

Regional Perspectives: Wyoming Economic Outlook

KEY MESSAGES:

Cheyenne. Source: US Department of Labor. Updated through April 2013.

Wyoming forecast

Wyoming

Commercial Banking

12

December 26, 2013

Unemployment UNEMPLOYMENT (PERCENT OF THE LABOR FORCE)

WHAT THE CHART SHOWS:  Wyoming’s unemployment rate, compared

12

12

with the national average.  Unemployment is falling back quickly and is

Forecast

10 8

Wyoming US (shaded)

10

under 5 percent.

KEY MESSAGES:

8

 The unemployment rate is the single best indicator of the relative economic

6

6

performance of a region.  Unemployment trends indicate the state’s economy is rebounding.

4

4 Source: US Department of Labor. Updated through October 2013.

2

2

0 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018

0

Regional Perspectives: Wyoming Economic Outlook

Commercial Banking

13

December 26, 2013

Relative House Prices RATIO OF THE STATE’S HOUSE PRICES TO THE NATIONAL AVERAGE (1995 Q2 = 1.0)

WHAT THE CHART SHOWS:  The figure tracks the relative price of houses

1.3

1.3

in the state versus the nation—that is, it reflects the ratio of the state price index to

1.2

1.2

the national house price index, with that ratio set to unity in the summer of 1995. A drop in the line means that house prices in the

1.1

1.1

state lag the national trend. States that did not suffer from speculative conditions saw a

1.0

1.0

decline in the relative price of houses in this last decade.  Wyoming’s real estate values followed other

0.9

0.9

0.8

0.8

0.7 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

0.7

markets up, but have not corrected much.

KEY MESSAGES:  Wyoming’s real estate markets are likely to stabilize as the economy recovers.

Regional Perspectives: Wyoming Economic Outlook

Source: FHFA. Updated through 2013 Q3.

Commercial Banking

14

December 26, 2013

Real Estate Markets HOUSE PRICES IN SELECTED COMMUNITIES (RATIO TO THE 1995 Q2 LEVEL)

WHAT THE CHART SHOWS:  The figure tracks the cumulative percentage

2.50

2.50

deviation in house prices since 1995 in selected local markets and compares those

2.25

2.25

2.00

2.00 US

1.75

Eau Claire

1.75

Cheyenne

1.50

Casper

1.50

with the national average.  Wyoming’s real estate values are beginning to stabilize.

KEY MESSAGE:  The hottest real estate markets in Wyoming have corrected the most, as in other states. Source: FHFA. Updated through 2013 Q3.

1.25

1.25

1.00

1.00

0.75

0.75 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Regional Perspectives: Wyoming Economic Outlook

Commercial Banking

15

December 26, 2013

New Home Building HOUSING STARTS (RATIO TO THE JULY 1990 LEVEL)

WHAT THE CHART SHOWS:  The pace of new home building (housing

10

10

9

9

8

8 US Wyoming

7

7

starts) in Wyoming, compared with the national building industry.  Housing activity is volatile, but appears to be rebounding quickly.

KEY MESSAGES:

6

6

 Wyoming’s housing market will be dictated

5

5

by the robustness of the state’s growth.

4

4 Forecast

3

3

2

2

1

1

0

Source: Census Department. Updated through August 2013.

0 2000

2003

2006

Regional Perspectives: Wyoming Economic Outlook

2009

2012

2015

Commercial Banking

16