Western Blue Chip Current Update

July 3, 2019

The states included in the Western Blue Chip Economic Forecast are Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming.

 

SPOTLIGHT ON TEXAS

The Texas economy continues to expand impressively and to score at or near the top of numerous national rankings that reflect economic growth.  West Texas and the suburban regions in the major metro areas see the dominant increases, although growth is widespread (every metro area in the state saw a reduction in its unemployment rate over the past 12 months, while the state saw an all-time low).  The tariff issues have begun to plague Texas business (Texas is by far the largest state in terms of exports and trade volume) and are slowing growth modestly.  Recent legislations will also hamstring the ability of local areas to meet pressing needs brought on by growth.  Labor conditions are tight and likely to remain so for the foreseeable future.  Nonetheless, the overall strength of the economy remains solid, bolstered by a vibrant energy sector, an expanding technology presence, and a healthy and growing services sector.

Dr. Ray Perryman, President and CEO of The Perryman Group

 

PERSONAL INCOME GROWTH EXCEEDED EXPECTATIONS IN WESTERN STATES IN 2018

The Western region accounted for nine of the top ten states with the fastest growth rates for personal income in 2018, according to figures released recently by the U.S. Bureau of Economic Analysis.  Washington led all states with an increase of 6.8 percent, followed by Utah, Colorado, Nevada and Arizona among the top five.  Other Western states in the top ten included Idaho, Texas, Montana and Oregon. Florida, ranked in ninth position, was the only non-Western state among the top ten fastest growing.  At the national level, personal income increased by 4.5 percent.  New Mexico was the only state in the West with personal income growth below the national average.

 

Personal Income Growth and Forecasts for the Western States

(Annual Percent Change: 2018)

Actual Rank Forecast* Deviation
Washington 6.8% 1 5.0% 1.8%
Utah 6.3% 2 5.1% 1.2%
Colorado 5.7% 3 5.1% 0.6%
Nevada 5.7% 4 4.5% 1.2%
Arizona 5.5% 5 4.8% 0.7%
Idaho 5.4% 6 4.3% 1.1%
Texas 5.3% 7 5.6% -0.3%
Montana 5.0% 9 3.6% 1.4%
Oregon 4.9% 10 4.4% 0.5%
California 4.7% 13 4.9% -0.2%
Wyoming 4.5% 19 2.5% 2.0%
New Mexico 3.9% 33 2.9% 1.0%

Source: U.S. Bureau of Economic Analysis, June 25, 2019

Forecast* published January 2018

 

Personal income growth exceeded forecaster expectations in all but two states, Texas and California.  Among professional forecasters, the forecast “error” or deviation is by statistical convention expressed as the actual value minus the forecast value, so positive deviations result from forecasts values smaller than actual values.  For economic variables such as personal income, positive forecast deviations represent (somewhat counter intuitively) the degree of under estimation of the actual value.  Actual personal income growth was expected to be quite strong in Washington, for example, but growth exceeded the forecast by 1.8 percentage points.  The biggest surprise was registered by Wyoming, where forecasters under estimated growth by 2.0 percentage points.

To be fair, it should be noted that the 2018 forecasts shown in the table were recorded in the January 2018 posting of the Western Blue Chip Economic Forecast, when analysts did not have access even to complete 2017 personal income data.  Nevertheless,  the mean absolute deviation over the forecasts from the 12 Western states was a mere one percentage point, certainly useful for corporate and government planners needing an advance reading on economic performance in the New Year 2018.