Regional Outlook STEVEN G. COCHRANE, MANAGING DIRECTOR

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1 Regional Outlook STEVEN G. COCHRANE, MANAGING DIRECTOR

2 Differences Narrow; Southeast Vies for Lead Employment, % change yr ago Southwest East South Central South Atlantic Northeast West Midwest Sources: BLS, Moody s Analytics 2017 data through Feb 2

3 Broad Job Growth Total payroll employment, Feb 2017, 3-mo MA, % change yr ago U.S.=1.6 <0 0 to < to <3 3 to 6 Sources: BLS, Moody s Analytics

4 Still Only a Few Extremely Tight Labor Markets Unemployment rate, %, Feb 2017 U.S.=4.7 >5.8 Near avg 3.1 to 4.1 <3.1 Sources: BLS, Moody s Analytics

5 Payroll Employment Northeast MSAs 1-yr vs. 3-mo performance (3-mo. MA) Improving Annualized 3-mo % change Middle Atlantic New England South Atlantic United States Contracting -1 Note: Size reflects relative total employment Bridgeport Pittsburgh 1 Silver Spring Hartford Newark Albany Cambridge Nassau Baltimore % change yr ago Montgomery Boston Buffalo New Haven ProvidenceTrenton Camden New York Washington September March Philadelphia Expanding 0 Syracuse Rochester Manchester Allentown Slipping 5

6 Payroll Employment Midwest MSAs 1-yr vs. 3-mo performance (3-mo. MA) Improving Annualized 3-mo % change West North Central East North Central United States Contracting Peoria Note: Size reflects relative total employment Elgin Cleveland Akron Wichita % change yr ago Kansas City Fort Wayne Minneapolis Dayton Lake County Fargo Chicago September March Expanding Toledo Madison Detroit Warren Cincinnati Omaha Grand Rapids 0 Milwaukee Gary St. Louis Indianapolis Ann Arbor Des Moines Columbus Lansing Slipping 6

7 Payroll Employment South MSAs 1-yr vs. 3-mo performance (3-mo. MA) Improving Annualized 3-mo % change South Atlantic East South Central West South Central United States Contracting New Orleans -2 Note: Size reflects relative total employment % change yr ago Miami San Antonio Fort Lauderdale Memphis Fort Worth September March Atlanta Nashville Dallas Expanding Orlando Charlotte Austin Raleigh Tampa Houston Oklahoma City Greensboro Birmingham Richmond Little Rock Virginia Beach Greenville Louisville West Palm Beach Jacksonville Slipping 7

8 Payroll Employment West MSAs 1-yr vs. 3-mo performance (3-mo. MA) Improving Annualized 3-mo % change Pacific Mountain United States Contracting -2 Note: Size reflects relative total employment Honolulu Albuquerque Boulder Colorado Springs Oxnard San Diego Anaheim Spokane San Jose Portland Denver Los Angeles % change yr ago Phoenix Oakland Las Vegas Seattle September March Sacramento Provo San Francisco Riverside Salt Lake City Fresno Boise City Expanding Slipping 8

9 Little Labor Force Growth in Northeast Labor force, % change, 2008Q4 to 2016Q4 U.S.=3.1 Decline 0 to to 7 >7 Sources: BLS, Moody s Analytics

10 Held Back by State-to-State Migration Net domestic migration, 2016, rate per 1,000 population 3 to 12 Near zero -3 to -10 Sources: Census Bureau, Moody s Analytics 10

11 And Dependence on Immigration Net international migration, 2016, rate per 1,000 population 3.3 to 6.1 Near avg 0.5 to 1.7 U.S.=3.1 Sources: Census Bureau, Moody s Analytics 11

12 Supported Partly by H-1B Visas H-1B visa applications, by location of work, % of total jobs, 2016 Sources: ACS, Moody s Analytics U.S.=3.9 < to to 7.7 >7.8 12

13 Most Larger Metro Areas Attract More Labor Labor force, % change, 2008Q4 to 2016Q4 Decline 0 to to 7 >7 Sources: BLS, Moody s Analytics U.S.=3.1

14 Wage Composition Still Uneven Employment growth by wage cohort, % change yr ago, Feb Low Mid High Northeast Midwest South West Sources: BLS, BEA, Moody s Analytics 14

15 Broad-Based Job Growth Missing in Northeast Diffusion index, employment by 3-digit NAICS code, Feb mo MA >58.4 Near metro avg <47.7 Sources: BLS, Moody s Analytics U.S.=62 Avg of metro areas=

16 Strong Wage Income Growth in the West Wage and salary income, % change yr ago 10 Northeast Midwest South West PCE deflator Sources: BEA, Moody s Analytics 16

17 Homebuilding Finally Responds in the West Residential construction starts, Jan 2011=100, 3-mo MA, SAAR Northeast Midwest South West Sources: Census Bureau, Moody s Analytics 17

18 Vacant Stock on Market Is at Cyclical Low Vacant homes for sale or rent, % of housing stock, 4-qtr MA Midwest South U.S. West Northeast Sources: Census Bureau, Moody s Analytics 18

19 West and Texas Begin to Overheat FHFA all-transactions index, % above equilibrium trend, 2016Q4 Sources: FHFA, BEA, Census Bureau, Moody s Analytics U.S.=0.4 < to <0 0 to 9.99 >10 19

20 Florida and the Coasts Have Larger Rent Burdens Gross median rent, % of median household income, 2015 Sources: Census Bureau, Moody s Analytics U.S.= to to to to

21 Exports Are Improving Again Merchandise exports, nominal value, Jan 2009= Northeast Midwest South West Sources: Census Bureau, Moody s Analytics 21

22 But Might Be Overstated by Surveys Composite manufacturing index, harmonized PHL NEY RIC KAN DAL Sources: Federal Reserve, Moody s Analytics 22

23 Manufacturing Jobs Return: Energy and Tech Manufacturing employment, Jan 2014= Great Lakes Southeast Mountain Plains Northeast Pacific Southwest Sources: BLS, Moody s Analytics 23

24 Midwest Is Most Export-Intensive Region Total exports, goods and commodities, % of GMP, 2015 < to 14 >14 Sources: BEA, Census Bureau, ITA, Moody s Analytics 24

25 Balance of Trade Favors Ag Commodity Areas Net merchandise exports, % share of GSP 2015 U.S.=-3.9 >0.2 Near avg <-5.1 Sources: BEA, Census Bureau, Moody s Analytics 25

26 Entrepreneurship Creates Jobs in West, Northeast Jobs created by new firms, % of total employment, avg Sources: BLS, Moody s Analytics <1.49 Near avg >1.81 U.S.=

27 Northeast: Modest Outlook Employment, % change yr ago Philadelphia Montgomery PA Cambridge MA Boston New York Long Island NY U.S. Washington Providence RI Baltimore Pittsburgh Newark NJ 2016Q4 2017Q4 Sources: BLS, Moody s Analytics

28 Midwest: Mostly Stable Employment, % change yr ago Columbus OH Indianapolis Kansas City MO Warren MI Cincinnati Detroit Minneapolis U.S. St. Louis Chicago Cleveland Milwaukee Lake County IL 2016Q4 2017Q4 Sources: BLS, Moody s Analytics

29 South: Energy Regions Pick Up Employment, % change yr ago Dallas Austin TX Orlando FL Atlanta Charlotte NC Tampa FL Ft. Lauderdale San Antonio TX Miami Ft. Worth TX U.S. Birmingham AL Houston Virginia Beach VA 2016Q4 2017Q4 Sources: BLS, Moody s Analytics

30 West: Constrained by Labor Markets Employment, % change yr ago Seattle San Francisco Las Vegas Oakland CA Riverside CA Phoenix Sacramento CA San Jose CA Portland OR Denver San Diego Los Angeles U.S. Santa Ana CA Sources: BLS, Moody s Analytics 2016Q4 2017Q

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31 United States 121 North Walnut Street Suite 500 West Chester PA Australia Level 10 1 O'Connell Street Sydney, NSW, 2000 Australia United Kingdom One Canada Square Canary Wharf London E14 5FA Prague Washingtonova Prague 1 Czech Republic

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Location, Location, Location. 19 th Annual NIC Conference NIC MAP Data & Analysis Service

Location, Location, Location. 19 th Annual NIC Conference NIC MAP Data & Analysis Service Location, Location, Location 19 th Annual NIC Conference NIC MAP Data & Analysis Service The Great Occupancy Decline 94% Occupancy Trends Majority Nursing Seniors Housing 93% 92% 91% 92.8% 91.0% 90% 89%