Economic Indicators:

An Update for the 7 Rivers Region

Poll: What is the biggest immediate threat to ...

Economic Indicators:

An Update for the 7 Rivers Region

I’ve been sent by the Obama campaign to tell

you that you are better off now than you were

4 years ago.

I’ve been sent by the Romney campaign to tell

you that you are worse off now than you were

4 years ago.

Non-Standard Disclaimer:

-8%

-6%

-4%

-2%

0%

2%

2008Q1 2010Q1 2012Q1

Change in GDP since Q1 2008US

-8%

-6%

-4%

-2%

0%

2%

2008Q1 2010Q1 2012Q1

Change in GDP since Q1 2008US

France

Germany

Spain

Italy

Euro Crisis

0

4

8

12

16

1/1/1990 1/1/1994 1/1/1998 1/1/2002 1/1/2006 1/1/2010

Interest Rates on Gov’t Bonds

Spain

Italy

Germany

France

Euro Crisis

$0.50 $1.00 $1.50 $2.00 $2.50

New MexicoMississippi

AlaskaLouisiana

West VirginiaNorth Dakota

AlabamaSouth Dakota

KentuckyVirginia

MontanaHawaiiMaine

ArkansasOklahoma

South CarolinaMissouri

MarylandTennessee

IdahoArizonaKansas

WyomingIowa

NebraskaVermont

North CarolinaPennsylvania

UtahIndiana

OhioGeorgia

Rhode IslandFloridaTexas

OregonMichigan

WashingtonWisconsin

MassachusettsColoradoNew YorkCaliforniaDelaware

IllinoisMinnesota

New HampshireConnecticut

NevadaNew Jersey

Federal Spending in State per Dollar of

Federal Taxes Collected from State

Euro Crisis

The Fiscal Cliff

Table 1. Tax Relief from a One-Year Extension of Bush Tax Cuts and

AMT Patch

Extension with

AMT Patch

Extension without

AMT Patch

As a Share

of Income

Per Tax

Return

As a Share

of Income

Per Tax

Return

Iowa 3.65% $1,882 2.27% $1,167

Minnesota 4.76% $2,833 2.48% $1,474

Wisconsin 4.19% $2,196 2.33% $1,224

$5

$8

$10

$13

$15

$18

$20

$23

Tri

llio

ns

Source: U.S. Congress: Congressional Budget Office/U.S. Department of Commerce: Bureau of Economic Analysis/FRED

GDP versus Potential

0

5

10

15

20

25

30

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

Millio

ns

Unemployed and Underemployed

Unemployed

Involuntary

Marginally

70

75

80

85

90

95

100

105

110

115

120

Jan-08 Sep-08 May-09 Jan-10 Sep-10 May-11 Jan-12

Employment Growth By Sector

Healthcare

Construction

Manufacturing

Federal

Finance

State/local

1990 recession

2001 recession

2007 recession

1981 recession

97%

100%

103%

106%

-18 -14 -10 -6 -2 2 6 10 14 18 22 26 30 34

Sh

are

of

tota

l jo

bs,

sta

rt o

f re

co

very

= 1

00%

Length of recession (months) Months since recession's end

Total job change for public-sector

workers since the start of recoveries

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

1/3/2007 1/3/2008 1/3/2009 1/3/2010 1/3/2011 1/3/2012

Tri

llio

ns

Federal Reserve Balance Sheet

Mortgage

Backed

Securities

Long Term

Treasuries

Traditional

Securities

Lending

$5

$8

$10

$13

$15

$18

$20

$23

Tri

llio

ns

Source: U.S. Congress: Congressional Budget Office/U.S. Department of Commerce: Bureau of Economic Analysis/FRED

GDP versus Potential

Drought 2012

Access to Capital

Poll: What is the largest source of business i...

80% Internally

Financed

0 10 20 30 40 50

Bank Loans

Bonds

Non-Bank Loans

Stocks

US Sources of External Finance 2000

0 25 50 75 100

Bonds

Bank Loans

Non-Bank Loans

Stocks

Sources of External Finance 2004

US

Germany

Japan

Eight Basic Facts

1. Stocks are not the most important sources of external financing for businesses

2. Issuing marketable debt and equity securities is not the primary way in which businesses finance their operations

3. Indirect finance is many times more important than direct finance

4. Financial intermediaries are the most important source of external funds

Eight Basic Facts (cont’d)

5. The financial system is among the most heavily regulated sectors of the economy

6. Only large, well-established corporations have easy access to securities markets to finance their activities

7. Collateral is a prevalent feature of debt contracts

8. Debt contracts are extremely complicated legal documents that place substantial restrictive covenants on borrowers

Not everything should be

funded

Some ideas are

Bad.

Market Failure?

Informational Asymmetries?

Non competitive market?

Principal-Agent Problems?

Externalities?

Public Goods?

Expanding Access to Capital

Akin to Expanding Home Ownership

Marginal Investments

Informational Asymmetries

Video

http://www.kickstarter.com/projects/97103764/capture-camera-clip-system?ref=live

Launched Projects: 27,086

Successful Projects: 11,836

Dollars Pledged: $99,344,382

Rewards Selected:

1,150,461

Total Visitors:

30,590,342

Project Success Rate: 46%

$0 $10,000 $20,000 $30,000 $40,000

Fashion

Art

Games

Theater

Technology

Publishing

Comics

Music

Photography

Food

Film&Video

Dance

Design

Funding Per Project

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Film&Video

Music

Design

Art

Publishing

Technology

Theater

Games

Food

Photography

Comics

Fashion

Dance 100 Million in funding by Category

0 10 20 30 40 50

Our Accountant

Our Bank

Small Business Development Center

Chamber of Commerce

County Economic Development Staff

Other

Turn to for financial advice...

1 2 3 4 5

availability in the region of capital from banks

availability in the region of angel investors

The financial programs/incentives offered by local or county

government

The financial programs/incentives offered by your state government

1 - Poor to 5 - Excellent for your Business

Panelists

GREG FLOGSTAD

Mississippi River Regional Planning Commission

(MRRPC)

COLIN FLEMING

State Bank Financial

STEVE TIPPINS

UW-L Department of Finance

Question:

Please share some of the challenges and

successes you and your organizations

have faced assisting people trying to

access capital.

Question:

When unable to access

capital, which factor is typically cited as

limiting a business from accessing

capital?

Questions

What is the most important action we could

take in the region in the next six months

that would have the greatest impact on

improving access to capital in the region?

Questions

What role – if any – can the government

play in increasing access to capital?

Poll: What can we do in the 7 Rivers Region to...

Thanks.