Finance Committee Agenda and Packet 2020 07 21

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City Council Finance Committee Meeting Minutes 06/23/20 Page 2 of 9 None. PRESENTATION FROM CHANDLER ASSET MANAGEMENT Mr. Scott Prickett and Ms. Julie Hughes from Chandler Asset Management, the City's Investment Advisor, presented to the Finance Committee an update on various economic indicators and on the performance of the City's investment portfolio. The key economic information provided by Ms. Hughes included: • The unprecedented action of the Feds to prop up the economy early on in the pandemic ($2.7 Trillion between the CARES Act and other fiscal stimulus) • Federal Open Market Committee (FOMC) set target rate at 0%-0.25% which is expected to hold for some time through the recovery period • The May employment report was better than expected, but unemployment remains at a historically high level • 2-year declined four basis points to 0.16%, and 10-year Treasury yields declined one basis point to 0.65%; ongoing global demand for safe -haven assets has helped keep a lid on Treasury rates • The Consumer Price Index (CPI) increased 1.4% year -over -year in April • Consumer pricing data indicate the initial effect of the pandemic has been deflationary • Retail sales fell 21.6% in April on a year -over -year basis while e-commerce sales in April increased 8.4%. May retail sales increased 17% reflecting business reopening. • Consumer Confidence Index (CPI) improved in May to 86.6 from 85.7 in April • Housing remains strong while Manufacturing shows a strong contraction • The Leading Economic Indicators (LEI) fell 4.4% in April following a 7.4% drop in March. The LEI suggest a deep contraction for the US economy, and does not imply a quick rebound • The Gross Domestic Product (GDP) declined 5% in the first quarter, and a further, more severe second quarter decline is anticipated Finance Committee Chairperson Maloney stated that the City has been considering several curve models for its revenue recovery projections, and asked Ms. Hughes her opinion on the best curve model to use through the pandemic and recovery. Ms. Hughes stated she would see a "U" curve with a prolonged, elongated bottom. Ms. Hughes stated with the ongoing health effects and resurgences of COVID-19, they anticipate it will probably take about two years to get back to the revenue levels prior to the pandemic. El