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U.S. and Colorado Unemployment Rates Continue to Decline

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Nationally, the unemployment rate has dropped below 6.0%, to 5.9% and the number of unemployed is now below 9.3 million. While this decline is a positive sign, the number of unemployed remains about 2.5 million above the low point in the second half of 2006.

The BLS tracks the unemployment rate in 22 occupations. Ten of those occupations have unemployment rates below the natural rate of unemployment (5.0%).

Most likely there is upward pressure on wages in these occupations at a national level, as well as in Colorado.

Occupation Unemployment Rate
Legal occupations 2.2%
Management occupations 2.3%
Architecture and engineering occupations 2.4%
Healthcare practitioner and technical occupations 2.4%
Business and financial operations occupations 2.7%
Computer and mathematical occupations 2.8%
Life, physical, and social science occupations 2.8%
Community and social service occupations 3.3%
Education, training, and library occupations, 3.3%
Installation, maintenance, and repair occupations 3.4%
Healthcare support occupations 4.9%

Of the above occupations, the ones most critical to Colorado are:
• Architecture and engineering occupations
• Healthcare practitioner and technical occupations
• Computer and mathematical occupations
• Healthcare support occupations

Although the U.S. unemployment rate is approaching the natural rate of unemployment (5.0%), there is limited upward pressure on wages across the nation. This is reflected in the National Association of Business Economists October Survey, which indicated that in Q3 2014, 24% of the respondent firms raised their wages and salaries, about half the percentage that raised their wages in Q2. If there was a potential for upwards wage pressures earlier in the year, those pressures have eased significantly.

The Colorado unemployment rate, 4.7%, and the number of unemployed, 131,348, continues to decline.

Even though the unemployment rate is near the natural rate of unemployment there appears to be minimal upward pressure on wages, except in a few categories of occupations such as specialized high -tech jobs, computer related occupations, and healthcare. In addition, wage pressures may be felt in geographic areas, such as Weld County, where the extractive industries are booming.

In 2009 the average annual wages for all occupations in Colorado, as measure by the QCEW data, was $46,861. By 2013, average annual wages had increased to $50,873, an annualized rate of growth of 2.1%.

Unfortunately, during that same period, the Consumer Price Index for the Denver-Boulder-Greeley area increased at an annualized rate of 2.6%. In other words pay increases did not keep up with increases in the cost of living. This year inflation is projected to increase at a higher rate than the gain in total wages.

On average, Colorado employment is 65,200 greater for the first 9 months of 2014 than the same period in 2013. That total will likely be revised upwards when the BLS benchmarks the CES data series in March 2015.

Looking ahead for the remainder of the year, the tourism; construction; health care; and professional, scientific, and technical services sectors will continue to be the primary sources of growth. Although, the extractive industries are small they are the source of greater indirect job growth and significant output growth.

How Would You Rate the Integrity of Data Produced by Federal Agencies?

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What do you think about the integrity of data produced by the Federal agencies? Do you trust it? Do you feel comfortable making decisions with it?

Recently, the New York Post reported the following:

“A field supervisor in the Census Bureau’s Denver region has informed her organization’s higher-ups, the head of the Commerce Department and congressional investigators that she believes economic data collected by her office is being falsified.

And this whistleblower — who asked that I not identify her — said her bosses in Denver ignored her warnings even after she provided details of wrongdoing by three different survey takers.
The three continued to collect data even after she reported them.

When I spoke with this whistleblower earlier this year as part of my investigation of Census, she told me that hundreds of interviews that go into the Labor Department’s unemployment rate and inflation surveys would miraculously be completed just hours before deadline.
The implication was that someone with the ability to fill in the blanks on incomplete surveys was doing just that.

The Denver whistleblower also provided to the House Committee on Oversight and Government Reform the names of other Census workers who can spill the beans about data fraud in other regions.”integrity of data?

There are often innuendos that the data produced by the federal agencies lacks integrity. Several years ago Jack Welch claimed that labor data was falsified to help the Democratic campaign. While Welch had reason to be concerned about the data, his allegations were not addressed.

In Colorado there have been claims that elected officials have tried to get state agencies to falsify data and that in some cases they were successful. While the inferences came from credible sources, the innuendos were never addressed, hence they were never verified.

Colorado’s state agency that works with the Census department is the State Demographers Office (They are not the regional Census office) They have a positive reputation for making sure Colorado is fairly and accurately represented in the various surveys.

Generally speaking, state and federal agencies go to great lengths to hire people with integrity. At the same time, the temporary Census workers have thankless jobs.

State and federal agencies are no different than other organizations. Despite their aspirations to hire only quality employees, they sometimes employ workers who do not do the right things.

In defense of the federal agencies, over the past ten years they have been asked to provide more detailed data on a more timely basis with smaller or restricted budgets. As a result they sometimes produce preliminary data that does not always make sense. Such discrepancies are not an issue of integrity, but rather flawed methodology. Usually when the agencies revise their data, it aligns with what is happening on the street.

Despite the limitations of our state and federal data, we are fortunate to have so many data series to work with. Many countries have do not produce statistics or they have limited data to make decisions on.

It is great the whistleblower is being heard. If the innuendos are true, hopefully they will be addressed. The most damning part of this situation is that it destroys the integrity of the federal agencies that produce the data. Even worse, it is disturbing to think that public and private entities used data to make critical decisions and prepare budgets and policies that was intentionally and knowingly flawed.  The integrity of the data we use on a regular basis is important!

Holiday Retail Sales will be Strong – Grinch to Visit Elsewhere

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noGrinchnoThe outlook for holiday retail sales is upbeat. It is doubtful the Grinch will be visiting Colorado this Christmas season. Most likely he will be in parts of Europe, Japan, and Mexico where the economy is not as strong.

The National Retail Federation expects holiday sales to increase by 4.1% this November and December compared to a 3.1% increase last year. Over the past 10 years, average holiday growth has been about 2.9%. In other words, lower unemployment rates and an improved economy means retail trade sales this holiday season will be above average.

Sales in November and December (excluding autos, gasoline, and restaurant sales) represent about 19.2% of the annual total. Nationally, up to 800,000 workers will be hired on a seasonal basis for November and December.  Online sales will increase by 8% to 11%.

The optimistic expectations for national retail sales bode well for Colorado. The Colorado Legislative Council and the Office of State Planning and Budgeting expect Colorado’s 2014 annual retail sales to be 6.0% greater than last year. Given the strength of the state economy, holiday sales should easily exceed the national projected growth rate of 4.1% and may exceed the 6.0% projection for the year.

Colorado average retail trade employment in November and December is about 10,000 workers greater than the average for the other 10 months of the year. A similar increase in retail employment should be expected in 2014.

Over the past decade consumers have become accustomed to deep discounting during the holiday season. Despite an outlook for a brisk holiday season, there will likely be a sufficient number of markdowns and bargain basement deals. As the t-shirts on consumers in the local mall say, “Stay Calm and Shop On” or is it “Stay Calm and Shop Online.”

Happy shopping!

BLS August Jobs Numbers Revised Upward

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Last month the Bureau of Labor Statistics delivered a Labor Day surprise when its monthly employment situation press release stated the U.S. had only added 142,000 jobs in August. This month the BLS reversed their bombshell announcement; they revised the August jobs numbers from +142,000 to +180,000 and July was revised from +212,000 to +243,000. In other words, their previous estimates for these two months missed their mark by 69,000.

Total nonfarm payroll employment increased by 248,000 in September. For the month job growth was led by professional and business services, retail trade, and health care.

These increases in wage and salary employment were accompanied by a decline in unemployment to 5.9%. The number of unemployed persons decreased to 9.3 million (That is still a lot of people). Compared to a year ago, the unemployment rate and the number of unemployed persons were down by 1.3 percentage points and 1.9 million, respectively.

In addition, the number of long-term unemployed (LTE) was remained at 3,000,000 people. The LTE are those jobless for 27 weeks or more and they account for 31.9% of the unemployed.

The outlook remains positive for the U.S. and Colorado through the end of the year.

August Jobs numbers

Utah Job Growth Outpacing Colorado

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Colorado’s wage and salary employment is about twice the size of Utah’s wage and salary employment. In some state rankings, it has been reported that Utah is adding workers at a faster rate than Colorado.

Since 1990, Utah wage and salary employment has grown at a faster rate than Colorado, although the two states grew at a similar rate during the 1990s.

A review of the following six industries shows that Utah has increased at a faster relative rate than Colorado between 1990 and 2013:
• Construction
• Manufacturing
• Tourism
• Information
• Professional and Business Services
• Financial Activities

The following factors contribute to Utah’s faster rate of growth:
• Utah was showcased around the world for the 2002 Olympics.
• Utah has many of the same assets that Colorado has – quality of life, scenery, tourism, solid higher education.
• Because its rate of growth is calculated off a smaller base, Utah is likely to have a higher rate of growth. That statement is not intended to detract from Utah’s appeal as a place to live, work, and play.

It is common to rank and compare the performance of states. The most important take-away from this comparison is the fact that Colorado and Utah are both popular strong performing states.

Colorado vs. Utah Job Growth

 

 

Colorado Lost 700 Jobs – Don’t Believe It

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Earlier this morning, the Colorado Department of Labor and Employment issued a press release stating that Colorado lost 700 jobs in August compared to the previous month. The data series was adjusted.

The data does not reflect what is happening on the street. It fails to echo the confidence that consumers have in the national and state economy.

• The ISM indices for manufacturing and the services sector are positive.
• While some of the construction data is flat or down, NAHB data is up, suggesting better data in the months ahead.
• On 9/26, the Q2 GDP will be revised. The third estimate is expected to be revised upwards to 4.8ish.

Locally, there is even stronger reason to be optimistic.

• The state made it through the summer without any major fires, floods, or other natural disasters (knock on wood).
• The number of business establishments continues to increase. The leaders in relative growth are Broomfield, Denver, Douglas, and Boulder.
• Universities and K-12 are better funded than a year ago.
• Retail sales tax collections up, as evidenced by increased budgets for the state and many municipalities.
• The State General Fund has collected more revenue, a reflection of improved business and personal income taxes.
• The Colorado Tourism Office has reported a record level of tourism visitation and spending for the summer months.
• Developers are optimistic – believably optimistic.

From a methodological perspective, there are multiple reasons why the data will likely be revised upwards next month and later in March 2015. While it is possible the data turned down slightly in August, it is difficult to believe there were seasonally adjusted job losses in August.

Colorado Loses 700 Jobs

 

U.S. and Colorado Economy Remain Solid

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National Economy
The U.S. economy remains strong, with solid employment and output growth.

• Nationally, employment remains strong, despite slower than expected job growth in August. The non-seasonally adjusted data shows that an average of 215,000 jobs has been added each month through eight months. This means the U.S. will add about 2.5 million jobs this year.
• Output remains solid. The first Q2 estimate showed real GDP growth of 4.0%. That was revised upwards to 4.2%. It is possible the third estimate, due later this month, could be revised even higher to 5.0%.
• At the most recent FOMC meeting the Federal Reserve provided no surprises. Their stance on the economy indicates:
o The rate of inflation remains below target.
o Quantitative easing will come to an end.
o There is slack in the labor market.
o Interest rates will remain low in the near term; however, once rate increases begin they will accelerate faster than previously anticipated. It is likely rates will begin increasing in mid-2015.
• The outlook for construction is positive.  Single family building permits have been flat; however the NAHB index shows that homebuilder sentiment is much stronger than the permits data. This suggests greater activity, and stronger data, will occur in the future.
• The unemployment rate, number of unemployed, and the number of Americans filing new claims for unemployment benefits continue on a downward trend. The economy should remain healthy as long as fewer people are unemployed and an increasing number of Americans are working.

Colorado Economy

The performance of the Colorado economy is closely tied to changes in U.S. job and output growth. Since the end of the recession Colorado job growth has outperformed the U.S. because of its mix of industries. The state is on track to add jobs at an accelerated rate for the fourth consecutive year.  Job growth this year will be about 3.0%.

• The extractive industries have been a major direct and indirect contributor to the job growth. As well, the extractive industries were responsible for about one-third of the state’s GDP growth in 2013. The extractive industries are important to the economies of about half the counties in the state. From a jobs perspective, the sector is small, but the number of workers will increase by at least 9% this year compared to 2013.
• So far this year, between 10% and 12% of the jobs added in Colorado are construction jobs. The number of jobs will increase by at least 6.5% compared to the same period last year. Growth in the sector might be constrained by a lack of trained workers in specialized construction occupations such as plumbers, HVAC workers, and electricians. The home and infrastructure subsectors also include distinct specialized occupations.
• Tourism has enjoyed a banner year in Colorado. It began with good snow and a strong ski season. The good snow season also meant plenty of water for mountain rafting and summer tourism activities. Special events, such as the USA Pro Challenge, and the lack of fires and flooding provided the foundation for a strong summer season. Leisure and hospitality job growth is poised to be at least 4.6% greater in 2014 than last year. The sector will be responsible for adding about 19% of the jobs in the state this year.  The sector plays a significant part of the economy in all 64 counties.
• The healthcare sector will add more than 10,000 workers in 2014 and expand at a rate of more than 4.3%. The sector continues to face challenges finding workers in many occupations and in rural areas.
• The growth of the professional, scientific, and technical sector is important to the state because a portion of these companies are directly or indirectly a part of the state’s advanced technology sector. The lifestyle of Downtown Denver and Colorado is attracting millennials to jobs in these sectors. The growth of in the sector will be at a rate of about 4.5% in 2014. It is important to note that many of these occupations pay higher than average wages and the sector is adding jobs at an increasing rate.

 

2014 U.S. Employment Situation Remains Solid

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The BLS presented the country with a lackluster Labor Day gift with their employment situation announcemnt that total nonfarm payroll employment increased by only 142,000 workers in August. This was the first time since January that the month-over-the-prior-month change was below 200,000.

The sectors adding the greatest number of jobs were:

  • Professional and business services.
  • Health care.
  • Construction
  • Leisure and Hospitality (tourism).

Through eight months, average monthly job growth is 215,400 workers. If this trend continues, the economy is on tap to add more than 2.5 million jobs in 2014.

The August unemployment rate fell to 6.1%, down from 7.2% a year ago. Sadly, the number of unemployed has only declined to about 9.6 million.

Most economists believe the economy remains solid and that there will be positive job growth for the remainder of the year.

Employment situation

Colorado Job Growth Outpaces the U.S.

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Colorado is outpacing the U.S. in the rate of job growth. The mix of jobs added by the top sectors is different for Colorado than the U.S. In addition, many of the jobs being added in the state pay lower than average wages.

Through seven months, the sectors that contributed the greatest number of jobs (top five) account for 70.4% of jobs created in Colorado.

  • Accommodations and Food Services 19.8%
  • Health Care 15.9%
  • Professional, Scientific, and Technical Services 12.0%
  • Construction 11.9%
  • Retail Trade 10.8%.

Through seven months, these same five sectors contributed only 56.4% of the jobs created in the U.S.

  • Accommodations and Food Services 14.1%
  • Health Care 12.6%
  • Professional, Scientific, and Technical Services 9.1%
  • Construction 7.7%
  • Retail Trade 12.8%.

Colorado’s rate of growth for these sectors during the first seven months is faster than the U.S.

  • Accommodations and Food Services, 5.5% vs. 2.8%.
  • Health Care, 4.3% vs. 1.7%.
  • Professional, Scientific, and Technical Services, 4.3% vs. 2.7%.
  • Construction 6.5% vs. 3.2%.
  • Retail Trade 3.0% vs. 2.0%.

For the first seven months, the cumulative total of the Colorado sectors where primary jobs were categorized (manufacturing, information, PST) expanded at a faster rate than the U.S, 2.7% vs. 1.3%.

The following are the average annual private sector wages for the sectors that are adding the most jobs.

  • Accommodations and Food Services $18,808.
  • Health Care, $45,905.
  • Professional, Scientific, and Technical Services, $84,842.
  • Construction, $51,064.
  • Retail Trade $28,159.

Many of the jobs being added in Colorado are low paying jobs.

It is great that the Colorado economy is adding jobs. Time will tell whether the mix of jobs being added will be to Colorado’s benefit or detriment.

Colorado Adds High Number of Low-Wage Jobs

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Is Colorado adding too many low-wage jobs?

When analyzing the job changes in an economy there are several points that are understood. For example:

  • Jobs are often added unevenly. For instance, during expansionary periods construction jobs will usually be added at a faster pace than other jobs.
  • All jobs are important to the economy for different reasons. Some jobs provide basic services while others generate tax revenue.
  • Some jobs have higher than average wages while others have lower than average wages. There is often greater consumption when workers are paid higher wages.

For the past seven months the following five sectors account for about 45% of total jobs in the state, yet they are responsible for almost 75% of the jobs added this year.

  • Accommodations and Food Services
  • Health Care
  • Construction
  • Professional and Scientific Services
  • Retail Trade.

The following information includes the top sectors, the average annual private sector wages for the sectors, and the reasons those sectors are important. The average private sector wages $50,768.

  • Accommodations and Food Services, $18,808. About 10% of all jobs are in the Accommodations and Food Services sector. AFS has accounted for about 20% of the jobs added this year. As a major component of the tourism sector, AFS is an important part of the economy in all 64 counties.
  • Health Care, $45,905. Just under 11% of the state’s s jobs are in the Health Care sector. This category has accounted for about 15% of total jobs added this year. The Health Care sector affects our quality of life and plays a key role in the economy in all 64 counties.
  • Construction, $51,064. The Construction industry is small by comparison, with about 5.0% of total state jobs. Approximately 12% of the job growth is in this category. A segment of the Construction jobs are tied to the growth of the extractive industries.
  • Professional, Scientific, and Technical Services, 84,842. A portion of the Professional, Scientific, and Technical jobs are a key part of the state’s advance technology industries. They account for about 8% of the jobs and 11% of the job growth.
  • Retail Trade, $28,159. Retail Trade jobs account for almost 11% of total jobs and 11% of total job growth. The retail sector is critical to most local governments because a majority of their revenue is derived from retail trade sales taxes.

There is legitimate reason to be concerned that the state is adding so many low-wage jobs. On the other hand, it is a positive sign that the state is adding jobs that potentially impact all counties, jobs are being added in sectors that generate tax revenues, and jobs are being added that allow for a better quality of life.

So, is Colorado adding too many low-wage jobs?