Blog - Colorado-based Business and Economic Research

Number of Colorado Business Establishments Remains Well Below 2007 Peak

February 23, 2014June 7, 2014 horvath Leave a comment

The Bureau of Labor Statistics tracks the number of business establishments as well as the number of employees. An establishment is defined as a single physical location where business is conducted or where services or industrial operations are performed. By contrast, a firm is comprised of establishments.

The number of Colorado business establishments peaked at 180,934 in Q3 2007. As a result of the Great Recession, the number of Colorado business establishments declined to 168,939 in Q1 2011.

There has been steady growth in the number of business establishments since bottoming out in 2011; however, it will be several more years before a return to the 2007 peak. In other words, the effects of the Great Recession are still being felt despite the state’s job recovery.

The number of business establishments in Colorado remains below the 2007 peak. — The number of Colorado business establishments remains below the 2007 peak.

Colorado Population to Increase by 90,000 in 2014

February 17, 2014June 12, 2014 horvath Leave a comment

The Colorado population increases and decreases are a result of the natural rate of change (births minus deaths) and the change in net migration (people moving in the state minus people moving out of the state).

Over the past two decades the natural change gradually increased from 31,400 in 1991 to a peak of 40,230 in 2006.

Changes resulting from net migration are closely tied to the strength of the economy. For example, there were five years, from 1986 to 1990, when net migration was negative. More people moved out of state than moved into the state to escape a regional recession. During the past two recessions, net migration declined because it was difficult for people to move and net migration remained positive.

The Colorado population will increase by about 90,000 in 2014. The natural rate of change will rise to 37,000. Net migration will increase dramatically to 53,000, the highest level of change since 2001.

Changes in Colorado population — The Colorado population is changing at a faster rate because of increased net migration.

SIngle Family Permits Being Added at Greater Rate than 1991-2005

February 11, 2014June 28, 2014 horvath Leave a comment

Improvement in the construction industry, as measured by single family permits, has contributed to the recovery from the Great Recession.

Looking back, the number of annual permits grew steadily from 1991 to 2006.

After bottoming out in January 1991 at 587,000 annual permits and the average number of permits added that year was 751,000. In September 2005, the number of permits peaked at 1,798,000 and the average number of permits added that year was 1,685,000. Over this period of 15 years months the average number of single family permits increased at an average annual rate of 62,233 units per year.

After the Great Recession hit, the number of monthly permits bottomed out at 379,000 in February of 2011. The average number of permits issues for 2011 was 420,000. In 2013 the number of permits increased to 614,000. For this two year period, permits are being added at an average annual rate of 97,208.

The story of the construction industry continues to be one of good and bad news. Over the past two years, the rate of new single family permits being issued is greater than during the boom years. The problem is the greater recession created such a hole, it seems like there is little construction activity.

single family permits

ADP Report – Mid-Size Companies Adding The Most Jobs

February 6, 2014June 12, 2014 horvath Leave a comment

ADP announced that the U.S. private sector added 175,000 jobs in January. The data shows mid-size companies adding the most jobs.

Since the official end of the Great Recession the ADP data shows the private sector has added 7,418,000 jobs.

The number of jobs added by company size category follows.

1 to 19 employees

1,477,000 jobs added.
19.9% of total jobs added.
25.9% of private sector jobs.
5.2% growth since the end of the recession.
(See chart below for jobs added since the end of the recession).

20 to 49 employees

1,191,000 jobs added.
16.1% of total jobs added.
15.9% of private sector jobs.
7.0% growth since the end of the recession.

50 to 499 employees

2,674,000 jobs added.
36.0% of total jobs added.
35.6% of private sector jobs.
7.0% growth since the end of the recession.

500 to 999 employees

474,000 jobs added.
6.4% of total jobs added.
6.9% of private sector jobs.
6.4% growth since the end of the recession.

1,000+ employees

1,602,000 jobs added.
21.6% of total jobs added.
15.8% of private sector jobs.
9.7% growth since the end of the recession.

Jobs have been added across all size categories. The data show the following:

Well-established large companies (1,000+ workers) have added jobs at the fastest rate, 9.7%.
The 50 to 499 category has added the highest percentage of jobs 36.0%.
The 50 to 499 category is the largest category, 35.6% of private sector jobs.
The 50 to 499 category has added the greatest number of jobs, almost 2.7 million.

The most encouraging news is the recent increase in the growth of smaller companies.
Mid-size companies adding the most jobs

Manufacturing Role in U.S. Recovery May be Overstated

January 30, 2014June 28, 2014 horvath Leave a comment

The Manufacturing Sector has been regarded as a driving force in the recovery from the Great Recession.

A look at U.S. Manufacturing Shipments shows the sector’s contribution to the recovery may be slightly overstated. Consider the annualized growth rates for shipments for the following periods:

January 1992 to January 2000, 8 years at +5.6%.
January 2000 to January 2002, 2 years at -4.6%.
January 2002 to January 2008, 6 years at +6.5%.
January 2008 to January 2009, 1 year at -21.6%.
January 2009 to January 2014 (est.), 5 years at +6.1%.

As a result of the Great Recession, shipments dropped to mid-2004 levels and it took 5 years before shipments returned to 2008 levels.

While it is good news that the manufacturing sector has played an important role in the recovery, it should be noted that the annualized rate of growth from 2012 to 2014 was only about 2.0%.

What’s on tap for manufacturing in 2014?

©Copyright 2011 by CBER.

Output Projections for Global Economy Show Improvement

January 23, 2014June 28, 2014 horvath Leave a comment

The global economy is poised for a turn-around in 2014, with stronger growth in most regions. At this time a year ago most output projections for 2013 pointed to lower growth rates than 2012. Today, both the Conference Board -TCB- and the International Monetary Fund -IMF- are optimistic about the global economy in 2014 – truly a pleasant change.

Part of the good news is that the optimistic projections are broad-based and the most notable improvements are in the U.S. and Europe economies.

TCB ouput projections for 2013 vs. 2014 are:

Global 2.8% vs. 3.1%
Mature 1.0% vs. 1.7%
Emerging 4.7% vs. 4.6%

IMF output projections for 2013 vs. 2014 are:

Global 2.9% vs. 3.6%
Mature 1.2% vs. 2.0%
Emerging 4.5% vs. 5.1%

The IMF is slightly more optimistic than TCB, particularly with its output projections for the emerging countries. Let’s hope they are correct.

Relief at the Pump – Coloradans Saved $56 in 2013!

January 17, 2014June 28, 2014 horvath Leave a comment

Back in the day… a Hershey’s candy bar cost a nickel and a person needed a dime to get a Coke from the vending machine. (Diet Coke didn’t exist). Nickels and dimes had value back in the day.

And…it cost $.21 for a gallon of gasoline. Not only that, an attendant filled up the car, checked the oil, and washed the windows. Back in the day a car was taken to a service station, not a gas station.

Given that perspective, the current relief at the pump is still painful.

As we ring out the old year and ring in the new it is now possible to compare the annual costs of gas for Colorado and the U.S. This calculation assumes that 15 gallons of gas were purchased each week at the average price for all blends. The comparison follows:

Colorado
- The 2013 cost was $2,706.
- The 2012 cost was $2,762.

It cost $56 less to purchase gas in Colorado during 2013 than 2012.

United States
- The 2013 cost was $2,782.
- The 2012 cost was $2,874.

It cost $92 less to purchase gas in the U.S. during 2013 than 2012.

In 2013 it cost $76 less to purchase gas in Colorado than the U.S.

How is that for relief at the pump?

Issues That Will Present Opportunities and Challenges for Colorado in 2014

January 11, 2014June 28, 2014 horvath Leave a comment

The improving global economy will support broad-based growth of the U.S. economy and vice versa. In turn, Colorado will enjoy its strongest job growth in over a decade. Click here to review the CBER forecast and other economic reports. Some of the opportunities and challenges for 2014 are listed below.

Opportunities

Both Global and U.S. Real GDP are projected to increase at rates greater than 2013. Will that translate into a 4th consecutive year of rising job growth for the state?
After the dysfunctional 2013 Colorado legislative session, a threat by counties to secede from the state, and two successful recalls, are legislators ready to work together for the good of the state?
How much will the passage of Amendment 64 benefit the state fiscally? Will tax revenues exceed enforcement, social, and opportunity costs?
Primary jobs are essential to the economy because they create wealth and usually pay higher than average wages. Will 2014 be the year that there is a stronger increase in primary jobs?
Will Colorado’s strategy to attract millenials prove to be an effective economic development strategy?

Challenges

Are global financial sectors in the mature economies stable? Are financial bubbles looming on the horizon?
Will U.S. monetary policy be conducive to growth of the global economy? Will Janet Yellen be able to unwind Quantitative Easing without drastically raising inflation or the causing a downturn in the equity markets?
Is U.S. public and personal public debt excessive? Will Americans manage their finances more responsibly?
Will the off-year elections bring about more conflict, change, or more of the same?
Will gun-control legislation, anti-fracking efforts, energy legislation that hurt rural Colorado, and other anti-business activity create the impression that Colorado is not business-friendly?
What does Mother Nature have in store for Colorado in 2014?
Will 2014 be the year Colorado begins adding establishments at a significant level?

The most critical item on the list of opportunities and challenges…Will Peyton Manning bring a Super Bowl to Denver in 2014? Go Broncos!

cber.co Colorado Economic Forecast for 2014 – 68,000 to 74,000 Jobs to be Added

January 8, 2014July 6, 2014 horvath Leave a comment

In 2013 the state experienced natural disasters and self-inflicted political wounds, yet Colorado employment grew at a faster than expected rate. The cber.co economic forecast points to continued expansion for 2014.

On a Positive Note…

The state population grew at a higher rate than expected in 2013. Stronger growth is on tap for 2014.
The story is the same for employment. In 2013, the state added approximately 68,000 workers and will add another 68,000 to 74,000 in 2014. This represents job growth in the rage of 2.9% to 3.1%.
Unemployment will continue to decline, and will be in the range of 5.5% to 5.8% at the end of 2014.
In 2013 consumers were delighted that gasoline prices declined. At the moment there is no reason to believe they will rise precipitously (knock on wood).
Colorado new car registrations have risen steadily for the period 2010 to 2013. A decline is unlikely in 2014.
Colorado’s general fund, particularly sales and income taxes, has been a benefactor of increased population, employment, and wages. Likewise the revenue for city and county governments has improved.

Some Mixed News…

Per Capita Personal Income will increase by 3.7% in 2014. This is slightly less than the rate of growth for the U.S. Over the past two decades the gap between the U.S. PCPI and the state PCPI has closed significantly.
In 2014, Colorado inflation will be 3.0%, well above the rate for the U.S.
In Colorado, housing prices have increased at a faster rate than the nation. That is great news for home owners, but not so good news for people wanting to enter the housing market.
The Construction Sector is slowly improving. Increased building activity supports growth in multiple sectors and causes greater congestion on the highways. For some, the latter is not desirable.
Although the state returned to 2008 peak employment, it will be a long time before the state returns to the 2007 peak number of establishments.

Looking ahead, the economy will build on the foundation established in 2013. Hopefully the state’s leadership will be less dysfunctional.

Click here to review the cber.co forecast and other economic reports.

cber.co forecast

The Return of the Dow Jones Industrial Average – 26.5%

January 1, 2014January 1, 2014 horvath Leave a comment

What a year it was – at least for the equities markets!

The DJIA surpassed the peak for 2007 and closed the year 2013 at 16,577.

The 2013 closing total was 26.5% above the close in 2012. It follows growth rates of:

5.9% in 2012
5.5% in 2011
11.0% in 2010.

The great crash of 2008 seems so far away.

Looking back…the DJIA peaked at 14,163 on October 9, 2007. Between then and December 31, 2013, the market rose by 2,274 points. This is an annualized rate of change of only 2.5%, slightly better than the rate of inflation.

Suddenly 26.5% doesn’t sound so good, but thank goodness it happened!