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Colorado Adds 62,600 Jobs in Q1 2013

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A review of 22 NAICS sectors shows that on average, Colorado added 62,600 jobs in Q1 compared to the same period last year.  Only four of the sectors posted losses (Information 1,800; Federal Government 900; Natural Resources 600; and State (Not Higher Education) 100.

The following sectors added jobs at a faster level, Q1 2013 vs. 2012:
Accommodations and Food Services; B-to-B (Not Employment); Retail Trade;  Construction;  K-12 Education;  Wholesale Trade; Health Care; Arts Entertainment, and Recreation; and Other Services.

The following sectors added jobs at the same level, Q1 2013 vs. 2012:
Corporate Headquarters (MCE), Local (Not Higher Education), and State (Not Higher Education).

The following sectors added jobs at a slower level, Q1 2013 vs. 2012:
Private Education; Information; Employment Services; Transportation, Warehousing, and Utilities;  Higher Education; Financial Activities; Federal Government; Manufacturing; Professional, Scientific, and Technical; and Natural Resources and Mining.

While it is great news that most sectors are adding jobs, it may be cause for concern that many of the state’s primary job creators have fallen in the latter category – adding jobs at a level slower than 2012.

©Copyright 2011 by CBER.

2012 CDLE Monthly Employment Numbers Didn’t Reflect Reality

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In 2012, the monthly Colorado Department of Labor and Employment (CDLE ) employment press releases told a story about the economy that did not agree with what happened on the streets.  The initial seasonally adjusted employment data depicted huge swings in employment, ranging from an unbelievable gain of 19,500 jobs in January to an equally absurd loss of 6,900 jobs in June.  This is a range of 26,500 jobs.

The initial data showed losses in two months and no growth in a third. The initial data indicated that job gains only occurred in nine months.

The benchmarked revision, released in March 2013, told a much different story. There were consistent job gains in all 12 months, rather than the erratic job growth portrayed by the initial data.  That range of job growth was 7,300 jobs, from a low of 1,700 jobs added in May to a peak of 9,000 jobs added in October.

The correlation coefficient between the initial data and the March benchmark data is .56. The coefficient of determination is .31. In other words, the relationship between the two sets of data is weak. It is difficult to understand why the initial data set does such a poor job projecting employment growth.

It is important for public and private leaders to have “accurate” data available to make critical business decisions relating to their industry. In this case, it was difficult for consumers to have confidence in the business climate when the story being told by state officials did not reflect what was actually happening on the street. CDLE must revisit its priorities. Publishing credible data is much more important than conducting a media blitz for the sake of gaining exposure for the agency.

©Copyright 2011 by CBER.

CDLE’s Monthly Unemployment Data Misses the Mark in 2012

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Last year, did it  seem like the Colorado unemployment rate didn’t match what was happening on the streets?

For the most part, the initial data, which is used in the monthly CDLE media blitz, told a much different story from the unheralded benchmark revisions released in March. In fact, the correlation coefficient between the initial release data and the March benchmark data is .44. This means there is a relationship between the two data sets, but it is not strong.

The initial data indicated that unemployment rate was flat at 7.8% for the first quarter, had four months of increases up to 8.3%, then five months of declines.

On the other hand, the benchmarked revisions started at 8.3% and dropped in February to 8.2%. The rate stayed at that level until June, when it declined for the last 6 months of the year.  The benchmarked data ended the year at 7.5% compared to 7.6% for the initial data.

Good data is most valuable during times when the economy is the most volatile. The unemployment rate published by the Colorado Department of Labor failed to meet that critical need in 2012.


©Copyright 2011 by CBER.

How Would You Describe Colorado’s 2010 Job Growth of 2.3%?

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The world would be a much better place if economists were not allowed to use thesauruses. Only economists use phrases and terms such as irrational exuberance, the new normal, conundrum, albeit, and exacerbated.  Even worse are their descriptors for the performance of the economy.

Some economists refer to job growth of 2.3% as encouraging, on the upswing, or comparatively modest. Others might describe that same level of growth as dismal, subpar, or in line with expectations.

The state added 51,800 jobs in 2012. In the 73 years that employment data has been recorded for Colorado, 2012 was the 18th best year in terms of absolute job growth.

If you talked to a group of sixth graders, instead of an economist, they would probably smile and give such a performance an enthusiastic thumbs-up.

The 2012 job growth can also be measured in relative terms. In other words, state employment increased by 2.3%. In the 73 years that employment data has been recorded for Colorado, 2012 was the 46th best year of relative growth.

A group of sixth graders would describe that level of growth as follows, “If I did that poorly on a test I would flunk. That sucks!”

It’s your call, how would you rate the 2012 job growth in Colorado? Would you use the verbiage of an economist or the wisdom of a sixth grader?

For more information about the performance of the Colorado economy in 2012 refer to “Review of Colorado Economy – 2012“.

©Copyright 2011 by CBER.

Decline in Employment of Information Sector Accompanied by Decline in Concentration of Workers

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One of Colorado’s more intriguing components of the state economy is the Information sector.  It includes telecommunication, printed media, broadcasting, Internet service providers, and software publishers.  As such many companies in this sector are part of Colorado’s advanced technology cluster.

Over the past decade technological advances and the Internet caused a decline in jobs in the media, particularly the printed media. As well consolidation occurred in telecommunications, the most recent being the acquisition of Qwest by Centurylink.

After peaking at 108,400 workers in 2000, the sector has declined steadily. In 2012, it had fallen to 69,700, about the same level as in the mid-1990s.

Over this period, technological advances and consolidation caused the sector to decline across the U.S. Unfortunately, the location quotient, or the concentration of local Information workers relative to the U.S. has dropped off at a faster rate in Colorado than the U.S.

In August 2000, Colorado’s location quotient for Information peaked at 1.84. By the end of 2012 it had fallen to 1.48.

The good news is the state still has a high location quotient of workers and the sector remains a major contributor to the Colorado Gross Domestic Product.

For additional information about the performanc of the Colorado economy refer to “Colorado Employment Review – 2012 “.

©Copyright 2011 by CBER.

Colorado Adds 51,800 Jobs in 2012 – Top Growth in Low Paying Sectors

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Colorado received good news today (3/18) when the Bureau of Labor Statistics released its benchmark revisions for 2012 employment. Overall 51,800 jobs were added, well above the 40,000 mark that the BLS reported in December 2012.

Growth was led by Accommodations and Food Services (AFS); Health Care; Professional, Scientific, and Technical Services (PST); B-to-B Services (Administrative and Waste Services), Employment Services, and Retail Trade.

The best news is that the PST sector added workers. This sector has many companies that are a critical part of the state’s advanced technologies cluster.  Overall, this sector has many occupations that pay above the state average.

The growth of the B-to-B Services and Employment Services are indicators of an improvement in the business sector.  Expansion in AFS, Retail, and Other Services sectors are an indication that consumer spending has improved. Unfortunately, each of these sectors have annual wages below the state average.

Only four sectors lost jobs. Three of the four were governmental sectors.

For additional details, see the “Review of the Colorado Economy – 2012”

Copyright 2011 by CBER.

U.S. Unemployment is on the Decline, but not for all Occupations

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There is good news on the unemployment front – the rate and number of unemployed workers continues to decline.

There are 2.0 million unemployed workers in occupations with unemployment rates below the natural rate (4.5% to 5.0%). Many of these occupations require a college degree.  The two-digit Standard Occupational Code (SOC) precedes each category
33 Protective service                       4.1%
19 Life sciences                               4.0%
11 Management                               4.0%
25 Education                                     3.8%
17 Architecture & engineering       3.8%
13 Business & finance                   3.7%
15 Computer & math                       3.5%
21 Community & social services  3.5%
23 Legal                                             3.1%
29 Healthcare practitioners            2.5%

There are 2.4 million unemployed workers in occupations with unemployment rates between the natural rate and the U.S. average (7.8%).  Some of these occupations require some form of higher education.
27 Arts & design                                7.8%
43 Office support                               7.6%
31 Healthcare support                      7.3%
49 Installation & maintenance        6.0%

There are 6.9 million unemployed workers in occupations with unemployment rates above the U.S. average.  Most of these occupations don’t require higher education.
45 Farming, fishing, & forestry       16.1%
47 Construction & extraction          15.8%
37 Building maintenance                13.3%
35 Food preparation                         11.0%
53 Transportation                             10.9%
39 Personal care & service               9.2%
51 Production                                       9.1%
41 Sales & related                              8.2%

In many cases, there is a clear mismatch of worker skills and company needs. In part, this has exacerbated the length of the recovery.

©Copyright 2011 by CBER.

Is Colorado Better Off Now Than We Were When the DJIA Reached Its Peak in 2007?

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On March 5, 2013 The Dow Jones Industrial Average moved into uncharted territory when it closed at 14,253.77.  This surpassed the previous peak, last seen on October 9, 2007.  To quote the legendary musician Sam Cooke, “It’s been a long time coming”, 1,974 days to be exact.

The run that ended on October 9, 2007 began on October 9, 2002 when the DJIA bottomed out at 7,286.27.  In those five years the bulls drove the DJIA up by 6,878.26 points. Quite a rally!

Then the  DJIA cratered, dropping from 14,253.77 to 6,547.05 on March 9, 2009. It lost 7,617.48 points. That brings back painful memories. It has taken almost four years to regain what the market lost in less than one year.

As of March 9 (assuming there is no collapse between now and then) the current bull market will have gained over 7,600 points, in 1,096 days. Impressive!  But, how much longer will it last?

The Colorado economic landscape is much different than it was in October 2007.

Wage and Salary Employment (Seasonally Adjusted)

October 2007   2,345,500
Most recent December 2012  2,316,600
Colorado has about 28,900 fewer workers today. (That number will be slightly less when the BLS releases their annual revisions later this month.

Unemployment Rate(Seasonally Adjusted)
October 2007   4.0% and rising
Most recent December 2012 7.5% and slowly declining

State Sales Tax Revenue
FYE June 2008   $2,126.6 Million
FYE June 2013   $2,226.6 Million
The annual projections are only $100 million higher.

Individual Income Tax Revenue
FYE June 2008   $4,973.7 million
FYE June 2013   $5,216.9 million
Annual projections are only $243.2 million higher.

General Fund
FYE June 2008   $7,742.9 million
FYE June 2013   $8,025.9 million
Annual projections are only $283.0 million higher.

Credability Consumer Distress Index
Q3 2009    79
Most recent Q4 2012   75
The index is 4 points lower meaning consumers are still at risk.

Gasoline Prices All Grades
Week ending October 11, 2007  $2.81 per gallon
Week ending March 4, 2013  $3.62 per gallon
Gasoline prices are $.81 cents higher per gallon.

Case Shiller
Q3 2007    136.1 and declining
Q3 2012    131.6 and rising
The housing market is improving.

It is truly a different world in Colorado. Clearly, the  state economy has not experienced  the same level of growth as corporate profits and the stock market.

©Copyright 2011 by CBER.

Where is the Automobile Industry Really Headed?

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American voters should be required to read the 1954 best seller by Darrell Huff, How to Lie with Statistics. The book illustrates how data used by political leaders, economists, and business leaders represent their viewpoints. At times, a single set of data may tell different, but accurate stories about the subject matter.

This was the case in President Obama’s State of the Union speech on February 12 when he stated “We buy more American cars than we have in five years”.  A review of the data tells at least three different  stories (you may find additional interpretations of the data).

1. In February 2008, light truck and auto sales were 15,459,000 and interest rates were 7.27%. Total sales for December 2012 were 15,325,000 and January was slightly lower 15,200,000.  After plummeting, light truck and auto sales have returned to levels of five years ago.

2. In February 2009, sales had plummeted to 9,021,000 with interest rates of 6.92%.  For the period 1980 to 2012, this is the lowest level of sales since December 1981. That month sales were 8,849,000 and interest rates were 17.36%. Since late 2001, there has been heavy stimulation in the market causing sales to be “stolen from the future.” This includes zero percent and other creative financing programs as well as Cash for Clunkers. Given the level of past stimulation, a case can be made that the recent increased growth in auto sales is partly a function of altered consumption patterns and may not be sustainable.

3. Current light truck and auto sales are comparable to December of 1985, when 15,387,000 vehicles were sold and interest rates were 12.39%. Interest rates have dropped steadily since the high in December 1981 to 4.82% at the end of 2012. Given the current level of interest rates and the likelihood  they will increase, a case can be made that additional stimulation is unlikely to occur from low interest rates.

The President was correct in his statement (#1 above). While his positive interpretation of the data was appropriate for the occasion, it is possible that the growth of the auto industry will not be the topic of future State of the Union speeches.

Note: monthly light truck and auto sales are seasonally adjusted and annualized.


Copyright 2011 by CBER.

“Our Businesses Have Created Over Six Million Jobs” – True, But…

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In his State of the Union speech, President Obama stated, “After years of grueling recession, our businesses have created over six million new jobs.”

The jobs data produced by BLS tells at least four accurate, but different stories about the state of U.S. private sector employment.

1. The trough of the recession occurred in February 2010. About 6,111,000 private sector jobs were added between February 2010 and January 2013.

2. When President Obama took office in January 2009, private sector employment was 111,048,000. In January 2013, it was only 113,111,000. During the first four years of President Obama’s presidency, private sector employment increased by about 2 million workers.

3.  In December of 2000 private sector employment peaked at 111,776,000. The recovery from the 2001 recession took 54 months, or until June 2005, to return to its 2000 peak. The rebound continued until January 2008 when private sector employment peaked at 115,668,000. Just over 8.8 million jobs were lost between then and February 2010 when private sector employment bottomed out at 106,850,000, well below the peak in 2000. Specifically, in January 2009, employment dropped below the 2000 peak. Forty three months later, mid-2012, the number of jobs again exceeded the 2000 peak. At the time President Obama gave his 2013 State of the Union speech private sector employment was only about 1.2 million jobs greater than the peak in 2000.

4.  Private sector employment will not reach 2008 peak employment until mid-2014. In other words it will take about 72 months, or 6 six years for full recovery of the private sector from the 2008 recession.

The wisdom of Darrell Huff, author of How to Lie with Statistics, should be heeded when reviewing data produced by political leaders, economists, and business leaders.  Statistics can tell many stories.

©Copyright 2011 by CBER.