Category: Colorado Economy

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.

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.

Slow Gross Job Growth – a Cause of the Weak Recovery in Colorado

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Colorado prides itself on its entrepreneurial spirit, yet, it took about 4 1/2 years to recover from the 2001 recession and it will take longer to rebound from the Great Recession.  In short, the primary reason the state experienced net job growth was a decline in gross job losses and weak gross job gains.

The Bureau of Labor Statistics produces the Business Employment Dynamics data (BDM), a data set that provides gross job added because of expansion and openings and gross jobs lost because of contractions and closures. This differs from the wage and salary data series that reports only total net jobs.

The data shows that since 2000, Gross Job Gains and Gross Job Losses have been volatile and both have trended downward.

Since 1993, between 18.1% and 24.7% of the Gross Jobs Added are from openings while between 75.3% and 81.9% are from expansions. For that same period, the range of Gross Job Lost from contractions is 77.0% to 86.4% and the range for closings has been 13.6% to 23.0%. In the short-term, Gross Losses are moving downward and Gross Additions are headed upwards.

For more information go to the report, “Why Weaker Job Growth?” on cber.co. It can be found in the Special Reports Section.

 

©Copyright 2011 by CBER.

Establishment Openings Not Up to Par in Colorado

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Colorado prides itself on being a leader in entrepreneurship, yet it has fallen short in that area for the past decade. Business creation, as measured by Gross Establishment Openings, has been somewhat  volatile. In addition, Openings have trended flat to slightly downward since 2001.

As well, the annual change in the number of establishments (openings minus closures) has paled compared to the period 1994 to 2001. To add insult to injury, the annual change was negative for 3 years from 2009 to 2011.

Annual Change

1994  4,977
1995  5,056
1996  3,535
1997  4,742
1998  3,729
1999  3,271
2000  4,138
2001  3,885
2002     876
2003  1,154
2004  2,540
2005  3,256
2006  2,991
2007  3,078
2008  1,586
2009 -3,708
2010 -3,809
2011    -176
2012  1,818
Note: The above years end in March.

There were 18,033 Openings and 16,215 Closings in Q2 2012, the last quarter that data is available for. That quarter, Openings accounted for 23.2% of Gross Establishments Added and Closing accounted for 24.1% of Gross Establishments Lost.

For more information go to the report, “Why Weaker Job Growth?” on cber.co. It can be found in the Special Reports Section.


©Copyright 2011 by CBER.

Milken Report Shows Solid Economic Performance in Four Corner States

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The Milken Institute recently released Best-Performing Cities 2012-Where America’s Jobs are Created and Sustained. Coloradans will be pleased to note that Fort Collins was ranked 12th and Boulder was ranked 15th in 2011. As well, Denver-Aurora-Broomfield was 30th, Greeley was 42nd and Colorado Springs was 57th. Pueblo was ranked 33rd and Grand Junction 50th for small MSAs. Since the ratings began in 1999, the Denver MSA has never been in the top 20.

The rankings are based on an index that measures growth in jobs and high tech output from 2006 to 2011. Technology output and wages and salaries are tracked for 2005 to 2010. Five-year ranges account for fluctuation in business cycles. The latest year’s growth from these five-year ranges is also included. The high-tech concentration and the number of high tech industries with a location quotient greater than one for 2011 are also included. Finally, the change in employment for May 2011 to May 2012 is included to capture momentum. This index measures the performance of the country’s MSAs coming out of the recession into 2012.

Overall, the report shows that Silicon Valley is back, Texas remains strong, tech centers have rebounded (Texas, North Carolina, Washington D.C. Utah, and Massachusetts), and Utah is the top state in the Mountain region.

1    San Jose-Sunnyvale-Santa Clara, CA

2    Austin-Round Rock-San Marcos, TX

3    Raleigh-Cary, NC

4    Houston-Sugar Land-Baytown, TX

5    Washington-Arlington-Alexandria, DC-VA-MD-WV

6    Salt Lake City, UT

7    Provo-Orem, UT

8    Cambridge-Newton-Framingham, MA

9    Charleston-North Charleston-Summerville, SC

10    Fort Worth-Arlington, TX

11    New York-White Plains-Wayne, NY-NJ

12    Fort Collins-Loveland, CO

13    Seattle-Bellevue-Everett, WA

14    Dallas-Plano-Irving, TX

15    Boulder, CO

16    Kennewick-Pasco-Richland, WA

17    Peabody, MA

18    El Paso, TX

19    Bakersfield-Delano, CA

20    Lubbock, TX

21    Durham-Chapel Hill, NC

22    San Antonio-New Braunfels, TX

23    Portland-Vancouver-Hillsboro, OR-WA

24    Lafayette, LA

25    Knoxville, TN

In addition to the report, the website provides a historic perspective showing the evolution of the top 20 cities for 1999 to 2011. In the table below, the year represents the year of the data, not the year of the report. Results for the Four Corners states show that the Denver MSA was never in the top 20 and Utah’s MSAs  outshined those in Colorado. The data makes the case that the four states represent a region with solid economic performance.


©Copyright 2011 by CBER.

CBER Colorado Economic Forecast 2013 – Growth Rate Similar in Year Ahead

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CBER recently released its forecast of the Colorado economy and at the risk of sounding like a broken record, 2013 will look a lot like 2012 and 2011.

  • U.S. Real GDP will be in the range of 1.9% to 2.3%
  • The U.S. will add 1.9 to 2.1 million workers
  • Colorado will account for 2.5% of U.S. jobs added
  • Colorado will add 45,000 to 55,000 workers.

Since the end of the recession, Colorado employment has had five false starts. Despite serious national and international headwinds, the state may finally have enough momentum to begin showing solid, sustained job growth beginning in the second half of 2013.

Strong Growth Category ( About 32% of total employment)

This category has consistently posted strong growth over the past two decades. In 2013, job growth will be 2.9% to 3.1%, slightly below the category’s annualized growth rate of 3.25% for 1990 to 2011.

Limited Growth Sectors (about  40% of total employment)

This category has consistently posted solid growth over the past two decades (Annualized rates for the sectors range between 1.1% to 2.2%.) In 2013, job growth will be 1.4% to 1.6%, slightly below the category’s annualized growth rate of 1.85% for 1990 to 2011.

Volatile Growth Sectors (28% of total employment)

This category has been inconsistent in its growth rates over the past two decades. It is expected to add jobs at a rate of 2.1% to 2.3%. This is above the category’s annualized growth rate of about 0.79% for 1990 to 2011. This variance from the average is a reflection of the category’s  volatility.

©Copyright 2011 by CBER.

General Assembly to Address Tough Fiscal Challenges and Contentious Social Issues

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Next week the gavel will drop for the 69th session of the Colorado General Assembly. Clearly, the legislature will have a number of tough fiscal challenges and contentious social issues to address in the upcoming session.

As part of its seminar series, on December 17th, the Colorado Office of Economic Development and International Trade (OEDIT) hosted a panel discussion to preview the upcoming legislative session. Panelists featured:

  • Danny Tomlinson, Tomlinson and Associates (Tomlinson provides periodic legislative updates on his website).
  • Jennifer Cassell, Legislative Liaison, OEDIT
  • Loren Furman, Colorado Association of Commerce and Industry (CACI)

The group identified the following as the top budget priorities for the state in the upcoming session.

  • Protect the last  and the least (human services)
  • K-12 and higher education
  • Economic development
  • Infrastructure
  • Public safety/Mental health
  • Improve efficiency of  state government/Pay increases
  • Expansion of Medicaid

As well, legislators will be asked to address the following issues.

  • Civil unions
  • Tuition for undocumented immigrants
  • Referendum on single-payer health insurance
  • Lobato school funding lawsuit
  • Metropolitan Transportation District
  • Tolling and/or VMT
  • HUTF money for transit
  •  RAMP (Responsible Acceleration of Maintenance and Projects)
  • Governmental immunity /raising of $600K caps
  • Peace officer bill of rights
  • Fracking
  • Renewable energy policy
  • Thermal standards
  • Eco-friendly architecture?
  • Coal bed methane
  • Public trustees and foreclosures
  • Gun control

It will be interesting to see if the Democrats act in the best interests of the state or for the well-being of their party, given that they control both houses and the governor’s office (That comment would also be appropriate if the Republicans were in a similar situation).

©Copyright 2011 by CBER.

Colorado’s General Fund Making a Recovery

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The Great Recession played havoc with the budgets of state governments. Colorado was no exception. In late December, the Colorado Legislative Council released its quarterly economic update that shows the impact the Great Recession has had on the revenue streams for the state government.

Sales Tax Revenue accounts for about one-fourth of the Gross General Fund. Sales Tax Revenue for the Fiscal Year (FY) 2013 is projected to exceed revenue for FY 2008 (not adjusted for inflation). [Note: The State Fiscal Year is July 1st through June 30th.]

It is projected that Net Individual Income Tax for the FY 2012 will exceed FY 2008 (not adjusted for inflation). This tax accounts for about two-thirds of Gross General Fund Revenue.

It is projected that General Fund Revenue for FY 2012 will be similar to FY 2008 (not adjusted for inflation). Total revenue was $7.743 billion in 2008. In 2012 it was 7.737 billion. In 2013 it is currently projected to be $8.026 billion. On an inflation adjusted basis, 2013 remains well below the 2008 total.

The Colorado State budget is much like the pocketbook of many Colorado residents. Over the past five years they have had to deal with wages that either declined or remained flat while experiencing expenses that escalated every year.

©Copyright 2011 by CBER.

Five False Starts – Will Strong Sustained Job Growth Occur in 2013?

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Over time, recoveries from recessions have mirrored the downturn, i.e. a steep recovery usually follows a sharp downturn. That was not the case with the 2001 or 2007 recession.

Nationally, the economy was too weak to support job growth, as evidenced by the four false starts in seasonally adjusted job growth.
• An average of 315,000 jobs was added for the three month period March to May 2010. This gain can be attributed to temporary Census workers.
• An average of 239,000 jobs was added for the three month period February to April 2011.
• An average of 252,000 jobs was added for the three month period December 2011 to February 2012.
• An average of 168,000 jobs was added for the three month period July 2012 to September 2012 – it is debatable whether this job growth to strong enough to be classified as a false start.

In Colorado, there have been five false starts since the end of the recession
• An average of 4,000 jobs was added for the seven month period February to July 2010 (One month showed declines). This anomaly was temporary Census workers.
• An average of 4,200 jobs was added for the four month period October 2010 to April 2011.
• An average of 4,300 jobs was added for the four month period July to October 2011.
• An average of 8,400 jobs was added for the three month period January to March 2012. This can be attributed to a large increase in construction workers.
• An average of 8,000 jobs was added for the three month period September to November 2012.

Most national forecasts project a slowdown in the economy during the first half of 2013. If that is the case, then the rally in the second half of 2012 will be wasted.

Will 2013 be the year that Colorado has strong sustained growth?
©Copyright 2011 by CBER.

Colorado Households Remain at Risk

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The Credability Consumer Distress Index (CCDI) shows that the financial condition of Colorado households has improved since the end of the recession, but they remain at risk. Colorado households are slightly better off than the nation.

The Index is a quarterly comprehensive picture of the average American household’s financial condition. It converts a complex set of factors into a single, easy to understand number. Financial distress is measured on a 100 point scale and a score under 70 indicates financial distress.

The index measures five categories of personal finance that reflect or lead to a secure, stable financial life—Employment, Housing, Credit, Household Budget and Net Worth. Each category has equal weighting.

90 and Above Excellent / Secure
80 – 89 Good / Stable
70 – 79 Weakening / At-Risk
60 – 69 Distressed / Unstable
Less than 60 Emergency / Crisis

From 1990 through 2002 the index was above 80; household finances were thought to be stable. From 2003 to 2008 the index dropped into the At Risk category. For seven quarters beginning in Q1 2009 the CCDI was in the unstable category. Since Q4 2011 the CCDI has been in the At Risk category. Coloradans fare better than the U.S. on the CCDI.

©Copyright 2011 by CBER.