Category: Colorado Economy

Data Not Clear About Whether Colorado is Outperforming the Nation in the Recovery

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The wage and salary data produced by BLS shows that Colorado has recovered about 67% of jobs lost as a result of the Great Recession compared to 51% for the U.S.

The LAUS data also produced by BLS tells a much different story.

The Colorado LAUS Data shows that between the 2008 peak and the 2010 trough, Colorado lost more than 135,000 jobs. As of October 2012, the state had recovered only 26% of these jobs.

From October 2011 to October 2012, the LAUS data reports that the number of employed in Colorado has increased by 4,700. Over the past year, state CES employment has increased by 41,600 (NSA) or 42,100 (SA) and those numbers are likely to be revised upwards. For the numbers to reconcile, this disparity suggests that at least 37,000 contract workers, sole proprietors, or family businesses went out of business over the past year.

The U.S. LAUS Data shows that between the 2008 peak and the 2010 trough, the U.S. lost more than seven million jobs. It has since recovered 67% of these jobs.

From October 2011 to October 2012, the LAUS data reports that the number of employed in the U.S. has increased by 3.1 million. Over the past year, U.S. CES employment has increased by more than 1.922 million (NSA) or 1.949 million (SA). The differences between these numbers can be reconciled, as the difference can most likely be attributed to the growth of contract workers, family businesses, or sole proprietors.

The LAUS data shows that Colorado has recovered 26% of the jobs lost during the Great Recession compared to 67% for the U.S.

These results raise yet another red flag about the LAUS data published by the Colorado LMI, CDLE, and BLS. Click on the following dates for a review of the downturns for the 1980s and the late 2000s.

©Copyright 2011 by CBER.

Stagnancy in the Size of the Colorado Labor Force – The Lost Decade and Beyond

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In a previous post, the topic of discussion was the stagnancy of the labor force during the 1980s (click here). In that case the size of the labor force was flat for about five years because of a regional recession, weak wage and salary job growth, and negative net migration. This post will look at the size of the labor force during the Great Recession and beyond.

Local Area Unemployment Statistics (LAUS) are available for Colorado beginning in 1976. Since then, the month-over-prior month labor force increased about 87% of the time (383 of 442 months). In a vibrant economy, periodic ups and downs are expected, but increases in the size of the labor force are generally the rule of the thumb.

Between April 2000 and October 2012 there were 30 months with decreases in the month-over-prior month size of the labor force. In January 2008 there were 2,722,015 workers. By April 2009 the number had risen to 2,758,468 workers.

During the past 42 months, there were 19 month-over-prior month declines. There were 2,725,803 workers in the October 2012 labor force. This was 32,665 fewer than the level in April 2009 and essentially the same as January 2008.

Next, we will look at three data sets for the period: Wage and Salary job growth, Net migration, and the Unemployment Rate.

For the years, 2009-2012, wage and salary job growth was devastating, with back-to-back net job losses in 2009 and 2010. The net change in wage and salary jobs follows:
• 2008 19,000
• 2009 -104,700
• 2010 -23,300
• 2011  33,000
• 2012 est  45,000

Unlike the 1980s, when the state experienced negative net migration, there has been solid positive net migration, i.e. more people moved into the state than out of it. The net migration follows:
• 2008 45,000
• 2009 36,300
• 2010 37,000
• 2011 34,900
• 2012 est 36,800

For this period the unemployment rate varied from 4.8% to 8.0%. While the monthly rate has dropped from a high of 9.0% in 2010, the 2012 annual rate remains the same as it was in 2009.
• 2008 4.8%
• 2009 8.1%
• 2010 8.9%
• 2011 8.3%
• 2012 8.0%

For all intensive purposes, the size of the labor force will be about the same as it was at the end of 2009 and the number of employed and unemployed workers will be similar.

• The 33,000 wage and salary jobs added in 2011 lowered the unemployment rate by 0.6% points, yet growth of 45,000 jobs in 2012 will lower it by 0.3% points.
• For the period 2008 to 2012, total net migration was 190,000; approximately 125,000 of these individuals are 16-65 years old.

This raises a series of questions:
• How many people have become contract or 1099 workers? How many have become sole proprietors and owned family businesses? How many people are working temporary jobs? Will they still work in this capacity when the economy recovers or will they take wage and salary jobs?
• How many workers have stopped working who don’t show up in the data?
• What are the in migrants doing? Did they take jobs that Colorado residents might have taken? Are they working in other capacities?
• How many families with dual incomes now only have one income?
• Have the published unemployment numbers been manipulated to meet political agendas?

There seem to be more questions than answers and the numbers do not seem to reconcile. As grave as the employment situation has been, it appears that the unemployment rate may be inaccurate and may have understated the magnitude of the problem.


©Copyright 2011 by CBER.

Stagnancy in the Size of the Colorado Labor Force – 1980s

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The unemployment rate is one of the most popular, but overrated statistics for measuring the performance of the economy. It is such a crude measurement of economic performance that the state’s labor economist was recently quoted in the media as saying that it shouldn’t be taken at face value.

The calculation of the unemployment rate is simple. The number of unemployed workers is added to the number of employed workers (wage and salary, sole proprietors, and others) and that equals the size of the labor force. The unemployment rate is simply the number of unemployed workers divided by the size of the labor force.

In other words, the size of the labor force is a key component in determining the accuracy of the unemployment rate. This brings us to the topic of this post – the size of the labor force.

Local Area Unemployment Statistics (LAUS) are available for Colorado beginning in 1976. Since then, month-over-prior month labor force increased about 87% of the time (383 of 442 months). In a vibrant economy, periodic ups and downs are expected, but increases in the size of the labor force are generally the rule of the thumb.

There are two periods when the size of the labor force did not increase, during the 1980s and the late 2000s. The following analysis looks a period during the 1980s.

Between September 1984 through April 1989 the size of the labor force declined in 29 of 53 months.

In August 1984 the size of the labor force, as measured by LAUS data,  was 1,719,239. It declined sharply in 1985, bounced back for most of 1986, and fell sharply in 1987. It remained flat for much of 1988 and into the first part of 1989. In June of 1989, the labor force was reported at 1,719,824. From that point, it continued to grow.

Next, we will look at three data sets for the period: Wage and Salary job growth, Net migration, and the unemployment rate.

During this period, Wage and Salary (CES)  job growth was weak, with net job losses in 1987. The net change in wage and salary jobs follows:
• 1984   75,100
• 1985   16,400
• 1986  -10,400
• 1987       4,300
• 1988    23,500
• 1989    46,200
• 1990    38,600

The CES and LAUS series are different measures of employment, but they should tell a similar story about changes in employment.

During this period the state experienced negative net migration, i.e. more people moved out of the state than into the state. The net migration follows:
• 1984      2,782
• 1985      5,172
• 1986     -5,270
• 1987   -13,997
• 1988   -24,280
• 1989   -18,752
• 1990   -12,964

For this period the unemployment rate varied from 5.4% to 7.5%. It remained at a higher than normal level because unemployed workers were able to move outside the region and find work. The annual unemployment rates for this period were:
• 1984   5.4%
• 1985   6.0%
• 1986   7.5%
• 1987   7.5%
• 1988   6.4%
• 1989   5.6%
• 1990   5.1%

The labor force was stagnant for about five years for the following reasons:
• There was a regional recession
• Weak wage and salary job growth
• Negative net migration.

A similar stagnancy in the size of the labor force occurred during the 2000s. It is more difficult to understand and will be discussed in a later post (click here).


©Copyright 2011 by CBER.

Colorado Posts So-So Competitive Job Growth 2010-2012

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On November 7th, Economic Modeling Specialists International (EMSI) released America’s Most Competitive Metros since 2010, a blogpost/mini-report showing which metros are becoming more competitive. Denver was ranked 25th and Colorado Springs was ranked 64th in the list of 100 metropolitan statistical areas (MSAs) evaluated. Pueblo, Fort Collins, Boulder, Greeley and Grand Junction were not included in the analysis.

EMSI used shift share analysis to make this comparison for the period 2010 to 2012 (Q3 2012 complete data). This method of analysis decomposes the change in employment into four categories: the national growth effect, the industrial effect, expected change, and the change in an industry due to local unique competitive advantages within the region. The latter is the focus of the EMSI blog post. This competitive change is then expressed as a percentage of total employment.

Of the 100 top MSAs evaluated, the relative change in competitive jobs ranged from -3.9% to 3.5%. Forty-eight MSAs posted increases over this period, while 52 recorded negative changes.

There were 28 MSAs with employment greater than 1 million workers. Only 3 of these cities were in the top 10 in terms of relative percentage growth; however, 16 of 28 had positive growth and only 32 of the 72 cities with employment less than 1 million workers had positive growth.

The MSAs at the top of the list were San Jose, Austin, Bakersfield, Provo, and Houston.  The top 48 MSAs, or those with a positive competitive effect are listed below (Those with negative growth are in a separate table).

Only 12 of the cities with more than 1 million workers were in the MSAs that posted competitive declines, while 40 of the 72 MSAs with less than 1 million workers recorded decreases. The MSAs at the bottom of the list were Modesto, Lakeland-Winter Haven, Palm Bay, Albuquerque, and Augusta.  A few comments about the position of the two Colorado MSAs follows this table.

The good news from the EMSI report is that Colorado’s hub of commerce, the Denver MSA, is adding “competitive” jobs. If the other MSAs had been included, Boulder and Fort Collins would probably join Denver as gainers and Pueblo, Greeley, and Grand Junction would join Colorado Springs on the down side. Clearly the trickledown effect from Denver to other parts of the state is minimal or non-existent.

Colorado’s recovery has been steady but, it has occurred at a pace slower than desired. While Colorado has been adding jobs, a disproportionate amount of those jobs are in the public sector. While those jobs may be necessary and justified, they will not provide Colorado with a competitive advantage in the months ahead.

Colorado needs to add more primary jobs and jobs need to be added outside the metro area. Here’s to better times for Colorado and the U.S!

©Copyright 2011 by CBER.

“Don’t Get Excited” About the Addition of 7,000 Colorado Jobs in September

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In its latest state-level jobs report, the Bureau of Labor Statistics stated that Colorado gained 7,000 jobs in September, on a seasonally-adjusted (SA) basis. This inordinate gain comes on the heels of a loss of 100 jobs in August.

The quirky nature of the data prompted Colorado’s chief labor economist to report to the Denver Post that the state shouldn’t get “too excited about the addition of 7,000 jobs in September”. It is unlikely that this wide swing in jobs is an accurate measure of what is happening on the streets. Rather, it is the result of adjustment factors that don’t fully capture “seasonal” changes in the economy. Unfortunately, Colorado’s Labor Market Information agency has chosen to use the SA data set as the foundation of its monthly labor reports.

A look at the non-seasonally adjusted data (NSA) shows that Colorado has added an average of 38,800 workers through the first three quarters of the year. The year-end data shouldn’t be too far off that mark, before revisions. Final revisions, made by BLS in March of 2013 and 2014, will likely be in an upward direction since the non-farm, or wage and salary data typically understates growth during periods of sustained growth.

Overall job growth is broad based with the strongest absolute growth occurring in the following sectors:
6,700 Tourism
5,900 Private, Education, and HealthCare
4,700 Professional, and Scientific, and Technical Services
4,700 Retail Trade
4,400 Construction
4,100 Employment Services
3,100 Manufacturing

The following sectors posted absolute job gains that were more moderate:
2,400 K-12 Education
1,800 Extractive Industries
1,700 Wholesale Trade
1,500 Higher Education
1,300 Corporate Headquarters (MCE)
1,300 Personal (Other) Services

Minimal change was recorded in the following sectors:
800 Financial Activities
300 B-to-B (Not Employment Services)
Flat State (Not Higher Education)
-200 Utilities
-400 Transportation & Warehousing

More significant job losses were reported in the following:
-400 Transportation & Warehousing
-700 Federal Government
-2,300 Local Government (Not K-12)
-2,400 Information

Average employment for the first quarter of the year was 47,300 greater than 2011. At the time that level of increase did not seem realistic or sustainable. In April, job growth dropped off to a rate that was in line with the sluggish growth of the U.S. economy.

Average employment for the past six months has been 34,600 and the range of year-over-year job gains has varied from 31,200 to 37,100. It seems realistic to expect similar job gains through the end of the year.

For more detailed analysis of the Colorado economy go to cber.co.

©Copyright 2011 by CBER.

Are We Better Off Than We Were Four Years Ago? – Colorado

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This election season has featured an abundance of discussion about where the state is better off now than we were four years ago. In some cases, we are better off today and in other cases we are not.  The following data provides a snapshot of key metrics that fit into both categories.

Colorado Population
People like to visit and live in Colorado. Continued population growth is projected on a long-term basis.
• Although Net Migration has slowed, Colorado’s population continues to grow at a steady pace.
Colorado Employment and Unemployment
Increased population growth points to long-term job gains and lower employment.
• During the 69 months between January 2007 and September 2012 Colorado only gained jobs in 34 months (seasonally adjusted data).
• In 2012, Colorado employment is well below employment of 2007 and 2008, but it is trending upwards.
• In 2012, jobs are being added at a faster rate than they were in 2008, but not 2007.
• The number of unemployed workers is more than twice as much in 2012 as it was in 2007. It is also greater than 2008.
• The unemployment rate in 2012 is twice the 2007 rate and much higher than in 2008.
• In 2012, the unemployment rate and the number of unemployed workers is trending downward, whereas, it was trending upward in 2008.

Colorado Employment by Sector
Segments of the economy are healthier than they were in 2008.
• Projected annual state employment for 2012 will be about 56,900 less than the total for 2008. The following sectors have greater 2012 employment than 2008: Private Education and Health Care, Higher Education, Tourism, K-12 Education, Corporate Headquarters (MCE), Federal Government, Employment Services, State Government, Extractive Industries, and Professional and Scientific and Technical Services.
Colorado Job Creation
Improved firm and job creation is necessary if the economy is to recover at a faster rate.
• Gross job losses and job gains for 2011 are less than 2008. Improvement in net job gains is more a result of decreased layoffs than actual job creation.

Income and Wages
Recent wage and income data is mixed.
• Per Capita Personal Income – The 2011 average is slightly below the value for 2008.
• Colorado Median Household Income – The 2011 median is below the value for 2008.
• Average Annual Wages – The 2011 average is above the value for 2008.

Colorado Output
Increased employment and wages will point to increased demand for goods and services. This in turn will push output upwards.
• Colorado Real GDP was greater than the U.S. for 2007 to 2011.
• The following sectors have shown steady growth since 1997 and 2011 output is greater than 2007 and 2008: Retail Trade; Professional, Scientific, and Technical Services; Health Care; Finance and Insurance; and Information.
• Real output for the Construction sector was greater in 2007 and 2008 than 2011 for both Colorado and the U.S.

Colorado and Inflation
Overall inflation has been minimal; however, inflation in key areas has been noticeable.
• Overall inflation has been minimal since the beginning of the Great Recession. Apparel and Housing are the only sectors that have grown at a lower rate than All Items for Coloradans.
Construction and Housing
There is improvement in the Construction and Housing markets.
• The number of permits in 2012 is greater than 2008, although they are well below the levels shown in the 2000s.  Most importantly, permits are slowly trending upwards.
• 2012 Colorado housing prices are approaching 2008 levels.
• Home ownership rates in 2011 are below the rates in 2008. More importantly, they are trending downwards.

General Fund and Retail Trade Sales
Gross General Fund Revenue is trending upwards because of stronger job gains (income taxes) and retail trade sales (sales taxes).
• Retail Sales are improving. Projected Sales Tax Revenue for the fiscal year ending June 2013 will exceed revenue for FYE 2008 (not adjusted for inflation). This tax accounts for about one-fourth of Gross General Fund Revenue.
• Projected Net Individual Income Tax for the fiscal year ending June 2012 will exceed FYE 2008 (not adjusted for inflation). This tax accounts for about two-thirds of Gross General Fund Revenue.
• Projected General Fund Revenue for the fiscal year ending June 2012 will match FYE 2008 (not adjusted for inflation).

For more detailed analysis of the state of the economy compared to four years ago, visit https://cber.co or click here.

 

©Copyright 2011 by CBER.

Are We Better Off Now Than We Were Four Years Ago? – Income

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The Great Recession was not kind to Coloradans in terms of employment and income.

On a positive note, Colorado’s Per Capita Personal Income (PCPI) increased between 2001 and 2011. The bad news is that it decreased sharply in 2009 and saw minimal gains in 2010 and 2011. Colorado’s 2011 PCPI is slightly below the value for 2008. Note: this data is not adjusted for inflation.

The news is less positive for Colorado’s Median Household Income (MHI). With the exception of 2007 and 2008, Colorado’s MHI, expressed in 2011 dollars, has trended downwards since 2000.

For more detailed analysis of the state of the economy compared to four years ago, visit https://cber.co or click here.

 

©Copyright 2011 by CBER.

Historical Colorado Output Growth Greater Than U.S.

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The Bureau of Economic Analysis recently released 2011 State Gross Domestic Product (GDP) data by NAICS sector. Last year the top industries for the U.S. and Colorado were similar, but they were ranked in different order.

United States Gross Domestic Product 2011 (Sum of States)
• $14.981 trillion.
• Private sector is 87.4% of total GDP; Government is 12.6%.
• Manufacturing; Real Estate/Rental/Leasing; Finance/Insurance are 32.4% of total GDP.
• Professional/ Scientific/Technical; Health Care/Social Assistance, and Retail Trade are 21.6% of the total.
Colorado Gross Domestic Product 2011
• $264.308 billion.
• Private sector is 87.2% of total GDP; Government is 12.8%.
• Real Estate/Rental/Leasing; Professional/Scientific/Technical; and Information are 30.1% of total GDP.
• Manufacturing; Finance/Insurance; and Health Care/Social Assistance are 20.7% of the total.

A quick and dirty historical analysis shows that
• Colorado’s Real GDP (2.9%) grew at a faster rate than the U.S. Real GDP (2.1%) from 1997 to 2011 as well as from 2007 to 2011 (0.7% vs. 0.0%).
• Both the private and public sector real output for Colorado grew at a faster rate than the U.S from 1997 to 2011, as well as from 2007 to 2011. Colorado is listed first in the following comparisons.
o Private sector for 1997 to 2011  3.1% vs.2.2%.
o Private sector for 2007 to 2011  0.5% vs. -0.1%.
o Public sector for 2007 to 2011  1.1% vs. 0.8%
o Public sector for 2007 to 2011  2.2% vs. 0.6%.

For the period 1997 to 2011, four sectors had negative annualized growth in the U.S.: Construction, Utilities, Mining, Construction, and Administrative/Waste Management. Construction is the only sector that posted a decline in Colorado. Colorado outperformed the nation in all sectors except Transportation/Warehousing, Real Estate/Rental/Leasing, Administrative/Waste Management, and Arts/Entertainment/Recreation.

It is important to note that some of the sectors with strongest output growth were sectors that incurred declines in jobs over this period. The Manufacturing and Information sectors are two key examples).

For a detailed analysis of the state GDP, click here (Special Reports section) or go to cber.co.

©Copyright 2011 by CBER.

Lackluster Job Growth on Tap for Remainder of 2012

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Through the first 8 months of 2012 there are 39,125 more jobs in Colorado than last year.

The average for the first 3 months was 47,300 workers with a drop-off in the next five months to 34,200.

In other words, the state is on track to hire between 35,000 and 40,000 for the year.

Two things could cause this number to drop below 35,000:
• BLS could make significant changes in future revisions. This is not likely given a recent announcement by the BLS that the recovery has been underestimated, i.e. employment numbers will be revised upwards.
• The economy could fall off a cliff as a result of an unforeseen event (9/11, Katrina, war, etc.).

Annual employment is calculated by averaging monthly employment for a 12 month period. Similarly, the annual change is the average of the month over same month differences.

As mentioned, the average change for the first 8 months of this year is 39,125 jobs and the average monthly change is trending downward. If that downward path continues the annual average will approach 35,000.

A look at several scenarios shows the change the last four months of the year will have on the 2012 average :
• If an average of 40,000 jobs is added for each of the last four months, the current average will change very little; it would increase slightly to 39,400.
• If an average of 30,000 jobs is added for each of the last four months, the annual change will be 36,100 jobs.
• If an average of 20,000 jobs is added for each of the last four months, the annual change will be 32,800 jobs.
• If an average of 10,000 jobs is added for each of the last four months, the annual change will be 29,500 jobs.
• If an average of 0 jobs is added for each of the last four months, the annual change would drop to 26,100.

At this point it seems likely that average employment for the last four months will be 30,000 or higher. While there are potential headwinds that could put the economy in a tailspin, it appears unlikely that will happen in the remaining four months.

There are two reasons to be optimistic about the final quarter. In a matter of weeks, the election will be over and the country can begin to move past the rhetoric of the campaign and start to chart a path for the next four years. Second, the the National Retail Federation recently announced that it expects holiday sales to be 4.1% greater than last year. Despite the high unemployment rate there are more people working and there are signs that some of Colorado’s volatile industries are rebounding. Sales growth at this level is a positive indicator, at least for the next three months.

While it is easy to complain about the state’s lackluster job growth of 35,000 to 40,000, it is important to keep in mind that 15 years ago Coloradans were complaining about all the people moving to Colorado and the accompanying cone zones.  Wouldn’t it be nice if we could have it both world – strong job growth and no cone zones?

For cber.co’s latest update on the Colorado economy click here.

©Copyright 2011 by CBER.

State Economic Agencies Point to Slower Growth in 2013

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The Colorado Legislative Council (CLC) and the Governor’s Office of State Planning and Budgeting (OSPB) recently released their Q3 economic updates. As can be surmised by their names, CLC and OSPB provide comprehensive economic information and forecasts to inform discussion about the state and national economies.

Their most current updates show the two groups are upbeat about the economy for 2012. At this point, they are much less optimistic about the prospects for 2013.

CLC
National Employment
2012  1.3% growth and 133,100,000 employees
2013  0.6% growth and 133,900,000 employees

National Unemployment
2012   8.3%
2013   9.1%

State Employment
2012  1.7% growth and  2,296,600 employees
2013   0.7% growth and 2,312,700 employees

State Unemployment
2012   8.3%
2013   9.4%

OSPB

National Employment
2012  1.3% growth and 133,000,000 employees
2013   0.8% growth and 134,100,000 employees

National Unemployment
2012  8.3%
2013  8.2%

State Employment
2012  1.7%  growth and  2,296,700 employees
2013  1.0%  growth and 2,320,300 employees

State Unemployment
2012  8.0%
2013  7.8%

There are notable differences between the two forecasts for 2013. This begs the question, “Are the two groups intentionally presenting best and worst case scenarios or are their differing viewpoints a legitimate indication of the diverse landscape?”

For more information about updates from OSPB click here.

To view the forecast for CLC click here.

For the most latest cber.co monthly update for Colorado click here.

 

 

©Copyright 2011 by CBER.