Category: Colorado Economy

Colorado Employment Increases by 13,000 jobs in October – Really?

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On Friday November 20th, the BLS released wage and salary employment data for the states. The seasonally adjusted data indicated that Colorado employment increased by 13,000 jobs last month.

This is in sharp contrast to the previous three months. The data for July showed a gain of 600 jobs; an increase of 1,600 workers was posted in August, and a decline of 1,600 jobs showed up in September.

If these numbers prove to be accurate, it is reasonable to raise the question: Which is the anomaly – the posted employment for July through September or the employment for October?

The non-seasonally adjusted data shows the Colorado employment continues to post solid job growth. Approximately 59,700 jobs will be added this year.

Colorado employment

The state’s job growth is led by the health care, construction, and accommodations and food services industries. There are fears that construction growth will be constrained by the lack of trained workers.

In addition, all of the state’s MSAs have shown solid to strong job growth. Local governments are continuing to spend and the state government is offering more tax incentives to out-of-state companies to move to Colorado.

A review of the top news stories for the past month echoes the sentiment of state leaders (Office of state Planning and Budgeting and Colorado Legislative Council) who say that the economy is on solid footing.

A majority of the coverage about the economy is very positive, however, there is one story that is unsettling. Union Pacific is laying off workers in Denver and BNSF is following suit in other states. While there is reason to be concerned about the individuals who are furloughed or laid off, there is greater concern because the railroads are facing decreased demand for shipments (coal, oil, agriculture products, and industrial products). This suggests there may be something fundamentally wrong with the overall economy, i.e. manufacturing may be woefully weak.

Another note of concern, the state of Colorado is expected to take in record levels of revenue, yet it will experience a budget shortfall for a variety of reasons beyond the control of state legislators. Special interest groups are addressing this issue, but there is limited interest in their efforts.

The bottom line is the Colorado economy is on solid footing, at least for the moment.

 

Colorado’s October Job Growth Reverses Downward Trend

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Recent data from the Bureau of Labor Statistics shows that 2015 wage and salary job growth continues to be positive, but it is increasing at a decreasing rate. Through the first nine months Colorado employment is 61,000 jobs greater than the same period last year.

During Q1 job growth was 75,000 greater than the same period a year ago. It dropped significantly during Q2 – 60,100 greater than Q2 2014. Q3 2015 job growth was only 47,700 greater than Q3 2014.

After declining for six months (March through August), employment increased from 42,100 in August to 42,400 in September.

About 76.2% of total jobs added were in the top five sectors:
Health Care 13,800
Accommodations and Food Services 12,300
Construction 11,500
Professional and Scientific 5,200
Manufacturing 3,600

Approximately 23.8% of all jobs added were in Leisure and Hospitality (AFS + AER). This sector touches all Colorado counties.

About 10.8% of total jobs added were in the PST, Manufacturing, and Information Sectors. These sectors are the source of primary and advanced technology jobs.

Colorado is projected to add 73,000 to 79,000 jobs in 2015, a gain of 3.0% to 3.2%. As mentioned earlier Colorado is on track to add 61,000 jobs this year.

CDLE/LMI has projected that a significant upward adjustment will be made to the Q4 2014 data and data for the first four months of 2015. These revisions will be made in March 2016. Total employment for 2015 should be at the lower end of the range of 73,000 to 79,000. This is the level of job growth forecasted by cber.co for 2015.

The good news is the downward trend in the number of jobs added may have been reversed in October. We will learn more next month and in March 2016 when the 2015 data is revised.

Wage and Salary Job Growth

 

Colorado Job Growth On Solid Footing

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This post touches on a few of the national and state trends that will affect Colorado job growth through the remainder of the year. They are made In anticipation of the September release of employment data from the BLS

National Trends That Affect Colorado

Nationally, there are several trends that are relevant to Colorado:
• Jobs are being added at a slower rate than in the past, yet the U.S. is on track to add about 3 million jobs this year. This will be the fifth consecutive year for accelerated job growth.
• The slower rate of job growth is occurring for two reasons. First, the slowdown in the Chinese economy has caused a pullback in other economic growth in other countries. Second, U.S. job growth has reached a point where the past level of job growth cannot be sustained. A slowdown in this case does not suggest the country is headed for a downturn.
• Real GDP growth for 2015 will remain in the neighborhood of 2.5%.
• The service sector will continue to post solid growth through the end of the year, while manufacturing remains sluggish.
• Holiday sales will be so-so. Industry experts expect an increase of 3.5% to 4.0% compared to last year. Stronger labor markets and lower gas prices should point to stronger sales; however, the savings rate is around 4.6%. At this point consumers appear to be cautious.
• It is likely the strong level of mergers and acquisitions will continue. Companies have money and they appear to be ready to spend it when the time is right. This has impacted several companies in Colorado.

Colorado’s Economic Trends

There is conflicting employment data. The Bureau of Labor Statistics shows that Colorado employment has trended downward beginning in Q2, with a significant decline in the rate of growth in August. There are also indications the number of jobs added for the first half of the year will be revised upward with the benchmark revisions.

Either way it is likely the rate of Colorado job growth is declining, in line with the national trends. The state will feel the effects of a slower global economy. As well, Colorado has reached a level of job growth that is unsustainable.

The bottom line is that Colorado will continue to have a higher rate of job growth than the U.S. for the remainder of the year and into next year.

If the Economy is Doing so Well, Why Doesn’t it Feel More Robust? -Take II

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In the previous blog post, the topic of the economic recovery was discussed. Although it has been a solid recovery, why doesn’t it feel more robust?

The 2007 recovery was atypical in that it occurred over a period of years, as opposed to months. As a result Colorado posted accelerating job growth for four consecutive years. Essentially, the recovery from the recession was weak and gradual. At no point has the state reached a point where public and private leaders could really say, “We have arrived.”

At the national level, the U.S. will add 3.0 million jobs in 2015. Yet, the focus is on the slowdown of the global economy, not the fact that 2015 will be the fifth consecutive year of solid job growth.

Nationally, GDP growth has been subpar. It is hard to get excited when the rate of Real GDP growth is 2.0% to 2.5%. Consumer spending has increased at a similar anemic rate. In other words consumers have remained cautious, as if they are always looking over their shoulder.

The construction industry is “booming” and there is a shortage of trained workers. At the same time, the growth of the industry pales when compared to the 2000s. The good news is that housing has been built on an “as needed basis” and the chance of being overbuilt is slim.

During the recovery period, the state has suffered natural tragedies. There were multiple severe forest fires in several parts of the state, as well as flooding and drought. That was taxing on the state – fiscally and psychologically. Fortunately, Coloradans have remained resilient.

Lower oil prices have dampened growth in parts of the state that had previously experienced strong growth. It is easy to forget the risk associated with the extractive industries until the price of the commodities (oil, molybdenum, coal) drops precipitously or regulations are established that eliminate demand for these commodities.

Then there is the state government… The legislature has focused on social issues for the past couple of sessions – and that is not bad. Some feel insufficient time and resources were spent addressing issues that could improve the state’s ability to conduct business.

At one point, there was sufficient discourse to cause several counties to threaten secession from the state. At times, state government seemed dysfunctional over the past five years.

State government faces a new problem – the state economy is on solid footing and the state will generate record levels of revenue, yet the legislature will be forced to make cuts to key service areas. This conundrum is caused by the combination of Amendment 23, the Gallagher Amendment, TABOR, the initiative process, and Medicare obligations. It is difficult for legislators to govern the state in a way they feel is appropriate.

Despite the challenges and angst created by the items mentioned above, the growth of Colorado’s economy has exceeded the growth of the U.S. economy in many key areas (rate of job growth, rate of population growth, growth of Gross Domestic Product).

Unfortunately, the picture hasn’t always been rosy for the past five years, despite the many great things that have happened.

Colorado has Diverse Cost of Living

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How does the cost of living in your area compare to Broomfield County or Yuma County? The Colorado Legislative Council collects Cost of Living data for Colorado’s 64 counties and has done so every two years since 1993 for the Public School Finance Act of 1994 for the School District Funding Formula.

The current data is from 2013. It assumes a three person household, 1,500 square foot home, with household income of $49,100.Annual expenditures are broken down as follows:
• Housing 33.8%
• Transportation 19.3%
• Food 13.6%
• Health Care 7.3%
• Entertainment 4.5%
• Apparel 3.3%
• Other Categories 18.2%

The counties are indexed off the state HHI, $49,100. Twenty-one counties are above the state value and 43 are below it.

As expected the counties in the state’s “Very High” category are the ones where the state’s prime ski areas are located.

Rank County HHI Index Index Category
1 Pitkin $84,810 172.7 Very High
2 Summit $59,836 121.9 Very High
3 San Miguel $54,717 111.4 Very High
4 Routt $54,311 110.6 Very High

Four counties are in the “High” category. Boulder County is in the “High” category. It is the Boulder MSA

Rank County HHI Index Index Category
5 Eagle $53,931 109.8 High
6 Denver $53,796 109.6 High
7 Grand $52,067 106.0 High
8 Boulder $52,041 106.0 High

Twenty-two counties are in the “Mid-Range” category. Larimer County is in the “Mid-Range” category. It is the Fort Collins MSA. Note that Park County, #21, is only a few dollars above the state average.

Rank County HHI Index Index Category
9 Hinsdale $50,800 103.5 Mid-Range
10 Gilpin $50,677 103.2 Mid-Range
11 La Plata $50,670 103.2 Mid-Range
12 Broomfield $50,651 103.2 Mid-Range
13 Gunnison $50,298 102.4 Mid-Range
14 Jefferson $50,108 102.1 Mid-Range
15 Clear Creek $49,949 101.7 Mid-Range
16 Garfield $49,777 101.4 Mid-Range
17 Lake $49,745 101.3 Mid-Range
18 Douglas $49,722 101.3 Mid-Range
19 Ouray $49,502 100.8 Mid-Range
20 San Juan $49,197 100.2 Mid-Range
21 Park $49,115 100.0 Mid-Range
22 Arapahoe $48,570 98.9 Mid-Range
23 El Paso $48,427 98.6 Mid-Range
24 Larimer $48,319 98.4 Mid-Range
25 Mineral $48,222 98.2 Mid-Range
26 Moffat $47,874 97.5 Mid-Range
27 Elbert $47,706 97.2 Mid-Range
28 Teller $47,489 96.7 Mid-Range
29 Adams $47,477 96.7 Mid-Range
30 Chaffee $47,320 96.4 Mid-Range

Sixteen counties are in the “Low” category. Weld, Mesa, and Pueblo Counties represent three of the states MSAs.

Rank County HHI Index Index Category
31 Morgan $46,604 94.9 Low
32 Delta $46,514 94.7 Low
33 Weld $46,419 94.5 Low
34 Custer $46,234 94.2 Low
35 Mesa $45,986 93.7 Low
36 Rio Blanco $45,932 93.5 Low
37 Pueblo $45,707 93.1 Low
38 Montrose $45,605 92.9 Low
39 Logan $45,519 92.7 Low
40 Rio Grande $45,301 92.3 Low
41 Alamosa $45,295 92.3 Low
42 Fremont $45,274 92.2 Low
43 Montezuma $45,206 92.1 Low
44 Jackson $44,834 91.3 Low
45 Archuleta $44,665 91.0 Low
46 Kit Carson $44,563 90.8 Low

Eighteen counties are in the “Very Low” category. These are all rural counties.

Rank County HHI Index Index Category
47 Dolores $43,943 89.5 Very Low
48 Phillips $43,713 89.0 Very Low
49 Costilla $43,537 88.7 Very Low
50 Saguache $43,331 88.3 Very Low
51 Las Animas $43,233 88.1 Very Low
52 Lincoln $43,044 87.7 Very Low
53 Huerfano $42,970 87.5 Very Low
54 Washington $42,947 87.5 Very Low
55 Yuma $42,786 87.1 Very Low
56 Sedgwick $42,781 87.1 Very Low
57 Otero $42,013 85.6 Very Low
58 Cheyenne $41,956 85.4 Very Low
59 Conejos $41,889 85.3 Very Low
60 Bent $41,477 84.5 Very Low
61 Crowley $41,440 84.4 Very Low
62 Prowers $41,197 83.9 Very Low
63 Baca $40,779 83.1 Very Low
64 Kiowa $40,438 82.4 Very Low

The Colorado Springs MSA includes El Paso and Teller Counties. They are both in the Mid-Range category, slightly below the state level of 100.

The Denver MSA has ten counties. Denver is in the “High” category and the following counties are in the “Mid-Range” category: Gilpin, Broomfield, Jefferson, Clear Creek, Douglas, Park, Arapahoe, Elbert, and Adams counties.

As can be seen, Colorado is a diverse state from many perspectives: geographically, ethnically, and from an industry mix. It is also a diverse state in terms of the cost of living. In simplistic terms, the cost of living is higher in the metro areas and the mountain resort communities and lower in the rural communities.

The Colorado Population, 5.3 million People Strong

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Colorado is noted for its diverse geography and population. In July 2014 the total Colorado population of the state’s 64 counties was 5,353,471, up from 4,338,801 in 2000 and 5,050,289 in 2010.

Colorado has 7 Metropolitan Statistical Areas (MSA). As expected, the Colorado-Lakewood-Aurora MSA is the largest with slightly more than half the state’s population. There are 4,688,482 people living in the 7 MSAs, or 87.6% of the state’s population

Denver 2,753,338 51.4%
Colorado Springs 711,364 13.3%
Fort Collins 323,863 6.0%
Boulder 313,708 5.9%
Greeley 276,079 5.2%
Pueblo 161,782 3.0%
Grand Junction 148,348 2.8%

In 2014 the state had 11 counties with populations greater than 100,000. Combined their population was 4,371,483, or 84.2% of the total Colorado population.

County Population
El Paso 665,070
Denver 664,220
Arapahoe 618,341
Jefferson 558,532
Adams 480,317
Larimer 323,863
Douglas 314,592
Boulder 313,708
Weld 276,079
Pueblo 161,782

There are 27 counties with a population between 10,000 and 62,000 people. These 27 counties have a combined population of 710,198. Broomfield is the largest county in this group with 61,826 people and
Yuma is the smallest with 10,132.

Colorado has 26 counties with a population less than 10,000 people. The combined population of these counties is 118,421. Of this group, 3 counties (Hinsdale, San Juan, and Mineral) have populations less than 1,000.

The populations for each of the state’s 64 counties is listed in the table below.

County Population % Total
El Paso 665,070 12.42%
Denver 664,220 12.41%
Arapahoe 618,341 11.55%
Jefferson 558,532 10.43%
Adams 480,317 8.97%
Larimer 323,863 6.05%
Douglas 314,592 5.88%
Boulder 313,708 5.86%
Weld 276,079 5.16%
Pueblo 161,782 3.02%
Mesa 148,348 2.77%
Broomfield 61,826 1.15%
Garfield 57,548 1.07%
La Plata 54,014 1.01%
Eagle 52,831 0.99%
Fremont 46,294 0.86%
Montrose 40,904 0.76%
Delta 30,027 0.56%
Summit 29,399 0.55%
Morgan 28,254 0.53%
Montezuma 25,812 0.48%
Elbert 24,144 0.45%
Routt 23,896 0.45%
Teller 23,394 0.44%
Logan 22,088 0.41%
Chaffee 18,454 0.34%
Otero 18,380 0.34%
Pitkin 17,645 0.33%
Park 16,383 0.31%
Alamosa 15,870 0.30%
Gunnison 15,660 0.29%
Grand 14,505 0.27%
Las Animas 14,060 0.26%
Moffat 12,870 0.24%
Archuleta 12,249 0.23%
Prowers 11,985 0.22%
Rio Grande 11,574 0.22%
Yuma 10,132 0.19%
Clear Creek 9,153 0.17%
Conejos 8,229 0.15%
San Miguel 7,823 0.15%
Kit Carson 7,818 0.15%
Lake 7,349 0.14%
Rio Blanco 6,607 0.12%
Huerfano 6,428 0.12%
Saguache 6,206 0.12%
Gilpin 5,830 0.11%
Crowley 5,551 0.10%
Bent 5,539 0.10%
Lincoln 5,508 0.10%
Washington 4,769 0.09%
Ouray 4,587 0.09%
Phillips 4,380 0.08%
Custer 4,373 0.08%
Baca 3,624 0.07%
Costilla 3,556 0.07%
Sedgwick 2,331 0.04%
Dolores 1,933 0.04%
Cheyenne 1,870 0.03%
Jackson 1,388 0.03%
Kiowa 1,385 0.03%
Hinsdale 769 0.01%
San Juan 718 0.01%
Mineral 697 0.01%
Colorado 5,353,471 100.00%

Colorado Job Growth is Solid – The Sky is Not Falling

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There has been a streak of bad economic news within the past ten days; however, the fundamentals of the U.S. and Colorado economies are solid and the sky is not falling!

The Colorado Department of Labor and Employment announced the release of data showing that on average there are 65,900 more jobs for the first seven months of 2015 than the same period in 2014. The rate of increase is about 2.7%. While this level of job growth is solid, activity on the streets is much stronger.

Internationally, concerns have temporarily shifted away from violence in the Middle East. Worries have shifted to a slowdown in the economic growth of China, the magnitude of that slowdown, and the impact it would have on the global economy.Job Growth - The Sky is Not Falling

Earlier declines in the price of oil have not had the negative impact on the state that was initially expected by some economists. Colorado is a second tier state in terms of production and companies have taken numerous steps to increase their efficiency and maintain their profitability. Layoffs in the industry may be inevitable if the price for a barrel of oil remains at its current level, in the low $40s, for an extended period.

Through seven months average employment in the extractive industries is about 700 greater than last year. That number will approach zero by the end of the year.

The recent volatility in the equity markets may be the sign of a long-overdue correction or the start of a bear market. Uncertainty in the equities market may cause consumers to remain cautious.

On a more positive note, Colorado new car registrations have been strong this year. On a YTD basis, more new cars have been registered in 2015; however, the rate of growth has slowed to about 5.0% this year, down from 11.2% growth in 2013, and 6.5% growth last year.

Net migration remains strong as people find Colorado an attractive place to live, work, and play. In part that is a driving factor for the construction industry.

On a year-to-date basis the top sectors for job growth are:
• Healthcare 14,000
• Accommodations and Food Services 13,200
• Construction 12,100

Combined these three sectors account for about 59.6% of the jobs added or 39,300 workers. Average wages for many of the occupations in these industries are well-below the state average.

There are concerns that an insufficient number of primary jobs are being added in Colorado. Primary jobs are important because they bring in money from the outside that is invested in the state economy. In addition, primary employers often have a local supply chain that supports the local economy.

To that point, the average number of manufacturing jobs is 3,900 greater than a year ago. Many of these workers have been added in the renewable energy sector and its supply chain and they are located in Weld County. The addition of new jobs in this area will offset job losses associated with the decline in the price of oil.

So far this year, the major disappointment is the Information Sector. Declines are expected to continue through the end of the year.

On a year-to-date basis, the Government sector has added about 4,900 jobs. On a percentage basis, the greatest number of jobs has been added in K-12 and higher education. After seeing cutbacks for two years, the Federal Government is on track to add about 400 positions this year.

In addition to this data, CDLE will release a report later this month showing that Colorado job growth for the first quarter may be revised upward by 15,000 to 20,000. The bottom line is that Colorado’s employment is  much stronger than currently being reported.  Unequivocally, the sky Is not falling.

Economic Risks at the National Level That Might Affect Colorado

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The U.S. economy is currently stronger than it was in 2014. The good news is the Colorado is outperforming the U.S. in three key areas:
• The Colorado rate of population growth in 2015 is projected to be 1.6% vs. 0.7% for the U.S.
• The Colorado rate of job growth in 2015 is currently projected to be 3.0% vs. 2.2% for the U.S.
• The recently released GDP data shows that Colorado outperformed the U.S. in the rate of growth, 4.7% vs. 2.2% in 2014.

Currently, the strengths of the national economy outnumber the economic risks. With that in mind this post reviews the manner in which the risks might impact the Colorado economy. For each risk the impact on Colorado is highlighted in italics.

The Economic Risks

The Fed – Janet Yellen indicated there are still issues with the labor market. These concerns include finding trained workers and weak wage growth.

Colorado’s low unemployment rate has caused companies to have difficulty finding trained workers in such industries as construction and the high tech sector. Areas of strong wage growth have occurred in occupations where there is high demand for workers.

Real GDP – The rate of growth in business investments is lackluster. Increased demand for goods and services will drive companies to invest in new equipment, software and buildings.

The decrease in the price of oil has caused Colorado companies in the Oil and Gas industry to curtail investments in their business.

The Dollar – The strong dollar has made U.S. goods/exports less competitive in foreign markets.

The strong dollar is one of many factors that could challenge Colorado exporters in 2015.economic risks

Industry Sentiment – Manufacturing may remain sluggish through the end of the year.

The growth of Colorado manufacturing output was disappointing in 2014. That is unlikely to change in 2015.

Housing – In some parts of the country the rate of housing price appreciation may be problematic.

It will be more difficult to find attainable and affordable housing as a result of the sharp increases in housing prices. These rising prices will cause the state’s rate of inflation to increase.

Price of Oil – Low oil prices have benefited consumers (lower prices at the pump) and some industries, but they have hurt the extractive industries.

Through the first half of the year, consumers have saved about $480 with lower gasoline prices. Currently, it is not possible to measure the impact of cheaper oil on the Oil and Gas industry.

International Situations – The current global situational and foreign policy challenges to the U.S. economy currently include Iran, Syria, China, Russia, Greece, Israel, Cuba, the EU, and Ukraine.

At the moment Colorado shares a level of risk similar to the U.S. as a result of situational and foreign policy challenges.

The strengths of the national economy have created momentum that will further strengthen the U.S. and Colorado moving into 2016; however, if several of these economic risks materialize at the same time, then the health of the U.S. and Colorado economies might be jeopardized.

Colorado Economy On Track to Add At Least 68,600 Jobs in 2015

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At the midpoint of the year the U.S. economy is on solid footing and the second half of the year will be much stronger than the first half. The Colorado economy continues to outperform the U.S. in its rate of growth for population, employment, and GDP.

Key Data Points for the U.S.
Real GDP – Q2 will be stronger. Annual growth will be 2.5% to 2.9% in 2015.
Retail Sales – Up 1.3% for 6 months, projected to be up 3.0% for 2015.
U.S. Employment – The U.S. is on track to add 3.1 million jobs this year.
Unemployment Rate – 5.3%, down from 6.1% a year ago, 8.3 million unemployed, trending down.
ISM Indices –Manufacturing is sluggish and expected to remain that way; Non-Manufacturing is steady and well above 50.
Price of a Barrel of Oil (WTI) – Since mid-March it has varied from $43 to $61. Currently in the low 50s, but trending down.
Construction – For 6 months, employment up 4.2%, weekly earnings up 3.0%.
Case Shiller Housing Prices – U.S. prices up 4.2% from a year ago.
Dow Jones Industrial Average – On July 17rd the DJIA was 18,086, up 1.5% from 17,823 at the end of the year.

Average Colorado employment is 68,600 greater than the same period last year, with the potential of being revised upward at a later date.

Colorado Economy

As has been the case in the past, the sectors with the top job growth are: Health Care; Accommodations and Food Services (part of the Tourism Industry); Construction; Professional, Scientific, and Technical Services; and Manufacturing. These sectors accounted for about 72% of total job growth in the first half of 2015.

The Bureau of Economic Analysis has released the 2014 Gross Domestic Product for Colorado. The state’s Real GDP expanded at a rate of 4.7% compared to 2.2% for the U.S.

Key Data Points for Colorado
QCEW Revisions – Recent revisions to Q4 2014 could cause 2014 employment to be revised upward in the March 2016 benchmark revisions. There was stronger momentum coming into 2015 than originally anticipated.
Population – Colorado’s population will increase by 88,800 people this year.
Unemployment Rate – 4.4%, down from 5.0% a year ago.
MSA Unemployment Rate – Boulder and Ft. Collins have the lowest rates at 3.5% and 3.6% respectively.
2014 Colorado GDP – The state Real GDP grew by 4.7% in 2014 compared to 2.2% for the U.S.
2014 Contribution to GDP Growth – The Mining sector accounted for 6.2% of GDP and 18.2% of GDP growth in 2014.
Wage and Salary Employment – On average Colorado has added 68,600 jobs this year based on current data. This is not adjusted for the projected revisions.
Leading Sectors for Growth – About 72.2% of the jobs have been added in the Health Care; Construction; Accommodations and Food Services; Professional, Scientific, and Technical Services; and Manufacturing.

For details or more information about the Colorado economy, check out the 2015 cber.co forecast and economic updates on this website, https://cber.co.

The Strengths of the National Economy will Impact Colorado

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The U.S. economy is currently stronger than it was in 2014. The good news is the Colorado economy is outperforming the U.S. economy in three key areas:
• The Colorado rate of population growth in 2015 is projected to be 1.6% vs. 0.7% for the U.S.
• The Colorado rate of job growth in 2015 is currently projected to be 3.0% vs. 2.2% for the U.S.
• The recently released GDP data shows that Colorado outperformed the U.S. in the rate of growth, 4.7% vs. 2.2% in 2014.

Currently, the strengths of the national economy outnumber the risks. With that in mind this post reviews the manner in which these strengths will impact the Colorado economy.  For each strength the impact on Colorado is highlighted in italics.

The Fed – Janet Yellen has indicated the Federal Reserve is confident the U.S. economy is performing well enough that interest rates can be raised.

Colorado has experienced stronger economic growth than the nation throughout the first half of the year. The state will continue to experience solid growth in the second half of the year.

Real GDP – After a weak start in Q1, Real GDP growth for the year is projected to be in the 2.5% to 2.9% range – better than last year.

In 2014, Colorado’s rate of Real GDP growth was more than twice that of the U.S. Solid growth is expected to continue in 2015.  strengths of the national economy - retail

Retail – The woes of Q1 seem to be behind us. Consumer spending is expected to be stronger in the second half. This may lead to strong back-to- school sales – a significant source of sales for retailers.

The Colorado economy had strong momentum coming into 2015. It did not experience problems felt elsewhere in Q1. Population and job growth will drive continued solid retail growth in 2015.

Jobs – The U.S. is on track to add more than 3.0 million jobs this year. The unemployment rate and the long-term unemployment rate have continued to decline.

As the year has progressed, U.S. job growth has increased at a solid, but decreasing rate. A similar trend may be happening in Colorado.

Consumer Sentiment – According to the Consumer Sentiment Survey, consumers are upbeat.

The mood of shoppers in the malls and the waiting times at local restaurants suggests that Coloradans are upbeat about the economy.

Industry Sentiment – Purchasing managers have a positive outlook for both goods and services. Manufacturing is more sluggish and may remain that way through the end of the year.

Continued optimism in the non-manufacturing sectors points to ongoing solid growth for these sectors and the Colorado economy.

Inflation – Inflation is below the Fed’s target rate of 2.0%. As interest rates increase, inflation will approach the target rate.

The increase in Colorado housing prices will cause the state’s rate of inflation to further exceed that of the nation.

Construction – There is strong activity in both the residential and non-residential markets. Construction job growth will be constrained by the lack of trained workers.

Despite the lack of trained construction workers, Colorado’s construction industry is responsible for about 18% of the jobs added in 2015.

Housing Prices – The housing market remains strong – too strong in some areas.

Home owners like having greater equity and local governments benefit from higher property taxes.

These strengths of the national economy have created momentum that will strengthen the U.S. and Colorado into 2016.