On December 8th Professor Richard Wobbekind and the Leeds School of Business (SOB) released the 49th annual economic forecast for Colorado. Unfortunately, the fundamentals of the 2014 outlook were as questionable as the 2012 and 2013 forecasts.
For three consecutive years (2012 to 2014) the SOB has projected fewer jobs would be added in the coming year, even though Real GDP was predicted to increase significantly in two of those three years.
A summary of the SOB forecasts from 2012 to 2014 are provided in the table below.
|
Leeds School of Business Forecast – US Real GDP and Colorado Employment |
|||
|
Year |
Change in Real GDP |
Change in State Employment |
|
|
2012 |
In 2012 Real GDP will show a significant increase in the rate of growth for 2011 |
Fewer jobs will be added in the coming year |
|
|
2013 |
In 2013 Real GDP will growth at about the same rate as 2012, a slight decrease is possible |
Fewer jobs will be added in the coming year |
|
|
2014 |
In 2014 Real GDP will increase at a rate almost double the 2013 rate |
Fewer jobs will be added in the coming year |
|
Source: SOB BEOF publications
The actual data for 2012 and preliminary data for 2013 are provided in the table below.
|
Performance of the Economy – US Real GDP and Colorado Employment |
|||
|
Year |
Change in Real GDP |
Change in State Employment |
|
|
2012 |
The rate of growth of 2012 was significantly greater than the rate of growth for 2011 |
More jobs were added in 2012 than 2011 |
|
|
2013 |
The 2013 preliminary rate of growth was significantly lower than the rate of growth for 2012. |
More jobs were added in 2013 than 2012 |
|
|
2014 |
To be determined |
To be determined |
|
Source: BLS, BEA, CBER
A historical look at the recoveries from the last three recessions is instructive.
After the 1991 recession, Colorado added jobs at an increasing rate for three years (1992 to 1994). This recovery was exceptionally strong. Job growth in 1994 was second highest in state history.
- Following the 2001 recession, Colorado “added” jobs at an increasing rate for four years (2003 to 2006). That rate of recovery for that period was anemic, but improving. Continued job growth at an increasing rate was cut short by the 2007 recession.
- After the 2007 recession, Colorado has “added” jobs at an increasing rate for four years (2010 to current). The rate of recovery has been so-so. In other words, there is a strong likelihood that job growth will continue at an increasing rate in 2014.
The saying “Every blind squirrel finds an acorn now and then” can be applied to the 2012-2014 SOB forecasts. If they continue to predict the state will add fewer jobs next year than this year, at some point they will be correct. Will 2014 finally be the year they are right?
We can only hope the SOB is wrong again!
©Copyright 2011 by CBER.