Tag: Bureau of Labor Statistics

Is Inflation Giving you Gas?

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It is not your imagination that the cost to fill your gas tank is rising faster than the increases in your paycheck.

Average retail gasoline prices for all formulations has more than doubled over the past two years (Colorado and U.S).

The annual cost for Coloradans to purchase 15 gallons of gasoline a week would have been about $1,800 for 2009. Last year that same amount of gasoline cost $2,100, a 16% increase. So far this year, prices are running about 21% ahead of last year. With the summer season right around the corner, $4.00 a gallon seems a certainty.

Is $5.00 a gallon on the horizon?

For some Americans the extra cost is an annoyance. For those who have gone months without a meaningful pay increase or those who are living on fixed or limited incomes, the additional $25 – $30 per month (for gasoline) is significant.

In addition higher fuel costs are indirectly causing increases in food prices, building materials, and various consumer goods and services.

©Copyright 2011 by CBER.

The Lost Decade – Colorado Sheds A Quarter Million Jobs As a Result of Recessions

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This topic is being revisited (last discussed October 1, 2010). In early March, the Bureau of Labor Statistics released benchmark revisions for the Current Employment Statistics (CES) series for 2009 and 2010.

The Lost Decade (January 2001 through December, 2010)

  • Two recessions
  • 69 months of job gains
  • 51 months of job losses
  • Net loss 28,800 jobs over ten years

Now that the revised data is in, the employment pattern for the 10 years ending this past December is clear: DOWN, UP, DOWN, UP.

The recession, as defined by NBER, is irrelevant.

DOWN

The employment situation started off bad in January 2001. And it stayed bad for 30 months (this includes the 2001 recession).

NOTE: More jobs were lost in the 22 months in the months before and after the recession, as defined by NBER than during the 8 months of the recession (March through October 2001).

Net job losses (from peak to trough) -103,600.

UP

Beginning in July 2003, employment turned positive. Steady gains occurred over the next 58 months.

NOTE: Colorado was late entering the Great Recession (December 2007 through May 2009). The state posted net job gains of 11,600 during the first 5 months.

Net job gains (from trough to peak) +214,900.

DOWN

NOTE: During the last 13 months of the Great Recession, the state lost 109,500 net jobs.

The trend of monthly losses began in May 2008 and continued for 21 months, 8 months past the end of the recession.

Net job losses (from peak to trough) –151,100.

UP

Employment turned positive in February 2010 and posted slight gains for the remaining 11 months in 2010.

Net job gains (from trough to peak) +10,900.

NET LOSS 28,900 JOBS FOR THE TEN YEARS 2001 through 2010!

 

©Copyright 2011 by CBER.

Colorado Unemployment Rate Tops the U.S.

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On March 10th, the Colorado Office of Labor Market Information (LMI) announced that the statewide seasonally adjusted unemployment rate reached 9.1% in January. By comparison, the national rate dropped to 9.0%. The last time Colorado’s rate was higher than the U.S. was September 2005.

These results are further indication that the state is lagging the nation in its recovery. Over the past year, the
national rate has declined, while the state rate has increased slightly.

A review of the 64 counties shows that 35 have a rate less than the state (9.9% non-seasonally adjusted). In
several counties with small labor forces there is unemployment of about 20%. In other words, both urban and rural counties have not been spared.

Colorado has 7 Metropolitan Statistical Areas (MSA) that cover 17 counties and account for 86% of the labor force. The unemployment rate (non seasonally adjusted) in 9 counties is less than the rate for the state.

A review of unemployment rates by MSA shows that the Denver-Aurora is the same as the state, whereas Boulder-Longmont and Fort Collins-Loveland fall below the state. The remaining four MSAs have rates (Greeley, Pueblo,Colorado Springs, and Grand Junction) above the state.

In addition, Colorado has seven Micropolitan Statistical Areas (MCAs) that cover 8 counties. About 5.5% of the
labor force works in these locales.

Five of the seven MCAs have unemployment lower than the state average (Durango, Edwards, Fort Morgan, Silverthorne, and Sterling). On the other hand, unemployment in Canon City and Montrose is well above the state average.Unemployment in 5 of the 8 counties is below 9.9%. In the remaining 39 rural counties, 21 had unemployment rates lower than 9.9%.

The aggregate rate of unemployment was greatest in the MSAs (9.94%), followed by the MCAs (9.70%), and the rural counties (9.58%). About one-third of the counties have unemployment below 8.0%.

On a more positive note, limited job creation began in the second quarter of 2010. If that growth continues, the state rate is likely to follow the national trend, and decline as the year progresses.

©Copyright 2011 by CBER.

Has the Colorado Job Creation Machine Stalled?

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Most analyses of Bureau of Labor Statistics (BLS) employment data report net change in the number of workers. For example, Colorado lost about 25,000 jobs in 2010.

BLS also produces data series, based on the Quarterly Census of Employment (QCEW – private sector only), that report the following employment flows:
• employees added (establishments were opened); in 2009 this total was 101,869.
• workers added (firms currently in business); in 2009 this total was 369,773.
• employees lost (establishments contracted); in 2009 this total was 472,895.
• workers lost (firms closed); in 2009 this total was 111,574.
The sum of the first two categories measures gross job gains, whereas the sum of the latter two categories is gross job losses. In 2009 there was a gross gain of 471,642 jobs and a gross loss of 584,469 jobs.

The net change in employment is the difference between job gains and job losses. In 2009 the net change in employment was -112,827 workers. Total QCEW private employment for 2009 was 1,828,955 workers.

The magnitude of the net jobs lost is striking. It is a result of reduced job creation and increased job losses – the perfect storm on steroids. It should also be noted that in both 2008 and 2009 more jobs were lost by firms closings than were added by firms that were opened.

The following points stand out in an analysis of the jobs gained and jobs lost data:
• During the “go-go 90s” there was a high level of gross jobs lost and an even higher level of gross jobs added. There was a high level of job churn accompanied by strong net gains in employment.
• For the period 2002 through 2004, weak gross job gains were offset by much stronger gross job losses. There were net job losses of about 50,000 workers for this period.
• Gross job gains were comparatively weak for 2006 through 2008, although the state added about 170,000 net jobs over that period. There was a net increase in employment because of a decline in the number of gross jobs lost. In other words, job churn subsided. Workers were content to stay in the jobs they held at the time and fewer jobs were created, which increased competition for the available openings.
• It is especially disturbing to see the decline in the number of employees working for firms that were opened.
At this point, data for 2010 is available through mid-year. The good news is that there seems to be significant improvement in the number of gross jobs lost. On the downside, there is not corresponding improvement in the number of gross jobs gained.

For the moment it appears that Colorado’s wild-west entrepreneurial job creation machine seems to have stalled!

©Copyright 2011 by CBER.

For Many Coloradans Inflation is Real

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Do you feel like your paycheck doesn’t pay as many bills as it did several months ago?

For the past couple of years, economists have expressed concerns about both inflation and deflation. In other words, inflation has been low.

Over the past decade the Denver-Boulder-Greeley Consumer Price Index (CPI) has expanded at a modest annualized rate of 2.1% (this rate is used as a proxy for the state), slightly lower than the U.S. rate of 2.4%. More recently, the past two years, inflation has been almost non-existent, 0.6% both in Colorado and the U. S.

In some cases, the Lost Decade has forced companies to market their products differently in order to retain sales and remain profitable. For example, restaurants may have held prices constant, but made the portions smaller.

The brief analysis that follows looks at annualized rates of growth of the Colorado CPI for the period 2001 to 2010.

Let’s take a look at apparel. While the emperor may have no clothes, most people have been able to afford an adequate wardrobe at a reasonable price. For the decade, clothing costs have risen by an annualized  rate of 0.9% and prices in 2010 were less than 2007.

The price for household furnishings has declined since 2004. For the decade the annualized change in inflation has been -0.5%.

So far, so good if buying clothes and updating your household decor have been a priority for you; not so good if you owned a clothing or furniture store.

Housing prices, which is a dominant component of the CPI, have remained constant for the past three years. For the period, prices for shelter rose at a compound rate of 1.3%.

On the other hand, food and beverage prices have increased at a compound rate of 2.3%, slightly higher than the rate for all goods and services. After sharp increases in 2007 and 2008, prices have decreased slightly.

Recreation prices have risen at a compound rate of 3.0% for the decade, bad news for the active-minded population of Colorado.

Medical care has grown at a compound rate of 3.9% over the past decade. For the family of four this is noticeable, while a healthy single person who avoids hang-gliding and race car driving is unlikely to notice.

Finally, we will take a look at electricity, utility (piped) gas service, and motor fuel. Each of these areas has experienced extreme volatility over the past decade, often posting double-digit swings in either direction.

Electricity has increased at an annualized rate of 3.9%, gas service 1.9%, and motor fuel, 5.6%. The steep increase in the latter is partially responsible for increases in food, beverage, and recreation prices.

As can be seen, the impact of inflation varies based on a person’s lifestyle. Those who eat, play, drive cars, and go to the doctor will have felt the pinch of inflation more than people with a different lifestyle. These trends are likely to continue in the months ahead. (For more information on the CPI-U check out the Bureau of Labor Statistics Website ).

©Copyright 2011 by CBER.

Small Business Start-Ups on the Decline?

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During a typical recession, the number of new or start-up businesses increases as some individuals start their own firms when they lose their jobs. As these start-ups become successful, job creation occurs, thus shortening the recovery periods. Unfortunately, the Lost Decade is not your typical recession.

On December 8, Aaron Smith of Moody Analytics reported that an analysis of BLS  data shows that the number of self-employed people fell from a peak of 15.5 million in December of 2006 to 13.7 million in October of this year, or a decline of 1.8 million. He went on to say that over the past decade, the self-employed have comprised 9.5% to 10.5% of the U.S. workforce, and today that percentage is closer to 9.5%.

Both Smith and others agree that small business sentiment is improving. For example, Vectra Bank’s Colorado Small Business Index has posted miniscule, but steady gains for the period of July through October. Despite increased optimism, small businesses do not appear to be thinking about expansion of capital expenditures, hiring, and increased inventory.

Assuming there is not a major revision in the data, this analysis raises a series of questions:
• Is this problem driven by a lack of demand or availability to credit? While both have been a problem, NFIB  research suggests that lack of demand has been more problematic.
• Is this reduction in startups tied to cutbacks in manufacturing and high tech jobs or might it be a function of increased dependence on imports?
• Has there been a structural change in our economic infrastructure that has diminished demand for start-ups?
• Is this a sign that the U.S. has lost its edge in competitiveness or innovation?
• Does this downward trend in firm creation exist in small-business-friendly states such as Colorado?

Hopefully this downturn in small business activity is just a brief hiccup, and that there will be a resurgence in start-ups in the near-term.

©Copyright 2011 by CBER.

It all Starts with a Job

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A mantra common to economic developers, high school counselors, and politicians is that “it all starts with a job”.  Jobs come in all shapes, sizes, and pay rates, as evidenced by the employment and occupation data produced by Colorado Office of Labor Market Information (LMI).

For example, the average entry level pay rate for Coloradans is $9.98 per hour while the average rate for experienced workers is $28.18. On average, hourly wage earners receive $22.11 per hour.

On the salary side of the equation, average annual entry level wages are $20,767 with experienced workers receiving $58,606. Average wages across all sectors are $45,993 per year.

The most recognized LMI data is the employment and unemployment numbers. In addition; the group also tracks occupational data, such as types of jobs, short-term and long-term growth rate, areas of the state where jobs are most prevalent, and compensation information.

A simple example of some of the data can be found by looking at the seven categories of occupations in the legal profession.  There are approximately:

• 14,298 Lawyers
• 4,486 Paralegals and Legal Assistants
• 4,006 Compliance Officers, Except Agriculture, Construct
• 3,965 Claims Adjusters, Examiners, and Investigators
• 1,782 Detectives and Criminal Investigators
• 627 Judges, Magistrate Judges, and Magistrates
• 298 Law Clerks

A similar breakdown is available for each of the key industries that comprise the Colorado economy. These data can be used by community colleges, workforce centers, and private educators to establish training and education programs. Parents and guidance counselors may use them as a tool for guiding their children into certain occupations. Employers may evaluate the data to understand pay ranges or areas where they may expect labor shortages.

 

 

©Copyright 2011 by CBER.

CSU Forecast – Job Growth Less Than One Percent

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On November 16, the Colorado State University ‘s Economics Department held its Colorado Employment Outlook for 2011. This event featured employment forecasts for various regions throughout Colorado as well as an overall forecast for the state.

Like many other forecasting groups, the CSU team accurately predicted the downturn; however, they did not project the full magnitude of the recession. The state forecast stated that employment growth would be less than 1% in 2011, or about 19,000 workers. The Denver metro area will record positive job growth, although the Boulder area will show weaknesses based on their high concentration of manufacturing and high tech. Mixed results are on the horizon for the state’s resort counties and rural parts of the state.

The forecast team worked with the staffs of the Denver Branch of the Kansas City Federal Reserve  as well as the Colorado Office of  Labor Market Information , the state agency that prepares labor and employment data for the Bureau of Labor Statistics .

For additional information contact Dr. Martin Shields or Dr. Harvey Cutler.

©Copyright 2011 by CBER.

Colorado to add 15,000 Jobs in 2011

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In late October, the Bureau of Labor Statistics released its first estimate of September employment data for Colorado. Based on that report, the state is on track to lose 35,000 jobs in 2010. (Preliminary 2010 data will be released in March 2011.)

Recently, many of the nation’s top economists have revised their 2011 Real GDP forecasts downward, in the range of 1.9% to 2.6%. Output growth of 2.4% points to a miniscule job increase of 0.7%, or 15,000 jobs, for Colorado next year.

This Colorado economic forecast  was shared with state business and government leaders this past week. A summary of the responses from these individuals follows:

  • The country should be concerned about the effect the Lost Decade will have on its competitiveness.
  • The recent announcement that Q3 Real GDP was 2.0% is better than expected; however, if output growth continues at this level next year, Colorado cannot expect meaningful job growth.
  • The lack of overall growth in the economy is reflected in the real estate market.
  • Colorado typically lags the nation in entering and exiting economic downturns. Colorado’s exit from the Great Recession seems to be slower than that of the nation – despite lower unemployment.
  • For some time, I’ve been concerned about unrealistic expectations for growth in consumer demand, given the deleveraging overhang and unemployment.
  • Colorado’s major wealth creation industry – mineral extraction – continues to be hobbled by policy, yet Wyoming is projecting a healthy recovery in the months ahead- thanks to their policies regarding extractive minerals.
  • Southwest Colorado is no better than the Front Range.
  • The word that best describes the Western Slope economy is “lagging.” We’re used to growing faster than the state; recently we were losing jobs faster, although those declines have slowed.
  • There is a reasonable chance that Colorado will experience back-to-back-to-back job losses.
  • We are seeing more inquiries, which hopefully will bode well for our local economy.
  • We are seeing more inquiries, but they are not translating into sales – yet.
  • Efforts are being made to manipulate the housing and equity markets to create the illusion that the economy is better than it really is. The hope is that if consumers see their net worth rise, then they will start spending again. This makeshift effort does not eliminate the fundamental problems.

While these comments are not intended to be a representative sample of all Coloradans, they support the belief that the prospects for a solid recovery are not in the immediate future.

 

©Copyright 2011 by CBER.