Tag: Colorado economy

Cber.co Colorado Economic Forecast 2012 – Continued Improvement

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The economy is fragile and there are a number of variables that could alter any forecast. At the risk of sounding like a broken record, 2012 will look a lot like 2011. Colorado will experience below average growth for another year. Cber.co is projecting that we will see real GDP growth of 2.1% to 2.5% in 2012, with employment growth of 27,500 to 37,500 in Colorado.  Go to Cber.co for the 2012 Colorado Economic Forecast.

The sectors of the economy can be evaluated in three groups: solid growth, limited growth, and volatile growth. A summary of these analyses for each of the groups follows.

Solid Growth Sectors (About 41% of total employment)

These sectors posted stronger growth in 2011 than any time in the past two decades. Growth will taper off slightly 2012 with the addition of at least 1,500 jobs in each of the following sectors.

Tourism
Private Education and Health Care
Professional and Scientific
Extractive Industries
Wholesale Trade
Employment Services
Higher Education

In total, these sectors will add 26,500 to 32,500 net jobs in 2012.

Limited Growth Sectors (about 26% of total employment)

In 2011 these sectors individually recorded minimal change in their number of employees. Significant change is unlikely in a slow economy.

Personal (Other) Services
Utilities
Retail Trade
Corporate Headquarters (MCE)
State (Not Higher Education)
Manufacturing
Transportation & Warehousing

Combined, these sectors will add 3,000 to 9,000 net jobs.

Volatile Growth Sectors (33% of total employment)
These sectors have either bottomed out, are near the bottom, or have turned the corner. Combined they will shed fewer jobs than in 2011.

Construction
Financial Activities
Information
Federal Government
B-to-B (Not Employment Services)
Local Government (Not K-12)
K-12 Education

Combined, there will be a change of -6,000 to 0 net jobs.

2012 Employment Outlook

Because the economy is still not on a solid foundation, it is reasonable to provide three scenarios for the summation of the above groups: optimistic, most likely, and pessimistic.

Optimistic Scenario
U.S. Real GDP 2.6%+
More than 37,500 Colorado Workers or More

Most Likely Scenario
U.S. Real GDP 2.1 % to 2.5%
+ 27,500 to 37,500 Colorado Workers

Pessimistic Scenario
U.S. Real GDP  1.6% to 2.0%
Less that 27,500 Colorado Workers

If probabilities were to be assigned to each of these scenarios, they would be as follows:
Most Likely   55%
Pessimistic 25%
Optimistic 20%.
At the time the forecast for 2012 was prepared, there was slightly more downside risk.

To access the Cber.co 2012 Colorado Economic Forecast click here.
©Copyright 2011 by CBER.

Leeds School Annual Forecast Calls For Slowdown in Colorado Employment Growth

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The Leeds School of Business released its 47th annual business forecast, calling for the U.S. economy to grow at a faster rate and a modest slowdown in the growth rate of the state economy in 2012. The report projected a sharp increase in U.S. Real GDP growth, from 1.8% to 2.4%. Surprisingly that gain translates into an increase of only 23,000 workers in Colorado. This follows on the heels of job gains of 27,500 in 2011.

Job losses are projected for the Manufacturing, Information, and Financial Activities sector. After manufacturing gains in 2011, it is disappointing to see the projected return to negative growth. Evidently renewable energy, which sparked manufacturing growth in 2011, will either flatten or taper off in 2012. Consolidation in the other two sectors will drive further cutbacks.

According to the Leeds School, 2012 growth will be driven by the Health Care and Professional Business Services sectors. Smaller gains will occur in tourism and construction. It is encouraging to see the Construction sector on the positive side of the ledger again.

Although, the 2011 preliminary employment estimates will not be updated until March 2013; the Leeds estimate of 27,500 additional jobs is reasonable. In evaluating their projections for 2012, it is interesting to see how they fared with their 2011 forecast.

1. The Forum (UCCS) error -2,500
25,000 jobs (10/2/2010).

2. OSPB error -3,200
24,300 jobs (12/2010).

3. BBVA Compass error -5,500
22,000 jobs

4. (tie). Legislative Council error -7,500
19,900 jobs (12/2010).

4. (tie). BBER error -7,500
(15,000 to 24,999) (10/2010).

4. (tie) Jeff Thredgold’s Small Business Index   error +7,500
(33,000+) (Autumn 2010).

7. CSU Economics Class error – 8,500
19,000 jobs (11/16/2010).

8. CU Colorado BEOF error -17,400
10,100 jobs (12/6/2010).

9. Demographer’s Office error -27,500
No growth (11/5/2010).

10. Moody’s/Dismal.com error +28,500
56,000 jobs (3/2011).

Like most forecasts, the Leeds projections have historically understated periods of growth and decline. If the Leeds pattern of error continues in 2012, then job gains above 30,000 might be more realistic. For additional information on forecast accuracy click here.

 

©Copyright 2011 by CBER.

Relief in the Decline of Gas Prices?

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Baseball Hall of Famer Yogi Berra said “It’s déjà vu all over again”. This famous quote originated as a result of Berra watching Mickey Mantle and Roger Maris hit back-to-back home runs on multiple occasions for the New York Yankees in the early 1960s.

Today Berra’s quote applies to the price of a gallon of  gasoline.

According to the EIA, the price at the pump has recently dropped; however, the average price for a gallon for all formulations on November 28 was $3.38, compared to $2.69 two years prior. The November price is down from a Colorado high of $3.83 in mid-May. Nationally, the price topped $4.00 a gallon for three weeks in May.

While these prices are admittedly high, Coloradans are fortunate. Over the past ten years, the price of gasoline is lower in Colorado than the U.S. average about 70% of the time.

For the period 12/1/2010 to 11/30/2011, the cost for Coloradans to purchase 15 gallons of gasoline a week would have been about $2,661. For the 52 weeks prior, costs would have been $2,101; and they would have been$1,737 for the year prior to that.

For some Americans the extra cost is an annoyance. For the unemployed, those who have gone months without a meaningful pay increase, or those who are living on fixed or limited incomes, the additional $40+ 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.

While the recent decline is welcome. “It’s déjà vu all over again”. The reprieve is only temporary.

 

 

©Copyright 2011 by CBER.

Challenges Facing Colorado Manufacturers in 2012

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Colorado’s seasonally adjusted manufacturing employment peaked at 192,700 employees in April 1998. On an annual basis, it has been declining since. As 2011 comes to an end, it appears that net jobs will be added for the first time in Colorado in 13 years.

Some economists are projecting that manufacturing job losses will resume in 2011. Manufacturers face a number of challenges. The following questions point to some of the challenges they face in terms of demand, the workforce, and the industry.

Demand
• Will there be sufficient demand for manufactured goods given the fact that consumers have received minimal increases in wages and disposable income?
• Will manufacturers be able to pass on increased input costs to customers and maintain demand?
• How much longer can shipments and output increase without significant increases in the size of the workforce?
• What impact will personal and private sector debt have on demand?

Workforce
• How much longer will productivity increase without adding labor?
• What is being done to address the mismatch between the skills that manufacturers need and a different set of skills in the workforce?
• What is the role of the older worker in the workforce? Are there sufficient workers in the pipeline to replace them when they retire?
• Has Colorado lost its pool of trained workers as a result of the Lost Decade?
• What is being done to educate high school and college students about the importance of learning skills that can be transferred between professions?
• What type of training opportunities are available to meet the changing needs of the manufacturing workforce?

The Industry
• How will changes in the manufacturing sector affect the growth of Colorado’s high tech cluster?
• Has Colorado lost its critical mass of manufacturers?
• Has Colorado lost the supply chain associated with the decline in its manufacturers?
• What is being done to retain existing manufacturers and attract new manufacturers?
• How will second and third generation manufacturers transition their businesses into the future?

For additional information on the Colorado manufacturing sector go to https://cber.co. or click on Colorado Manufacturing Update.

 

©Copyright 2011 by CBER.

State Population Approaches 5.2 Million – State Demography Office

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On November 4, Cindy DeGroen, Projections Demographer, and Elizabeth Garner, State Demographer, presented their annual population update and key findings from the 2010 U.S. Census at the annual State Demographer‘s meeting. A sampling of the information from their reports follows.

In 2010, the state population topped 5 million. By 2012, the population will reach about 5.2 million, with about 72,300 births, 32,400 deaths, and net migration of 36,500. This represents a net gain of about 76,400 people.

The top five counties in population (July) are:
1 El Paso 627,096
2 Denver 605,722
3 Arapahoe 575,022
4 Jefferson 535,533
5 Adams 443,715

The five counties with the least population are:
60 Kiowa 1,399
61 Jackson 1,390
62 Hinsdale 847
63 (tie) Mineral 710
63 (tie) San Juan 710

The census showed that between 2000 and 2010 the state added a net of 727,935 people.
• Douglas County added 109,699
• El Paso County added 105,334
• Arapahoe County added 84,036
• Adams County added 77,746
• Weld County added 71,889
In total these five counties added 448,704 people, or about 62% of the population increase during this period.

From a municipal perspective, the following 5 cities posted the top gains:
• Colorado Springs 55,537
• Aurora 48,685
• Denver 45,522
• Thornton 36,388
• Castle Rock 28.007

The following 5 cities posted the largest losses:
• Wheat Ridge  -2,747
• Englewood  -1,472
• Lakewood  -1,146
• Walsenburg  -1,114
• Lamar  -1,065

From this sampling of data it is clear to see that the state is evolving rapidly, as certain areas gain and lose population and workforce.

 

©Copyright 2011 by CBER.

State to Add 28,000 Jobs – State Demography Office

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On November 4, State Economist David Keyser unveiled his annual economic forecast at the 29th Annual State Demography meeting. In his report Keyser stated that the economy remains fragile, but that jobs will be added an a slow rate in 2012. Growth will be in the range of 1.0%, or 28,000 civilian jobs. He projected that more than 50,000 jobs would be added in 2013.

Unemployment will remain high through 2012, about 8.4%. There will be an insufficient number of jobs added to lower the rate significantly. In addition, labor participation rates are low. As jobs are created at a faster rate, the participation rate will pick up. That in turn, will keep the unemployment rate at a high level.

The painfully slow recovery will be extended by the lack of growth in per capita personal income. Stronger income growth is needed to spur on increased demand for goods and services. Real PCPI is projected to grow at 2.8% and 2.2% respectively in 2012 and 2013. On a positive note, the state inflation rate will remain around 2% in 2012 and bump up to 3% in 2013. Rising energy prices will play a role in the increase.

Looking ahead to 2012, Keyser sees tourism and retiree driven jobs as bright spots. As well, agriculture and the extractive industries, particularly oil and gas, will have strong years. In fact Keyser also sees an uptick in construction, as both single family and multifamily permits will more than double. Total permits will approach 30,000, up from about 13,000 in 2010. It should be noted that the mix of permits will be different than in the past. It will include a greater concentration of multifamily units. On the downside, Keyser points to weakness in investment and wealth driven jobs.

Click on State Demography Office for further information about their work.

 

©Copyright 2011 by CBER.

U.S. 36 Project Paves Way for Economic Development

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The U.S. 36 corridor between Denver and Boulder is on the cusp of significant transportation investments. The $310 million Managed Lanes/Bus Rapid Transit Project begins in the spring of 2012 and will be the largest Colorado Department of Transportation project in the state for the next few years. It is expected to generate 2,400 direct jobs.

The first phase of funding will add multimodal elements to 10 miles of U.S. 36 from Pecos Street to Interlocken Loop, including:
• HOV/HOT lane in each direction;
• Bus rapid-transit service;
• Corridor-wide bikeway: and
• Replacement of Lowell Boulevard, 112th Avenue, and Wadsworth bridges.

The Colorado High Performance Transportation Enterprise is concurrently defining developer interest to complete the second phase of the project to Table Mesa in Boulder. Potentially, the entire corridor project could be completed by July 2015.

Over the next 24 years, employment is expected to increase by 53% and population will grow by 28%. As anyone who has traveled 36 can testify, improvement of the corridor is essential for better access to commerce in the northwest metro region.

The above information has been provided by 36 Commuting Solutions in a  recent press release.

©Copyright 2011 by CBER.

Increased DIA Passenger Traffic Supports Strength of Tourism Sector

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Throughout most of the year, the Leisure and Hospitality Sector has been a leader in job creation.. Today, DIA released passenger traffic data that further supports the importance of the tourism sector in the state’s recovery.

In August 5,037,947 million travelers passed through DIA. This is a record for August and it marks the first time the airport has had back-to-back months with more than 5 million travelers.

Year-to-date data through August shows that about 30.2 million passengers have passed through airport gates in 2011. This represents a 2.8% increase, or 794,347 travelers, over the same period in 2010.

If this level of activity continues, about 53 million passengers will travel through DIA in 2011. This is clearly a sign that people from around the world have increased their travel through Denver for business and personal reasons.

©Copyright 2011 by CBER.

Sectors Losing Jobs Have Higher Wages

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Through the first 8 months of the year there are 7 sectors of the economy that have lost a net total of 25,100 jobs, compared to the same period last year.

Construction                                     -8,800
Financial Activities                            -4,200
Federal Government                         -3,400
Information                                       -3,400
B-to-B (Not Employment Services)  -2,600
Local Government (Not K-12)         -1,600
K-12 Education                               -1,100

These sectors account for 33.3% of total employment. Average wages for this mix of workers is about $56,600 compared to average annual wages for all employees of about $47,900 (calculations based on 2010 QCEW data). In other words, the average wages for the sectors that are losing jobs is significantly greater than the overall state average, based on 2010 data.

The 2011 prognosis is that each of these sectors will show job losses for the year (2011) and that average annual wages for the group will remain well above the overall state average.

For a comprehensive review of the Colorado economy visit the CBER website.

©Copyright 2011 by CBER.

After 8 Months, 7 Sectors Show Job Gains

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Through the first 8 months of the year there are 7 sectors of the economy that have added a net total of 34,900 jobs, compared to the same period last year.

  • Tourism                                                +11,600
  • Private Education and Health Care +9,600
  • Professional and Scientific                +4,100
  • Extractive Industries                             +3,000
  • Wholesale Trade                                  +2,300
  • Employment Services                          +2,300
  • Higher Education                                  +1,900

These sectors account for 40.6% of total employment. Average wages for this mix of workers is about $43,600 per worker, compared to average annual wages for all workers of about $47,900 (calculations based on 2010 QCEW data). In other words, the average wages for the sectors that are adding jobs is less than the overall state average.

The 2011 prognosis is that each of these sectors will show job gains for the year (2011) and that average annual wages for the group will be less than the overall state average.  For a more comprehensive review of the Colorado economy visit the CBER website.

 

©Copyright 2011 by CBER.