Colorado economy Archives - Page 16 of 16 - Colorado-based Business and Economic Research

Transportation Industry Hit Hard

October 22, 2010May 31, 2014 horvath Leave a comment

Previous blog discussions have focused on the relationship between the economy and two important components of Colorado’s transportation infrastructure, DIA and RTD . The state’s transportation system also includes bridges, roadways, smaller airports, and mass transit systems – all falling under the oversight of the Colorado Department of Transportation (CDOT) .

In addition to infrastructure, Colorado has a very vibrant transportation industry, i.e. the companies that transport people and goods. Approximately 58,000 people, or 2.8% of the state’s workforce, are employed at 3,800 companies. They receive $2.6 billion in total wages, or 2.5% of the state’s total. Average annual wages are in the neighborhood of $41,000, slightly less than the overall state average. Some of the major types of companies include:

• 2,100 Truck transport companies
• 670 Transportation support companies
• 340 Couriers
• 250 Warehouse companies
• 200 Ground transport companies
• 140 Air transportation companies

About 60% of the transportation workforce is located in Adams and Denver counties, in close proximity to DIA, Front Range Airport, and the state’s major arteries (I-25, I-70, Colorado I-76, and Colorado US 85).

Over the past two years about 10,000 jobs have been trimmed from the transportation workforce, a disproportionately high percentage of workers. Time will tell whether or not all of these positions will be recovered and the impact these job losses have on Colorado’s competitiveness.

NABE Downgrade of Real GDP Bodes Ill for Colorado

October 17, 2010May 31, 2014 horvath Leave a comment

The National Association of Business Economists (NABE) released its fall consensus forecast in early October. NABE revised its outlook for output from 3.2% (in May) to 2.6% based on lower than anticipated economic activity during the summer months.

In addition, NABE indicated that modest growth in consumer spending is on tap through 2011. Consumers will remain cautious as a result of continued high unemployment and weak gains in employment. As well, minimal growth is expected in household net worth, i.e. small gains are expected in equity portfolios and home prices

Finally, NABE opined that the downward revision in the forecast reflects “a greater appreciation of the importance of stimulus policies in countering forces holding down the economy’s performance.”

While it is not surprising that NABE lowered its expectations for expansion of the economy, the amount of the decrease is reason for concern. In simplistic terms, the May forecast suggested that the U.S. would see above potential growth this year while the October forecast now says that growth will be well below potential.

Were the NABE panelists overly anxious to see a recovery or did the positive impact of the stimulus package on Q1 Real GDP cause them to be overly optimistic in their May outlook? Clearly panelists missed indicators of the summer slowdown in their May forecast; are there other factors, favorable or unfavorable, that panelists may have missed in their October update?

The revisions in the NABE forecast illustrate the challenges that economists and business researchers face in evaluating and forecasting the performance of the economy. Many of the econometric models that have worked well during periods of growth have proven to have limitations caused by the volatility of the economy over the past decade. This is not intended as criticism, but rather an illustration of the challenge our public and private sector leaders face when they are forced to make decisions without perfect information.

While Colorado is a great place to conduct business, the underlying message from the NABE forecast bodes ill for Coloradans. Lackluster growth at the national level translates into an extended recovery for the Colorado economy, i.e. there will be limited job growth on the horizon.

RTD Makes the Rubber Meet the Road

October 12, 2010May 31, 2014 horvath Leave a comment

As an infrequent rider on RTD buses, I recently experienced sticker shock when I boarded a bus from DIA to Boulder and was asked to pay $12 for a one-way ticket. Back in the day, the fares were $4.

My first thought was, “Well, I will show them for raising the fares. Next time I will drive.” So I quickly did the math to confirm my beliefs.

Total round-trip mileage from Boulder to DIA is roughly 90 miles. Assuming $.50 a mile for vehicle operating costs, the expense for me to drive would be about $45, not to mention parking fees and the hassle of dealing with traffic. It was clear that the round trip fee of $24 was the most cost effective way to travel, at least for one person.

After I sat down I noticed signage on the bus that encouraged visitors to go to its website for a free lesson in mass transit economics. When I got home, I visited www.rtd-denver.com/economics and learned that fares account for about 30% of total revenues. Approximately 69% is derived from sales tax revenues and one percent comes from on-vehicle advertising and other sources. The economic lesson concluded with a statement that an $18 million deficit is projected for the 2011 budget.

To address this situation, RTD solicited feedback from its customer base over recent months. They asked about possible and preferred solutions that could be considered as part of a fiscal plan to address the projected shortfall. A short list of considerations include wage and hiring freezes, staff furloughs, service reduction and fare increases.

Many of the basic daily services that we take for granted during good economic times are facing challenges at least as severe as those faced by RTD. We can expect to face those challenges for awhile. Stay tuned to see how RTD makes the rubber meet the road.

Increased DIA Traffic Bodes Well for Economy

October 7, 2010May 31, 2014 horvath Leave a comment

Amidst all of the bad economic news, there is a ray of hope from the transportation sector. Year-to-date passenger traffic at DIA, through July 2010, is stronger than last year. About 30.2 million passengers have passed through airport gates this year, or about 779,710 more than in 2009. This represents a healthy increase of 2.6%. This is a good sign because it means more people from around the world are traveling for business and personal reasons.

Typically, the DIA’s peak load occurs in July. The total number of passengers for July 2010 was 5,060,508. Despite the year-to-date increase, the monthly total for July is slightly off the pace of 5,109,342 for 2009.

The 2010 YTD passenger total is slightly below the same period for 2008. If this level of activity continues, approximately 51 million passengers will travel through DIA in 2010.

KC Fed Cites Growth in 10th District High-Tech

September 29, 2010September 29, 2010 horvath Leave a comment

The Denver Business Journal recently reported that the Kansas City Federal Reserve Beige Book stated that during late July and August, consumer spending in the 10th District “increased slightly from the previous period, and high-tech and transportation firms reported moderate growth.”

Colorado’s Office of Labor Market Information (LMI) group has produced a definition of Advanced Technology (AT) and a data series based on this definition. That definition suggests that AT includes much of the Manufacturing; Information; and Professional, Scientific, and Technical Services sectors (PST).

Based on their definition of AT, the cluster does not appear to be performing as well in Colorado as their counterparts in other parts of the 10th district.