Tag: Colorado economy

Milken Report Shows Solid Economic Performance in Four Corner States

horvath Leave a comment

The Milken Institute recently released Best-Performing Cities 2012-Where America’s Jobs are Created and Sustained. Coloradans will be pleased to note that Fort Collins was ranked 12th and Boulder was ranked 15th in 2011. As well, Denver-Aurora-Broomfield was 30th, Greeley was 42nd and Colorado Springs was 57th. Pueblo was ranked 33rd and Grand Junction 50th for small MSAs. Since the ratings began in 1999, the Denver MSA has never been in the top 20.

The rankings are based on an index that measures growth in jobs and high tech output from 2006 to 2011. Technology output and wages and salaries are tracked for 2005 to 2010. Five-year ranges account for fluctuation in business cycles. The latest year’s growth from these five-year ranges is also included. The high-tech concentration and the number of high tech industries with a location quotient greater than one for 2011 are also included. Finally, the change in employment for May 2011 to May 2012 is included to capture momentum. This index measures the performance of the country’s MSAs coming out of the recession into 2012.

Overall, the report shows that Silicon Valley is back, Texas remains strong, tech centers have rebounded (Texas, North Carolina, Washington D.C. Utah, and Massachusetts), and Utah is the top state in the Mountain region.

1    San Jose-Sunnyvale-Santa Clara, CA

2    Austin-Round Rock-San Marcos, TX

3    Raleigh-Cary, NC

4    Houston-Sugar Land-Baytown, TX

5    Washington-Arlington-Alexandria, DC-VA-MD-WV

6    Salt Lake City, UT

7    Provo-Orem, UT

8    Cambridge-Newton-Framingham, MA

9    Charleston-North Charleston-Summerville, SC

10    Fort Worth-Arlington, TX

11    New York-White Plains-Wayne, NY-NJ

12    Fort Collins-Loveland, CO

13    Seattle-Bellevue-Everett, WA

14    Dallas-Plano-Irving, TX

15    Boulder, CO

16    Kennewick-Pasco-Richland, WA

17    Peabody, MA

18    El Paso, TX

19    Bakersfield-Delano, CA

20    Lubbock, TX

21    Durham-Chapel Hill, NC

22    San Antonio-New Braunfels, TX

23    Portland-Vancouver-Hillsboro, OR-WA

24    Lafayette, LA

25    Knoxville, TN

In addition to the report, the website provides a historic perspective showing the evolution of the top 20 cities for 1999 to 2011. In the table below, the year represents the year of the data, not the year of the report. Results for the Four Corners states show that the Denver MSA was never in the top 20 and Utah’s MSAs  outshined those in Colorado. The data makes the case that the four states represent a region with solid economic performance.


©Copyright 2011 by CBER.

CBER Colorado Economic Forecast 2013 – Growth Rate Similar in Year Ahead

horvath Leave a comment

CBER recently released its forecast of the Colorado economy and at the risk of sounding like a broken record, 2013 will look a lot like 2012 and 2011.

  • U.S. Real GDP will be in the range of 1.9% to 2.3%
  • The U.S. will add 1.9 to 2.1 million workers
  • Colorado will account for 2.5% of U.S. jobs added
  • Colorado will add 45,000 to 55,000 workers.

Since the end of the recession, Colorado employment has had five false starts. Despite serious national and international headwinds, the state may finally have enough momentum to begin showing solid, sustained job growth beginning in the second half of 2013.

Strong Growth Category ( About 32% of total employment)

This category has consistently posted strong growth over the past two decades. In 2013, job growth will be 2.9% to 3.1%, slightly below the category’s annualized growth rate of 3.25% for 1990 to 2011.

Limited Growth Sectors (about  40% of total employment)

This category has consistently posted solid growth over the past two decades (Annualized rates for the sectors range between 1.1% to 2.2%.) In 2013, job growth will be 1.4% to 1.6%, slightly below the category’s annualized growth rate of 1.85% for 1990 to 2011.

Volatile Growth Sectors (28% of total employment)

This category has been inconsistent in its growth rates over the past two decades. It is expected to add jobs at a rate of 2.1% to 2.3%. This is above the category’s annualized growth rate of about 0.79% for 1990 to 2011. This variance from the average is a reflection of the category’s  volatility.

©Copyright 2011 by CBER.

General Assembly to Address Tough Fiscal Challenges and Contentious Social Issues

horvath Leave a comment

Next week the gavel will drop for the 69th session of the Colorado General Assembly. Clearly, the legislature will have a number of tough fiscal challenges and contentious social issues to address in the upcoming session.

As part of its seminar series, on December 17th, the Colorado Office of Economic Development and International Trade (OEDIT) hosted a panel discussion to preview the upcoming legislative session. Panelists featured:

  • Danny Tomlinson, Tomlinson and Associates (Tomlinson provides periodic legislative updates on his website).
  • Jennifer Cassell, Legislative Liaison, OEDIT
  • Loren Furman, Colorado Association of Commerce and Industry (CACI)

The group identified the following as the top budget priorities for the state in the upcoming session.

  • Protect the last  and the least (human services)
  • K-12 and higher education
  • Economic development
  • Infrastructure
  • Public safety/Mental health
  • Improve efficiency of  state government/Pay increases
  • Expansion of Medicaid

As well, legislators will be asked to address the following issues.

  • Civil unions
  • Tuition for undocumented immigrants
  • Referendum on single-payer health insurance
  • Lobato school funding lawsuit
  • Metropolitan Transportation District
  • Tolling and/or VMT
  • HUTF money for transit
  •  RAMP (Responsible Acceleration of Maintenance and Projects)
  • Governmental immunity /raising of $600K caps
  • Peace officer bill of rights
  • Fracking
  • Renewable energy policy
  • Thermal standards
  • Eco-friendly architecture?
  • Coal bed methane
  • Public trustees and foreclosures
  • Gun control

It will be interesting to see if the Democrats act in the best interests of the state or for the well-being of their party, given that they control both houses and the governor’s office (That comment would also be appropriate if the Republicans were in a similar situation).

©Copyright 2011 by CBER.

Five False Starts – Will Strong Sustained Job Growth Occur in 2013?

horvath Leave a comment

Over time, recoveries from recessions have mirrored the downturn, i.e. a steep recovery usually follows a sharp downturn. That was not the case with the 2001 or 2007 recession.

Nationally, the economy was too weak to support job growth, as evidenced by the four false starts in seasonally adjusted job growth.
• An average of 315,000 jobs was added for the three month period March to May 2010. This gain can be attributed to temporary Census workers.
• An average of 239,000 jobs was added for the three month period February to April 2011.
• An average of 252,000 jobs was added for the three month period December 2011 to February 2012.
• An average of 168,000 jobs was added for the three month period July 2012 to September 2012 – it is debatable whether this job growth to strong enough to be classified as a false start.

In Colorado, there have been five false starts since the end of the recession
• An average of 4,000 jobs was added for the seven month period February to July 2010 (One month showed declines). This anomaly was temporary Census workers.
• An average of 4,200 jobs was added for the four month period October 2010 to April 2011.
• An average of 4,300 jobs was added for the four month period July to October 2011.
• An average of 8,400 jobs was added for the three month period January to March 2012. This can be attributed to a large increase in construction workers.
• An average of 8,000 jobs was added for the three month period September to November 2012.

Most national forecasts project a slowdown in the economy during the first half of 2013. If that is the case, then the rally in the second half of 2012 will be wasted.

Will 2013 be the year that Colorado has strong sustained growth?
©Copyright 2011 by CBER.

Data Not Clear About Whether Colorado is Outperforming the Nation in the Recovery

horvath Leave a comment

The wage and salary data produced by BLS shows that Colorado has recovered about 67% of jobs lost as a result of the Great Recession compared to 51% for the U.S.

The LAUS data also produced by BLS tells a much different story.

The Colorado LAUS Data shows that between the 2008 peak and the 2010 trough, Colorado lost more than 135,000 jobs. As of October 2012, the state had recovered only 26% of these jobs.

From October 2011 to October 2012, the LAUS data reports that the number of employed in Colorado has increased by 4,700. Over the past year, state CES employment has increased by 41,600 (NSA) or 42,100 (SA) and those numbers are likely to be revised upwards. For the numbers to reconcile, this disparity suggests that at least 37,000 contract workers, sole proprietors, or family businesses went out of business over the past year.

The U.S. LAUS Data shows that between the 2008 peak and the 2010 trough, the U.S. lost more than seven million jobs. It has since recovered 67% of these jobs.

From October 2011 to October 2012, the LAUS data reports that the number of employed in the U.S. has increased by 3.1 million. Over the past year, U.S. CES employment has increased by more than 1.922 million (NSA) or 1.949 million (SA). The differences between these numbers can be reconciled, as the difference can most likely be attributed to the growth of contract workers, family businesses, or sole proprietors.

The LAUS data shows that Colorado has recovered 26% of the jobs lost during the Great Recession compared to 67% for the U.S.

These results raise yet another red flag about the LAUS data published by the Colorado LMI, CDLE, and BLS. Click on the following dates for a review of the downturns for the 1980s and the late 2000s.

©Copyright 2011 by CBER.

Stagnancy in the Size of the Colorado Labor Force – The Lost Decade and Beyond

horvath Leave a comment

In a previous post, the topic of discussion was the stagnancy of the labor force during the 1980s (click here). In that case the size of the labor force was flat for about five years because of a regional recession, weak wage and salary job growth, and negative net migration. This post will look at the size of the labor force during the Great Recession and beyond.

Local Area Unemployment Statistics (LAUS) are available for Colorado beginning in 1976. Since then, the month-over-prior month labor force increased about 87% of the time (383 of 442 months). In a vibrant economy, periodic ups and downs are expected, but increases in the size of the labor force are generally the rule of the thumb.

Between April 2000 and October 2012 there were 30 months with decreases in the month-over-prior month size of the labor force. In January 2008 there were 2,722,015 workers. By April 2009 the number had risen to 2,758,468 workers.

During the past 42 months, there were 19 month-over-prior month declines. There were 2,725,803 workers in the October 2012 labor force. This was 32,665 fewer than the level in April 2009 and essentially the same as January 2008.

Next, we will look at three data sets for the period: Wage and Salary job growth, Net migration, and the Unemployment Rate.

For the years, 2009-2012, wage and salary job growth was devastating, with back-to-back net job losses in 2009 and 2010. The net change in wage and salary jobs follows:
• 2008 19,000
• 2009 -104,700
• 2010 -23,300
• 2011  33,000
• 2012 est  45,000

Unlike the 1980s, when the state experienced negative net migration, there has been solid positive net migration, i.e. more people moved into the state than out of it. The net migration follows:
• 2008 45,000
• 2009 36,300
• 2010 37,000
• 2011 34,900
• 2012 est 36,800

For this period the unemployment rate varied from 4.8% to 8.0%. While the monthly rate has dropped from a high of 9.0% in 2010, the 2012 annual rate remains the same as it was in 2009.
• 2008 4.8%
• 2009 8.1%
• 2010 8.9%
• 2011 8.3%
• 2012 8.0%

For all intensive purposes, the size of the labor force will be about the same as it was at the end of 2009 and the number of employed and unemployed workers will be similar.

• The 33,000 wage and salary jobs added in 2011 lowered the unemployment rate by 0.6% points, yet growth of 45,000 jobs in 2012 will lower it by 0.3% points.
• For the period 2008 to 2012, total net migration was 190,000; approximately 125,000 of these individuals are 16-65 years old.

This raises a series of questions:
• How many people have become contract or 1099 workers? How many have become sole proprietors and owned family businesses? How many people are working temporary jobs? Will they still work in this capacity when the economy recovers or will they take wage and salary jobs?
• How many workers have stopped working who don’t show up in the data?
• What are the in migrants doing? Did they take jobs that Colorado residents might have taken? Are they working in other capacities?
• How many families with dual incomes now only have one income?
• Have the published unemployment numbers been manipulated to meet political agendas?

There seem to be more questions than answers and the numbers do not seem to reconcile. As grave as the employment situation has been, it appears that the unemployment rate may be inaccurate and may have understated the magnitude of the problem.


©Copyright 2011 by CBER.

Stagnancy in the Size of the Colorado Labor Force – 1980s

horvath Leave a comment

The unemployment rate is one of the most popular, but overrated statistics for measuring the performance of the economy. It is such a crude measurement of economic performance that the state’s labor economist was recently quoted in the media as saying that it shouldn’t be taken at face value.

The calculation of the unemployment rate is simple. The number of unemployed workers is added to the number of employed workers (wage and salary, sole proprietors, and others) and that equals the size of the labor force. The unemployment rate is simply the number of unemployed workers divided by the size of the labor force.

In other words, the size of the labor force is a key component in determining the accuracy of the unemployment rate. This brings us to the topic of this post – the size of the labor force.

Local Area Unemployment Statistics (LAUS) are available for Colorado beginning in 1976. Since then, month-over-prior month labor force increased about 87% of the time (383 of 442 months). In a vibrant economy, periodic ups and downs are expected, but increases in the size of the labor force are generally the rule of the thumb.

There are two periods when the size of the labor force did not increase, during the 1980s and the late 2000s. The following analysis looks a period during the 1980s.

Between September 1984 through April 1989 the size of the labor force declined in 29 of 53 months.

In August 1984 the size of the labor force, as measured by LAUS data,  was 1,719,239. It declined sharply in 1985, bounced back for most of 1986, and fell sharply in 1987. It remained flat for much of 1988 and into the first part of 1989. In June of 1989, the labor force was reported at 1,719,824. From that point, it continued to grow.

Next, we will look at three data sets for the period: Wage and Salary job growth, Net migration, and the unemployment rate.

During this period, Wage and Salary (CES)  job growth was weak, with net job losses in 1987. The net change in wage and salary jobs follows:
• 1984   75,100
• 1985   16,400
• 1986  -10,400
• 1987       4,300
• 1988    23,500
• 1989    46,200
• 1990    38,600

The CES and LAUS series are different measures of employment, but they should tell a similar story about changes in employment.

During this period the state experienced negative net migration, i.e. more people moved out of the state than into the state. The net migration follows:
• 1984      2,782
• 1985      5,172
• 1986     -5,270
• 1987   -13,997
• 1988   -24,280
• 1989   -18,752
• 1990   -12,964

For this period the unemployment rate varied from 5.4% to 7.5%. It remained at a higher than normal level because unemployed workers were able to move outside the region and find work. The annual unemployment rates for this period were:
• 1984   5.4%
• 1985   6.0%
• 1986   7.5%
• 1987   7.5%
• 1988   6.4%
• 1989   5.6%
• 1990   5.1%

The labor force was stagnant for about five years for the following reasons:
• There was a regional recession
• Weak wage and salary job growth
• Negative net migration.

A similar stagnancy in the size of the labor force occurred during the 2000s. It is more difficult to understand and will be discussed in a later post (click here).


©Copyright 2011 by CBER.

Colorado Posts So-So Competitive Job Growth 2010-2012

horvath Leave a comment

On November 7th, Economic Modeling Specialists International (EMSI) released America’s Most Competitive Metros since 2010, a blogpost/mini-report showing which metros are becoming more competitive. Denver was ranked 25th and Colorado Springs was ranked 64th in the list of 100 metropolitan statistical areas (MSAs) evaluated. Pueblo, Fort Collins, Boulder, Greeley and Grand Junction were not included in the analysis.

EMSI used shift share analysis to make this comparison for the period 2010 to 2012 (Q3 2012 complete data). This method of analysis decomposes the change in employment into four categories: the national growth effect, the industrial effect, expected change, and the change in an industry due to local unique competitive advantages within the region. The latter is the focus of the EMSI blog post. This competitive change is then expressed as a percentage of total employment.

Of the 100 top MSAs evaluated, the relative change in competitive jobs ranged from -3.9% to 3.5%. Forty-eight MSAs posted increases over this period, while 52 recorded negative changes.

There were 28 MSAs with employment greater than 1 million workers. Only 3 of these cities were in the top 10 in terms of relative percentage growth; however, 16 of 28 had positive growth and only 32 of the 72 cities with employment less than 1 million workers had positive growth.

The MSAs at the top of the list were San Jose, Austin, Bakersfield, Provo, and Houston.  The top 48 MSAs, or those with a positive competitive effect are listed below (Those with negative growth are in a separate table).

Only 12 of the cities with more than 1 million workers were in the MSAs that posted competitive declines, while 40 of the 72 MSAs with less than 1 million workers recorded decreases. The MSAs at the bottom of the list were Modesto, Lakeland-Winter Haven, Palm Bay, Albuquerque, and Augusta.  A few comments about the position of the two Colorado MSAs follows this table.

The good news from the EMSI report is that Colorado’s hub of commerce, the Denver MSA, is adding “competitive” jobs. If the other MSAs had been included, Boulder and Fort Collins would probably join Denver as gainers and Pueblo, Greeley, and Grand Junction would join Colorado Springs on the down side. Clearly the trickledown effect from Denver to other parts of the state is minimal or non-existent.

Colorado’s recovery has been steady but, it has occurred at a pace slower than desired. While Colorado has been adding jobs, a disproportionate amount of those jobs are in the public sector. While those jobs may be necessary and justified, they will not provide Colorado with a competitive advantage in the months ahead.

Colorado needs to add more primary jobs and jobs need to be added outside the metro area. Here’s to better times for Colorado and the U.S!

©Copyright 2011 by CBER.

“Don’t Get Excited” About the Addition of 7,000 Colorado Jobs in September

horvath Leave a comment

In its latest state-level jobs report, the Bureau of Labor Statistics stated that Colorado gained 7,000 jobs in September, on a seasonally-adjusted (SA) basis. This inordinate gain comes on the heels of a loss of 100 jobs in August.

The quirky nature of the data prompted Colorado’s chief labor economist to report to the Denver Post that the state shouldn’t get “too excited about the addition of 7,000 jobs in September”. It is unlikely that this wide swing in jobs is an accurate measure of what is happening on the streets. Rather, it is the result of adjustment factors that don’t fully capture “seasonal” changes in the economy. Unfortunately, Colorado’s Labor Market Information agency has chosen to use the SA data set as the foundation of its monthly labor reports.

A look at the non-seasonally adjusted data (NSA) shows that Colorado has added an average of 38,800 workers through the first three quarters of the year. The year-end data shouldn’t be too far off that mark, before revisions. Final revisions, made by BLS in March of 2013 and 2014, will likely be in an upward direction since the non-farm, or wage and salary data typically understates growth during periods of sustained growth.

Overall job growth is broad based with the strongest absolute growth occurring in the following sectors:
6,700 Tourism
5,900 Private, Education, and HealthCare
4,700 Professional, and Scientific, and Technical Services
4,700 Retail Trade
4,400 Construction
4,100 Employment Services
3,100 Manufacturing

The following sectors posted absolute job gains that were more moderate:
2,400 K-12 Education
1,800 Extractive Industries
1,700 Wholesale Trade
1,500 Higher Education
1,300 Corporate Headquarters (MCE)
1,300 Personal (Other) Services

Minimal change was recorded in the following sectors:
800 Financial Activities
300 B-to-B (Not Employment Services)
Flat State (Not Higher Education)
-200 Utilities
-400 Transportation & Warehousing

More significant job losses were reported in the following:
-400 Transportation & Warehousing
-700 Federal Government
-2,300 Local Government (Not K-12)
-2,400 Information

Average employment for the first quarter of the year was 47,300 greater than 2011. At the time that level of increase did not seem realistic or sustainable. In April, job growth dropped off to a rate that was in line with the sluggish growth of the U.S. economy.

Average employment for the past six months has been 34,600 and the range of year-over-year job gains has varied from 31,200 to 37,100. It seems realistic to expect similar job gains through the end of the year.

For more detailed analysis of the Colorado economy go to cber.co.

©Copyright 2011 by CBER.

Are We Better Off Than We Were Four Years Ago? – Colorado

horvath Leave a comment

This election season has featured an abundance of discussion about where the state is better off now than we were four years ago. In some cases, we are better off today and in other cases we are not.  The following data provides a snapshot of key metrics that fit into both categories.

Colorado Population
People like to visit and live in Colorado. Continued population growth is projected on a long-term basis.
• Although Net Migration has slowed, Colorado’s population continues to grow at a steady pace.
Colorado Employment and Unemployment
Increased population growth points to long-term job gains and lower employment.
• During the 69 months between January 2007 and September 2012 Colorado only gained jobs in 34 months (seasonally adjusted data).
• In 2012, Colorado employment is well below employment of 2007 and 2008, but it is trending upwards.
• In 2012, jobs are being added at a faster rate than they were in 2008, but not 2007.
• The number of unemployed workers is more than twice as much in 2012 as it was in 2007. It is also greater than 2008.
• The unemployment rate in 2012 is twice the 2007 rate and much higher than in 2008.
• In 2012, the unemployment rate and the number of unemployed workers is trending downward, whereas, it was trending upward in 2008.

Colorado Employment by Sector
Segments of the economy are healthier than they were in 2008.
• Projected annual state employment for 2012 will be about 56,900 less than the total for 2008. The following sectors have greater 2012 employment than 2008: Private Education and Health Care, Higher Education, Tourism, K-12 Education, Corporate Headquarters (MCE), Federal Government, Employment Services, State Government, Extractive Industries, and Professional and Scientific and Technical Services.
Colorado Job Creation
Improved firm and job creation is necessary if the economy is to recover at a faster rate.
• Gross job losses and job gains for 2011 are less than 2008. Improvement in net job gains is more a result of decreased layoffs than actual job creation.

Income and Wages
Recent wage and income data is mixed.
• Per Capita Personal Income – The 2011 average is slightly below the value for 2008.
• Colorado Median Household Income – The 2011 median is below the value for 2008.
• Average Annual Wages – The 2011 average is above the value for 2008.

Colorado Output
Increased employment and wages will point to increased demand for goods and services. This in turn will push output upwards.
• Colorado Real GDP was greater than the U.S. for 2007 to 2011.
• The following sectors have shown steady growth since 1997 and 2011 output is greater than 2007 and 2008: Retail Trade; Professional, Scientific, and Technical Services; Health Care; Finance and Insurance; and Information.
• Real output for the Construction sector was greater in 2007 and 2008 than 2011 for both Colorado and the U.S.

Colorado and Inflation
Overall inflation has been minimal; however, inflation in key areas has been noticeable.
• Overall inflation has been minimal since the beginning of the Great Recession. Apparel and Housing are the only sectors that have grown at a lower rate than All Items for Coloradans.
Construction and Housing
There is improvement in the Construction and Housing markets.
• The number of permits in 2012 is greater than 2008, although they are well below the levels shown in the 2000s.  Most importantly, permits are slowly trending upwards.
• 2012 Colorado housing prices are approaching 2008 levels.
• Home ownership rates in 2011 are below the rates in 2008. More importantly, they are trending downwards.

General Fund and Retail Trade Sales
Gross General Fund Revenue is trending upwards because of stronger job gains (income taxes) and retail trade sales (sales taxes).
• Retail Sales are improving. Projected Sales Tax Revenue for the fiscal year ending June 2013 will exceed revenue for FYE 2008 (not adjusted for inflation). This tax accounts for about one-fourth of Gross General Fund Revenue.
• Projected Net Individual Income Tax for the fiscal year ending June 2012 will exceed FYE 2008 (not adjusted for inflation). This tax accounts for about two-thirds of Gross General Fund Revenue.
• Projected General Fund Revenue for the fiscal year ending June 2012 will match FYE 2008 (not adjusted for inflation).

For more detailed analysis of the state of the economy compared to four years ago, visit https://cber.co or click here.

 

©Copyright 2011 by CBER.