2021 Colorado Economic Forecast

The following forecast is from the 2021 cber.co Economic Forecast for the United States and Colorado.

Colorado’s real GDP growth rate for 2021 will be slightly higher than the U.S. rate It will return to its pre-pandemic value in late 2021.

Colorado employment posted declines in Q4 2020. The negative trend will continue in Q1 2021. Employment will return to its 2019 level in 2022.

Colorado’s unemployment rate will be greater than most states because unemployment claims will remain high.

Retail sales will rebound in 2021 as a result of pent-up demand. Sales will level off at pre-pandemic levels in 2022.

In 2021 and 2022, inflation will be slightly higher than the U.S. rate.

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The number of passengers through DIA in 2020 was about half of the 2019 total. Domestic flights will return to their 2019 level in 2023. International flights will return to their pre-pandemic level in 2024.

There was an increase in the number of building permits issued in 2020. There will be more permits in 2021 as the population increases. Also, there is a need for affordable housing in the metro areas.

State regulations and reduced demand caused a decline in oil production in 2020. The production of oil will be flat in 2021 and 2022.

Colorado Job Growth Holds Steady

In early March the Bureau of Labor Statistics released revised employment data for Colorado showing that 2014 was the 3rd strongest year of job growth in the state’s history and 2015 was ranked 9th.

Data released near the end of March shows that average year-over-year Colorado job growth for the past seven months has been about 67,000 jobs greater than the previous 12-month period. The reduced rate of expansion has occurred for the following reasons:
• The slowdown in the Chinese economy has caused many countries to experience lower rates of GDP growth.
• Colorado’s extractive industries are continuing to contract.
• Just as the Broncos can’t win the Super Bowl every year, it is not possible to have “Super-Bowl-like” job growth all the time.

Although the rate of growth for employment and the GDP are less than last year, the economy will still experience solid growth for the following reasons:
• There is solid GDP growth across most Colorado sectors.
• Job growth is stable in most industries and occupations.
• Solid and diverse growth will continue in the state’s personal income, population, and per capita personal income.
• There is a strong outlook for the construction industry in Colorado and the U.S.
• Robust new car sales are a reflection of solid personal consumption.
• There is increased activity at DIA and the area surrounding the airport.
• While low unemployment can be problematic it will drive higher wages.
• Higher wages will cause increased consumption and offset higher living costs.

Despite the headwinds, Colorado is on track for continued solid growth in 2016. For more details check out the most recent updates by clicking here or check out cber.co Colorado Economic 2016 Forecast.

Colorado Job Growth

Colorado 2015 Job Growth – 9th Best Year In History of State

This past week, the Bureau of Labor Statistics (BLS) announced that Colorado job growth for 2014 was revised upwards to 83,000 and 2015 job growth was bumped up to 76,300. The respective rates of Colorado job growth were 3.5% in 2014 and 3.1% in 2015.

The upward benchmark revisions made 2014 the third strongest year of absolute job growth while 2015 was the ninth strongest year. This is the best news for the state since the Broncos won the Super Bowl on February 7th.

During 2014 the BLS monthly estimates reported the Colorado economy was adding jobs at a declining rate. This past year, BLS showed that Colorado was adding jobs at an even faster declining rate than in 2014. Thank goodness the BLS projection models were grossly flawed. the benchmark revisions match the activity that has taken place on the streets for the past two years.

In 2015 the five largest sectors/subsectors were:
• Health Care
• Retail
• Accommodations and Food Services
• Professional, Scientific and Technical Services
• Financial Activities
These five industries accounted for 45.8% of total employment. Total employment for 2015 was 2,541,200.

In 2015, the five largest sectors/subsectors for the number of jobs added were:
• Health Care
• Construction
• Accommodations and Food Services
• Professional, Scientific and Technical Services
• Retail
These five industries accounted for 60% of the jobs added. The job growth for these five industries combined was 4.1% in 2015.

Job growth in 2016 will be solid, but slightly off the pace of 2015. Growth will be slowed by low oil prices, the slow economy in China, and a strong dollar abroad.

For more details check out the review of Colorado 2015 job growth by clicking here. And there is much more. For more details check out the cber.co Colorado Economic 2016 Forecast.

2015 job growth

Colorado Employment Increases by 13,000 jobs in October – Really?

On Friday November 20th, the BLS released wage and salary employment data for the states. The seasonally adjusted data indicated that Colorado employment increased by 13,000 jobs last month.

This is in sharp contrast to the previous three months. The data for July showed a gain of 600 jobs; an increase of 1,600 workers was posted in August, and a decline of 1,600 jobs showed up in September.

If these numbers prove to be accurate, it is reasonable to raise the question: Which is the anomaly – the posted employment for July through September or the employment for October?

The non-seasonally adjusted data shows the Colorado employment continues to post solid job growth. Approximately 59,700 jobs will be added this year.

Colorado employment

The state’s job growth is led by the health care, construction, and accommodations and food services industries. There are fears that construction growth will be constrained by the lack of trained workers.

In addition, all of the state’s MSAs have shown solid to strong job growth. Local governments are continuing to spend and the state government is offering more tax incentives to out-of-state companies to move to Colorado.

A review of the top news stories for the past month echoes the sentiment of state leaders (Office of state Planning and Budgeting and Colorado Legislative Council) who say that the economy is on solid footing.

A majority of the coverage about the economy is very positive, however, there is one story that is unsettling. Union Pacific is laying off workers in Denver and BNSF is following suit in other states. While there is reason to be concerned about the individuals who are furloughed or laid off, there is greater concern because the railroads are facing decreased demand for shipments (coal, oil, agriculture products, and industrial products). This suggests there may be something fundamentally wrong with the overall economy, i.e. manufacturing may be woefully weak.

Another note of concern, the state of Colorado is expected to take in record levels of revenue, yet it will experience a budget shortfall for a variety of reasons beyond the control of state legislators. Special interest groups are addressing this issue, but there is limited interest in their efforts.

The bottom line is the Colorado economy is on solid footing, at least for the moment.


Colorado Job Growth On Solid Footing

This post touches on a few of the national and state trends that will affect Colorado job growth through the remainder of the year. They are made In anticipation of the September release of employment data from the BLS

National Trends That Affect Colorado

Nationally, there are several trends that are relevant to Colorado:
• Jobs are being added at a slower rate than in the past, yet the U.S. is on track to add about 3 million jobs this year. This will be the fifth consecutive year for accelerated job growth.
• The slower rate of job growth is occurring for two reasons. First, the slowdown in the Chinese economy has caused a pullback in other economic growth in other countries. Second, U.S. job growth has reached a point where the past level of job growth cannot be sustained. A slowdown in this case does not suggest the country is headed for a downturn.
• Real GDP growth for 2015 will remain in the neighborhood of 2.5%.
• The service sector will continue to post solid growth through the end of the year, while manufacturing remains sluggish.
• Holiday sales will be so-so. Industry experts expect an increase of 3.5% to 4.0% compared to last year. Stronger labor markets and lower gas prices should point to stronger sales; however, the savings rate is around 4.6%. At this point consumers appear to be cautious.
• It is likely the strong level of mergers and acquisitions will continue. Companies have money and they appear to be ready to spend it when the time is right. This has impacted several companies in Colorado.

Colorado’s Economic Trends

There is conflicting employment data. The Bureau of Labor Statistics shows that Colorado employment has trended downward beginning in Q2, with a significant decline in the rate of growth in August. There are also indications the number of jobs added for the first half of the year will be revised upward with the benchmark revisions.

Either way it is likely the rate of Colorado job growth is declining, in line with the national trends. The state will feel the effects of a slower global economy. As well, Colorado has reached a level of job growth that is unsustainable.

The bottom line is that Colorado will continue to have a higher rate of job growth than the U.S. for the remainder of the year and into next year.

Colorado Job Growth is Solid – The Sky is Not Falling

There has been a streak of bad economic news within the past ten days; however, the fundamentals of the U.S. and Colorado economies are solid and the sky is not falling!

The Colorado Department of Labor and Employment announced the release of data showing that on average there are 65,900 more jobs for the first seven months of 2015 than the same period in 2014. The rate of increase is about 2.7%. While this level of job growth is solid, activity on the streets is much stronger.

Internationally, concerns have temporarily shifted away from violence in the Middle East. Worries have shifted to a slowdown in the economic growth of China, the magnitude of that slowdown, and the impact it would have on the global economy.Job Growth - The Sky is Not Falling

Earlier declines in the price of oil have not had the negative impact on the state that was initially expected by some economists. Colorado is a second tier state in terms of production and companies have taken numerous steps to increase their efficiency and maintain their profitability. Layoffs in the industry may be inevitable if the price for a barrel of oil remains at its current level, in the low $40s, for an extended period.

Through seven months average employment in the extractive industries is about 700 greater than last year. That number will approach zero by the end of the year.

The recent volatility in the equity markets may be the sign of a long-overdue correction or the start of a bear market. Uncertainty in the equities market may cause consumers to remain cautious.

On a more positive note, Colorado new car registrations have been strong this year. On a YTD basis, more new cars have been registered in 2015; however, the rate of growth has slowed to about 5.0% this year, down from 11.2% growth in 2013, and 6.5% growth last year.

Net migration remains strong as people find Colorado an attractive place to live, work, and play. In part that is a driving factor for the construction industry.

On a year-to-date basis the top sectors for job growth are:
• Healthcare 14,000
• Accommodations and Food Services 13,200
• Construction 12,100

Combined these three sectors account for about 59.6% of the jobs added or 39,300 workers. Average wages for many of the occupations in these industries are well-below the state average.

There are concerns that an insufficient number of primary jobs are being added in Colorado. Primary jobs are important because they bring in money from the outside that is invested in the state economy. In addition, primary employers often have a local supply chain that supports the local economy.

To that point, the average number of manufacturing jobs is 3,900 greater than a year ago. Many of these workers have been added in the renewable energy sector and its supply chain and they are located in Weld County. The addition of new jobs in this area will offset job losses associated with the decline in the price of oil.

So far this year, the major disappointment is the Information Sector. Declines are expected to continue through the end of the year.

On a year-to-date basis, the Government sector has added about 4,900 jobs. On a percentage basis, the greatest number of jobs has been added in K-12 and higher education. After seeing cutbacks for two years, the Federal Government is on track to add about 400 positions this year.

In addition to this data, CDLE will release a report later this month showing that Colorado job growth for the first quarter may be revised upward by 15,000 to 20,000. The bottom line is that Colorado’s employment is  much stronger than currently being reported.  Unequivocally, the sky Is not falling.

Colorado Job Growth Continues to be Solid in April

BLS recently released April wage and salary employment data for Colorado. The job growth is softer than expected given the strength of the U.S. jobs numbers, projected improvement in the growth of the economy (GDP), and the outlook of purchasing managers as measured by the ISM manufacturing and non-manufacturing indices. Given the strength of the U.S. employment data, it seems reasonable for the state to be ahead of last year by 70,000 to 75,000 jobs, even with the slight decreases in the state oil and gas industry.

job growth

In April there were 34,400 jobs (NSA) in the Mining and Logging Sector. This is down about 1,300 jobs from December, 2014 but about 1,800 jobs above the April 2014 total. The sector had record employment this past December.

Looking beyond the oil and gas industries we see that about two-thirds of the job growth this year has been in Health Care; Accommodations and Food Services; Construction; Professional, Scientific, and Technical Services (PST); and Manufacturing.

Approximately 21% of all jobs added were in Leisure and Hospitality. The tourism industry is important to all 64 counties in the state. Colorado had a strong ski season and is poised to have a strong summer season.

About 10% of total jobs added were in the PST, Manufacturing, and Information sectors. These sectors are the source of primary and advanced technology jobs. Primary jobs attract wealth from outside the state that is spent locally, they export a significant portion of their goods and services, and they often pay wages that are much greater than the state average.

Probably the hottest topic on the economic front has been the price of housing and rentals. The Case Shiller Home Price Index for Denver indicates that home prices increased by 10.0% over the past year and 1.4% on a month-over-month basis. Rentals have risen at slightly lower rates.

The comparative strength of the Colorado economy over the past five years has caused labor shortages in key occupations, i.e. it is necessary to attract talent from outside Colorado. Out-of -state workers from some parts of the country will experience sticker shock when they look at home prices in the metro area.

On a positive note, increased appreciation in home prices increases the “paper wealth” of individuals. This will cause home owners and landlords to remain confident in the economy and willing to spend money. The increase in prices, and ultimately property taxes, is a two-edged sword. Property owners don’t like the increase, but schools and local governments will see an increase in funding.

At the moment the increase in housing prices does not appear to have deterred job growth. Stay tuned – that may change! It will continue to be an interesting year for the Colorado economy.

Colorado Jobs and Economy Remain Strong

On December 20th the BLS will provide their final 2014 Colorado jobs report.

Given the strength of the U.S. job growth reported earlier this month (321,000 jobs added), it is reasonable to think there will be solid job growth for November. While the economy has had its ups and downs, job growth remains solid, and is trending upwards.

The upcoming press release is somewhat irrelevant because the BLS will release the 2014 benchmark revisions in early March of 2015. That data is expected to show that the number of Colorado jobs increased by about 73,000, or 3.1%, during 2014.

The BLS began producing state employment data in 1939. The Job growth of 73,000 jobs in 2014 will be the tenth best year in terms of absolute job growth (the number of jobs added). On the other hand, 2014 will be the 38th best year in terms of relative job growth (percentage of job growth).

This year marks the only time that Colorado jobs have increased at an accelerating rate for four consecutive years. Between 2011 and 2014, Colorado has added about 231,000 workers (36,300 jobs in 2011; 54,400 jobs in 2012; 68,100 jobs in 2013; and 73,000 jobs in 2014.)

Looking ahead to 2015:
• The price of oil has declined precipitously because supply exceeds demand. As a result the price for a gallon of gasoline has dropped well below $3.00 per gallon. To date, the short-term impact of lower gas prices has been minimal. If prices remain low, Colorado’s frequent fuelers will realize savings of about $500 to $600 next in 2015. Because wage growth has been weak over the past four years, most people will not use the savings for discretionary purposes. Rather they will pay for rent, food, medical costs, and other necessary expenses that have risen at a rate faster than their wages.
• In the short-term (first half of 2015) lower oil prices may not have a significant impact on production and the number of workers in Colorado’s extractive industries. If prices are suppressed for an extended period, then production will fall. Initially, contractors and engineers will be laid off and production workers will be furloughed. Eventually smaller companies and suppliers will be impacted. The extractive industries have a comparatively small direct workforce; however, they indirectly touch many industries. They have a much bigger role in the Colorado economy than most people realize.
• A slowdown in the economies of China, Russia, and parts of the European Union may impact Colorado companies that export products and services globally.
• Wage growth has been extremely weak, particularly given the decline in the rate of unemployment this year. Although the unemployment rate is below 4.5% (the natural rate of unemployment), upward wage pressure has been felt in only a few industries, such as construction and finance.
• Retail sales have remained solid because of increased employment and in-migration. Stronger wage growth is needed to support significant growth in retail sales.
• The downward trend in the unemployment rate is a mixed blessing. It is great that more people have jobs, but labor shortages will occur  in more industries during 2015 as the supply of trained workers is reduced.
• Health care costs will continue to be an issue in 2015. Participants in the Connect for Health Colorado program will not see minimal increases in their 2015 premiums. Unfortunately, the subsidies were reduced, which will cause costs for insurance to increase significantly for many families.
• Colorado’s housing prices continue to rise, which is good news for existing home owners. It is not such good news for renters and people moving to the state.

Despite these headwinds, there are plenty of reasons to be optimistic about the growth in the number of Colorado jobs and the overall economy in 2015.

Colorado’s Employment Situation After Ten Months

After ten months, enough of the year has passed that Colorado’s employment situation for 2014 is virtually set. This post looks at overall and regional job growth, drivers of the regional economies, and industries that dominate state job growth.

Job Growth (Overall)
After BLS makes their March 2015 revisions the wage and salary employment will show that Colorado added at least 70,000 jobs this year. That is job growth of at least 2.9%.

Job Growth (Regional)
About 81% of Colorado’s job growth occurs in Colorado’s seven metro areas (listed below). The industry composition and the economies in these seven metro areas are distinct. As a result they have grown at different rates.

The estimated rates of job growth through ten months are:
• Greeley 5.0%
• Boulder 3.1%
• Fort Collins 2.8%
• Denver 2.8%
• Pueblo 1.8%
• Grand Junction 0.9%
• Colorado Springs 0.8%

During this period the percentage of job growth in the MSAs was:
• Denver added 67.4% of the MSA jobs.
• Boulder added 10.0%.
• Combined, the Northern Colorado MSAs added 16.0% of all jobs (Greeley 8.5% and Fort Collins 7.5%).
• Colorado Springs added 3.6% of the MSA jobs.
• Pueblo added 2.1%.
• Grand Junction added almost 1%.

Drivers of Regional Economies
The economies of Colorado’s seven metro areas are very distinct as evidenced by the industries driving their economy.
• Greeley has been driven by the extractive industries and Vestas.
• Fort Collins has been driven by the high-tech industry, CSU, and spillover from the extractive industries.
• Boulder has posted gains as a result of the high-tech industry, and CU employment.
• Denver’s economy is more balanced than the smaller economies. Interestingly enough, it has grown at a slower rate in 2014 than 2013.
• Pueblo has benefitted from Vestas.
• Grand Junction has struggled to recover from the most recent “oil shale bust”.
• Colorado Springs is still feeling the pain from the exit of Intel. In addition, the wildfires during the summers of 2012 and 2013 played havoc with the economy. The local economy is very dependent on the military and defense funding for local businesses. These industries are typically more volatile than the overall economy.

Industries Dominating State Job Growth
• Throughout 2014, job growth across the state has been led by the following  sectors
o Accommodations and Food Services (AFS)
o Health Care
o Professional, Scientific, and Technical Services (PST)
o Construction
o Retail
These five sectors account for about 71% of total job growth in the state.

Colorado’s Diversity of Job Growth

cber.co tracks changes in employment for 23 sectors of the Colorado economy. Part of that tracking includes a two-step process for measuring Colorado’s diversity of job growth.

The first step is to identify the number of sectors that are adding jobs. For the last three years the data shows:
• In 2012 19 sectors added jobs
• In 2013 19 sectors added jobs
• In 2014 18 sectors will add jobs (estimate).

As a point of reference, a comparison can be made to the following years:
• In 1993 22 sectors added jobs
• In 1998 22 sectors added jobs
• In 2002 13 sectors added jobs
• in 2003 10 sectors added jobs
• in 2009 8 sectors added jobs
• In 2010 10 sectors added jobs.
This shows that during the best of times, some sectors lose jobs. As well, it illustrates that during the worst of times, there are sectors adding jobs.

Another way to look at the data is to calculate the percent of employment in sectors where jobs are being added. For the last three years the data shows:
• In 2012 the sectors that added jobs had 88.5% of total employment.
• In 2013 the sectors that added jobs had 89.2% of total employment.
• In 2014 the sectors that added jobs had 85.4% of total employment (estimate).
The 2014 percentage might increase when the BLS revises 2014 data in March 2015.

As a point of reference, a comparison can be made to the following years:
• In 1993 the sectors that added jobs had 99.1% of total employment.
• In 1998 the sectors that added jobs had 99.6% of total employment.
• In 2002 the sectors that added jobs had 49.4% of total employment.
• In 2003 the sectors that added jobs had 36.7% of total employment.
• In 2009 the sectors that added jobs had 27.3% of total employment.
• In 2010 the sectors that added jobs had 33.2% of total employment.

The data shows that since 2012 Colorado’s job growth has been diverse and solid.

diversity of job growth