CPI Archives - Colorado-based Business and Economic Research

Colorado Inflation for 2013 About Double the U.S. Rate

June 17, 2014June 29, 2014 horvath Leave a comment

Earlier today, the BLS released its CPI data for 2013. The data shows that Denver-Boulder-Greeley rate of inflation, 2.8%, was about double the rate for the U.S., 1.5%. (The Denver-Boulder-Greeley CPI is used as a proxy for Colorado inflation).

The inflation rate for three of the eight categories was well above the state average (2.8%). These categories were: apparel (6.5%), housing (4.8%), and medical care (3.6%). In addition, the rates for these categories were also significantly greater than the U.S. rate.

The housing category (4.8%) includes three subcategories:
• Inflation for the shelter category increased 4.5% in Colorado, compared to 2.3% for the U.S.
• Colorado fuels and utilities increased 9.3%, compared to 2.8% for the U.S. Within that category Colorado household energy rose by 11.2%, compared to 2.4% for the U.S.
• Colorado household furnishings rose by 0.9% compared to -0.8% for the U.S.
Colorado’s higher rate of inflation in the housing category is a reflection of stronger growth in the state economy and the residential real estate market than the U.S. The magnitude of the state’s increase in fuel and utilities may be a reflection of its commitment to alternative energy sources.

Finally, Colorado’s rate of inflation was somewhat higher in the other services category. The rise in prices for food and beverage was the only category that was significantly higher in the U.S. than Colorado. The remaining three categories (education and communications, recreation, and transportation) had similar growth rates for inflation.

Category	Denver-Boulder-Greeley	U.S.
Apparel	6.5%	0.9%
Housing	4.8%	2.1%
Medical care	3.6%	2.5%
Other goods and services	2.3%	1.7%
Education and communication	1.4%	1.5%
Food and beverages	0.6%	1.4%
Recreation	0.5%	0.5%
Transportation	-0.2%	0.0%

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

November 4, 2012November 4, 2012 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.

Is Inflation Giving you Gas?

April 28, 2011May 31, 2014 horvath Leave a comment

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.

Colorado Legislative Council – Outlook for the State Improving

March 23, 2011May 31, 2014 horvath Leave a comment

The Colorado Legislative Council (CLC) recently released its quarterly update of the state economy Focus Colorado: Economic and Revenue Forecast. The report was released in mid-March, at a time when it appears that Q1 2011 employment will be approximately 15,000 jobs higher than Q1 2010. It is great to hear that net employment is again trending upward; however, state employment remains below the peak 2001.

Increased employment is good news for the state coffers!

The Q4 2010 forecast pointed to a budget shortfall of $1,015 million. Because Colorado is required to have a balanced budget, it became necessary to significantly reduce spending for K-12 education and other programs.

Over the past year, there has been an increase in consumption and private sector employment that now appears to be sustainable, hence justification for adjusting the revenue forecast upward. Projections for FY 2010-11 were raised by $116 million, while revenues for the subsequent two years were upped by $99 million and $105 million respectively.

The combination of budget cuts and revenue increases point to a much lower projected shortfall, $450 million, for FY-2011-12. This is good news, but…

Nationally, CLC is calling for real GDP growth of 3.2%, similar to Q4 2010. After three years of net job losses, employment will increase by 0.4% to about 130.3 million jobs. Unfortunately, average annual unemployment for the year will be 8.7%.

At the state level, CLC projects population growth of 1.6% or about 78,000 people. This reflects a reduction in net in-migration to less than 40,000.

Wage and salary employment will post gains of 0.7%, or about 16,000 workers. While this growth is encouraging, it is not enough to significantly lower the rate of unemployment. Unemployment of 8.8% will be slightly higher than the national rate.

Retail sales are projected to record gains of 4.2%; however, inflation (2.3%), will account for more than half of that gain. Retailers will remain challenged to maintain profitability. Finally, single family building permits will be 15,300, slightly higher than in 2010.

The risks to continued growth remain significant. Consumer confidence is fragile and talk about a double-dip has resurfaced. Constraints facing Colorado include a painfully slow housing recovery, rising food and energy prices, and continued concerns about the banking system.

While the picture painted by CLC is certainly not a bright one, it is clearly much more encouraging.

For Many Coloradans Inflation is Real

February 16, 2011May 31, 2014 horvath Leave a comment

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 ).