Tag: Economic growth

CDLE Data – Many Have Not Recovered from Great Recession

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With great excitement the Colorado Department of Labor and Employment announced that the state’s wage and salary employment finally returned to its peak in 2008.

It took five years for the state to return to the pre-recession employment levels.

Ugh!

A closer look at the unemployment data is even more disturbing. As a result of the downturn, the number of unemployed workers increased by 123,500. To date, this number has only decreased by 51,300. In other words, the number of unemployed workers is 72,200 greater than five years ago.

Clearly, there are many in the state who have not recovered from the Great Recession and the addition of 150,000+ jobs!

For additional details about the performance of the state economy, go to the cber.co website or click here.

©Copyright 2011 by CBER.

Colorado Job Growth Increasing at a Declining Rate

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Colorado job gains remained solid in June; however, job growth is increasing at a declining rate. Average employment through June 2013 is 59,000 jobs greater than the same period last year.

If the data is evaluated on a quarterly basis, the number of jobs added leveled off for the period Q4 2012 to Q2 2013. In fact, there was a decrease between Q2 and Q1 of 2013.

Q4 2012   58,600

Q1 2013   61,800

Q2 2013   56,300.

On average, about 4,900 jobs have been added each month for the past three quarters.

For the period Q2 2012 to Q2 2013, the number of jobs added at the national level appears to have reached a plateau. Nationally, there was an increase in the job gains between Q2 and Q1 of 2013.

Q2 2012    2,158,000

Q3 2012    2,217,000

Q4 2012    2,188,000

Q1 2013    2,086,700

Q2 2013    2,177,300.

On average, about 180,500 jobs have been added each month for the past five quarters.

In both cases, the level of job growth is modest and expected to remain that way in the near term.

For additional details about the performance of the state economy, go to the cber.co website or click here.


©Copyright 2011 by CBER.

Construction Output Declined for Eleven Years – Reversed in 2012

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Real GDP for the Construction sector finally rebounded in 2012, after decreasing for eleven years, 2001 to 2011.

Between 1997 and 2012, the Bureau of Economic Analysis statistics show:

  • The annualized rate of growth for U.S. Private Sector Real GDP (sum of all states) was 2.3% and the U.S. Construction sector declined annually at a rate of -1.5%.
  • The compound growth rate for Colorado Private Sector Real GDP was 3.1%. The Colorado Construction sector declined annually at a rate of -2.4%.

For this period, the Colorado Construction sector was hit much harder than the U.S. In addition, the recovery was much slower for Colorado.

Between 2009 and 2012, the data shows:

  • The annualized rate of growth for U.S. Private Sector Real GDP (sum of all states) was 2.5% and the U.S. Construction sector increased at an annualized rate of 0.5%.
  • The compound growth rate for Colorado Private Sector Real GDP was 2.2%. The Colorado Construction sector declined annually at a rate of -1.4%.

Preliminary data suggests that 2013 Colorado Construction output will again be positive and that it will be stronger than the nation.


©Copyright 2011 by CBER.

Policy and Prices Impact Output for Extractive Industries – Is Colorado Closed for Business?

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The extractive industries are an important and visible part of Colorado’s economy. In 2012, Colorado’s GDP was 1.76% of the U.S. GDP and Colorado’s Mining sector output was 3.58% of the U.S. Mining sector output.  In other words, Colorado’s extractive industries critical components of both the state and the national economy.

Between 1997 and 2012, there were stark differences in the state and national output for the extractive industries and the private sector.

  • The annualized rate of growth for U.S. Private Sector Real GDP (sum of all states) was 2.3% and the extractive industries were -0.6%.
  • The compound growth rate for Colorado Private Sector Real GDP was 3.1% and the extractive industries grew at a rate of 3.6%.

Nationally sector output trended downward from 1997 to 2005 and trended upward from 2005 to 2009. Between 2009 and 2012, sector output trended downward again.

In Colorado sector output  trended upward from 1997 to 2009; however, it has trended downward since 2009.

  • The annualized rate of growth for U.S. Private Sector Real GDP (sum of all states) was 2.5% and extractive industry output was -2.0%.
  • The compound growth rate for Colorado Private Sector Real GDP was 2.2% and extractive industry output was -4.0%.

The variance in output has been caused by changes in prices, supply and demand, and policy. Recently, the latter has had the most detrimental impact on the industry in Colorado.  Policy and anti-fracking efforts are likely to further suppress output in the months ahead. In addition to reducing output, this will create the perception that Colorado is not a business-friendly state.


©Copyright 2011 by CBER.

Will Colorado Output Continue to Expand as Slower Rate than U.S.?

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Between 1997 and 2012, the Private Sector Real GDP and job growth for Colorado outpaced the nation.  For this period, data released by the Bureau of Economic Analysis and the Bureau of Labor Statistics shows:

  • The annualized rate of growth for U.S. Private Sector Real GDP (sum of all states) was 2.3% and private sector wage and salary employment expanded at a rate of 0.5%.
  • The compound growth rate for Colorado Private Sector Real GDP was 3.1% and private sector nonfarm jobs grew at a rate of 0.9%.

More recently, the data tells a different story.  Colorado did not fare as well as the nation between 2009 and 2012.  While the rate of job growth was similar, U.S. output expanded at a faster rate.

  • The annualized rate of growth for U.S. Private Sector Real GDP (sum of all states) was 2.5% and private sector wage and salary employment expanded at a rate of 1.1%.
  • The compound growth rate for Colorado Private Sector Real GDP was 2.2% and private sector nonfarm jobs grew at a rate of 1.1%.

Time will tell whether the Colorado output will continue to grow at a slower rate than the U.S. or if this is a short-term variance that will reverse itself in 2013 or 2014.

Private Sector Real GDP
©Copyright 2011 by CBER.

State Per Capita Real GDP Increased by 1.1% Since 1997

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There are many data sets that can be used to evaluate the performance of the state and national economy. One of those metrics is Per Capita Real GDP. This measure is derived by dividing real output by the population.

For the period 1997 to 2012, Per Capita Real GDP for Colorado and the U.S. grew at essentially the same rate, 1.11% and 1.13% respectively.

Within that period there were some differences:

  •  Between 1997 and 2001 the Per Capita Real GDP for Colorado increased at an annualized rate of  3.88% compared to 2.49% for the U.S.
  •  Between 2001 and 2012 the Per Capita Real GDP for Colorado increased at an annualized rate of  0.13% compared to 0.64% for the U.S.
  • Between 2009 and 2012 the Per Capita Real GDP for Colorado grew at an annualized rate of 0.58% compared to 1.39% for the U.S.

During the final years of the go-go 90s, Per Capita Real GDP for the state increased at a faster rate than the nation.  Since the 2001 recession, the nation has outpaced the state.

©Copyright 2011 by CBER.

Tepid Job Growth Continues

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When the Bureau of Labor Statistics announced (June 7th) that 175,000 jobs were added in May the stock market rose by 200+ points.  While the number of jobs added in May exceeded expectations, a significant downward revision in April offset those gains.

Said differently, the number of jobs added in May was comparable to the monthly average for 2011.  It is difficult to explain how that level of job growth could drive the market up.

The good news is that jobs are being added at a steady, albeit tepid pace.

On average, the U.S. has added 189,200 jobs per month in 2013. This compares to +185,000 workers in 2012 and +175,000 workers in 2011.  In other words, job growth continues to be lackluster, but well above the average for 2010 (+85,000) and 2009 (-421,000).

At this rate, U.S. employment will return to the 2008 peak some time in 2014.

©Copyright 2011 by CBER.

Lack of Primary Job Creation May Slow Future Employment Growth

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The Bureau of Labor Statistics recently released data showing that, on average, Colorado added almost 62,000 jobs for the first four months of the year compared to the same period last year.

As has been the case in the past, the tourism and healthcare industries led the continued expansion.  The top five sectors for growth were:

  • Accommodations and Food Services
  • Healthcare
  • B-to-B (excluding Employment Services)
  • Retail
  • Construction

About 64% of the jobs added can be attributed to these sectors.

While it is good news that jobs are being added in most sectors, the expansion may be slowed by the lack of primary/high-tech jobs – jobs that create other jobs or bring in investment from the outside. The following sectors serve as a proxy for “primary job creation.”

  • Professional, Scientific, and Technical
  • Corporate Headquarters (MCE)
  • Manufacturing
  • Information

So far this year, these sectors are responsible for adding about 10% of the jobs.

All jobs are important and interrelated, but not all jobs are equal in terms of their ability to create other jobs.

A review of the Colorado economy after four months can be found by clicking here.

©Copyright 2011 by CBER.

Colorado Adds 62,600 Jobs in Q1 2013

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A review of 22 NAICS sectors shows that on average, Colorado added 62,600 jobs in Q1 compared to the same period last year.  Only four of the sectors posted losses (Information 1,800; Federal Government 900; Natural Resources 600; and State (Not Higher Education) 100.

The following sectors added jobs at a faster level, Q1 2013 vs. 2012:
Accommodations and Food Services; B-to-B (Not Employment); Retail Trade;  Construction;  K-12 Education;  Wholesale Trade; Health Care; Arts Entertainment, and Recreation; and Other Services.

The following sectors added jobs at the same level, Q1 2013 vs. 2012:
Corporate Headquarters (MCE), Local (Not Higher Education), and State (Not Higher Education).

The following sectors added jobs at a slower level, Q1 2013 vs. 2012:
Private Education; Information; Employment Services; Transportation, Warehousing, and Utilities;  Higher Education; Financial Activities; Federal Government; Manufacturing; Professional, Scientific, and Technical; and Natural Resources and Mining.

While it is great news that most sectors are adding jobs, it may be cause for concern that many of the state’s primary job creators have fallen in the latter category – adding jobs at a level slower than 2012.

©Copyright 2011 by CBER.

2012 CDLE Monthly Employment Numbers Didn’t Reflect Reality

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In 2012, the monthly Colorado Department of Labor and Employment (CDLE ) employment press releases told a story about the economy that did not agree with what happened on the streets.  The initial seasonally adjusted employment data depicted huge swings in employment, ranging from an unbelievable gain of 19,500 jobs in January to an equally absurd loss of 6,900 jobs in June.  This is a range of 26,500 jobs.

The initial data showed losses in two months and no growth in a third. The initial data indicated that job gains only occurred in nine months.

The benchmarked revision, released in March 2013, told a much different story. There were consistent job gains in all 12 months, rather than the erratic job growth portrayed by the initial data.  That range of job growth was 7,300 jobs, from a low of 1,700 jobs added in May to a peak of 9,000 jobs added in October.

The correlation coefficient between the initial data and the March benchmark data is .56. The coefficient of determination is .31. In other words, the relationship between the two sets of data is weak. It is difficult to understand why the initial data set does such a poor job projecting employment growth.

It is important for public and private leaders to have “accurate” data available to make critical business decisions relating to their industry. In this case, it was difficult for consumers to have confidence in the business climate when the story being told by state officials did not reflect what was actually happening on the street. CDLE must revisit its priorities. Publishing credible data is much more important than conducting a media blitz for the sake of gaining exposure for the agency.

©Copyright 2011 by CBER.