Top Output Categories for Colorado

The following list identifies the top output categories for Colorado. The list has been extracted from an IMPLAN database, This database divides output and employment  into  440 categories.

IMPLAN is an economic analysis tool that uses input-output analysis in combination with regional specific Social Accounting Matrices and Multiplier Models.

This list provides insight into the industries that drive the Colorado economy. As can be seen finance is a major contributor to the state’s output. Other key categories are food services, extractive industries, construction, government, health care, and advanced technology.

Top Output Categories for Colorado Based on IMPLAN Data

Rank Industry Code Description Output Percent Cumulative Percent
1 360 Real estate establishments $25,472,296,875 5.2% 5.2%
2 361 Imputed rental activity for owner-occupied dwellings $22,888,701,172 4.7% 9.9%
3 319 Wholesale trade businesses $22,869,310,547 4.7% 14.6%
4 351 Telecommunications $20,428,070,313 4.2% 18.8%
5 413 Food services and drinking places $12,926,014,648 2.6% 21.4%
6 438 * Employment and payroll only (state & local govt, education) $11,658,043,945 2.4% 23.8%
7 354 Monetary authorities and depository credit intermediation activities $11,587,137,695 2.4% 26.2%
8 20 Extraction of oil and natural gas $11,270,791,992 2.3% 28.5%
9 356 Securities, commodity contracts, investments, and related activities $10,981,884,766 2.2% 30.7%
10 394 Offices of physicians, dentists, and other health practitioners $9,923,915,039 2.0% 32.8%
11 440 * Employment and payroll only (federal govt, military) $9,475,095,703 1.9% 34.7%
12 381 Management of companies and enterprises $9,202,613,281 1.9% 36.6%
13 437 * Employment and payroll only (state & local govt, non-education) $9,006,702,148 1.8% 38.4%
14 357 Insurance carriers $8,479,899,414 1.7% 40.2%
15 36 Construction of other new nonresidential structures $8,137,076,660 1.7% 41.8%
16 397 Private hospitals $7,912,281,250 1.6% 43.5%
17 369 Architectural, engineering, and related services $7,906,128,906 1.6% 45.1%
18 345 Software publishers $7,026,037,598 1.4% 46.5%
19 31 Electric power generation, transmission, and distribution $5,340,330,078 1.1% 47.6%
20 366 Lessors of nonfinancial intangible assets $5,337,109,375 1.1% 48.7%
21 439 * Employment and payroll only (federal govt, non-military) $5,274,785,156 1.1% 49.8%
22 371 Custom computer programming services $5,234,539,063 1.1% 50.9%
23 359 Funds, trusts, and other financial vehicles $5,130,132,813 1.1% 51.9%
24 115 Petroleum refineries $4,738,690,430 1.0% 52.9%
25 367 Legal services $4,462,339,844 0.9% 53.8%
Other $225,686,144,106 46.2% 100.0%

Total output for the model was $488,356,072,817 and employment was 3,235,493. These 25 categories account for 46.4% of employment and 53.8% of output for the state.

Sectors Losing Jobs Have Higher Wages

Through the first 8 months of the year there are 7 sectors of the economy that have lost a net total of 25,100 jobs, compared to the same period last year.

Construction                                     -8,800
Financial Activities                            -4,200
Federal Government                         -3,400
Information                                       -3,400
B-to-B (Not Employment Services)  -2,600
Local Government (Not K-12)         -1,600
K-12 Education                               -1,100

These sectors account for 33.3% of total employment. Average wages for this mix of workers is about $56,600 compared to average annual wages for all employees of about $47,900 (calculations based on 2010 QCEW data). In other words, the average wages for the sectors that are losing jobs is significantly greater than the overall state average, based on 2010 data.

The 2011 prognosis is that each of these sectors will show job losses for the year (2011) and that average annual wages for the group will remain well above the overall state average.

For a comprehensive review of the Colorado economy visit the CBER website.

©Copyright 2011 by CBER.

10 Years After 9/11 – Summary of Impacts on Colorado

This is the final post summarizing the way the economy has performed in the 10 years after 9/11. The series of posts began in early August and has included a review of tourism; construction, housing, and financial activities; retail sales and personal services; high tech and the military.


• From an employment perspective, tourism (accommodations and food services) has expanded in Colorado since 2001. Competitiveness within the industry has increased, as evidenced by the flat growth in output.

• In Colorado, the airline industry was “restructured” after 9/11.

• The impact of 9/11 was short term. These declines may have been offset by gains in emerging industries,
such as teleconferencing and other means of communications.

Construction, Housing, and Financial Activities

• Construction, housing (prices and foreclosures), and finance are all interrelated. A portion of today’s
problems can be tied to 9/11 and the 2001 recession. There was a mindset that the country could “spend” its way back to prosperity. That mindset created problems when overextended consumers lost their jobs or saw declines in the values of their houses.

• Construction output peaked in 2000 and has dropped-off since. From an employment standpoint, there was a slight decline during the 2001 recession. A much more severe drop-off began in 2008.

• Creative financing allowed financial employment to grow throughout the 2001 recession. Some of the
products that spurred that growth were problematic in the second half of the decade. In turn, layoffs in the
financial sector began in 2007 and have continued since. These declines are a function of lack of activity,
consolidation, automation, bank failures.

• Year-end equity market values are about the same in 2010 and 2000.

Retail Sales and Personal Services

• Sales of retail goods and personal services has become more competitive during the past decade, yet
employment has remained relatively flat. Increased savings in recent years may be an indicator that consumers learned from the 2001 and 2008 recessions that they have limited resources that can be allocated to the consumption of goods and services.

High Tech (Manufacturing; Information; and Professional Technical Services)

• Employment has dropped significantly as a result of increased efficiencies, outsourcing, and offshoring. At
the same time output has risen dramatically. MIPTS is the driver of the state economy. 9/11 played a role in the adoption of high technology goods and services (surveillance, security, teleconferencing, etc.)

• The U.S. military has increased their dependence on Fort Carson since 9/11.The movement of troops in and out of the base have had a noticeable impact on the El Paso County economy.

The “Lost Decade” was a turning point in the structure of the U.S. and Colorado economies. While 9/11 did not cause this transformation, it played a role in accelerating the change that occurred in some industries.

For additional information, see The Colorado Economy Ten Years After September 11, 2001 at in the Special Reports section.

©Copyright 2011 by CBER.

10 Years After 9/11 – Creative Financing Fizzles

In early 2003 a reporter posed the question, “Looking back, what did you miss in forecasting the 2001 recession?” In hindsight, there were two signals of greater problems.

1. Colorado construction output began to decline in 2001.
2. Employment in the Colorado Financial Activities Sector moved counter to total employment during the 2001 recession.

At that time, it was difficult to understand these trends because they were not fully developed. In the months prior to 9/11, the economy had slowed, but remained strong. Very few noticed the slowdown in construction output and those who did thought it to be nothing more than a bump in the road.

By mid-decade it became more apparent that the strength of the construction industry was waning. T-Rex was winding down and the only major activity was a smaller highway project in Colorado Springs, the Comanche Power Plant in Pueblo, and a mixture of school construction additions or improvements. In addition, housing permits, and valuation began to level off.

By 2007, housing construction began to slip and by 2008 it was clear that the industry was faced with more than a “bump in the road”. Between 2007 and 2009, 1-in-6 of the private sector jobs lost were either in construction or construction-related industries.

In hindsight, more economists and bank officials should have questioned why employees were being added in the Financial Activities Sector during a downturn. When 9/11 occurred, the economy came to a grinding halt for several days. Americans were encouraged to keep spending in hopes the country could consume its way out of the recession. At the time, that seemed to be the right thing to do.

Creative financing products (HELOCS, 0% financing, interest only loans, reverse mortgages, and others) were designed to stimulate consumption. Demand for these products increased in popularity because they allowed Americans to purchase whatever they wanted. To meet that demand, financial employment expanded between 2000 and 2007.

In 2007 a series of problems began to surface, the popularity of these products dropped off, and employment in the sector reversed trend – sharply. The industry experienced a complete melt-down – collapse of large financial institutions, the bailout of major banks by national governments, bank consolidations and closures, declines in consumer wealth, failure of top businesses, volatile equity markets, declining property values, foreclosures and evictions, and much lower interest rates.

In hindsight it is now easy to see that in 2002 there were signals that greater problems lay ahead. Given the circumstances, it is also easy to see why we looked past those warnings.

©Copyright 2011 by CBER.

Do Colorado Companies Receive Their Fair Share of VC Funding?

Colorado policy makers and business leaders take great pride in the state’s innovation and cowboy entrepreneurial spirit, but do Colorado’s innovators receive the funding or venture capital necessary to take their companies and ideas to the next level?

Most business leaders and policy makers answer the question with a resounding “No!” It is their belief that the local entrepreneurial community would be stronger if Colorado innovators had greater access to local capital.

On the other hand, the National Federation of Independent Business (NFIB) research resoundingly states that most businesses are adequately funded and that their greatest need is to have more customers. Admittedly, the NFIB customer base includes small businesses other than those who seek VC funding, so their results may not be totally representative of the VC community.

Some venture capitalists claim that Colorado lacks the critical mass of companies in any one cluster to warrant the attention that companies and policy makers feel they deserve. It is their belief that quality innovation will attract sufficient funding, no matter the location.

Price Waterhouse Coopers (PWC) Moneytree conducts research regarding the number of VC deals and investments for the U.S. and the states. Since 1995:
• Colorado companies have received 1.6 to 4.2% of total U.S. investment.
• Colorado companies have received 2.2 to 3.4% of total U.S. deals.
• The average size of an investment per deal is similar for Colorado and the U.S.
• Colorado has approximately 2.0% of total U.S. private sector firms.

Based on the number of companies in Colorado, the state typically receives more than its share of VC funding. The question is, “Do Colorado companies receive their fair share of VC funding?”.

For additional slides about Colorado’s VC funding  go to the PWC website.

©Copyright 2011 by CBER.

Gap between U.S. and Colorado Unemployment Widens

The Colorado economy is a lot like the final two weeks of the 2010 Colorado Rockies baseball season – very ugly.

On a positive note, the word on the street is that both are going to be better in the near term (despite at opening day loss in extra innings).

On March 25, the Colorado Office of Labor Market Information (LMI) announced that the statewide seasonally adjusted unemployment rate had risen to 9.3% in February (the non-seasonally adjusted rate was 9.7%). By comparison, the national seasonally adjusted rate dropped further to 8.9%. Prior to January, the last time Colorado’s rate was higher than the U.S. was September 2005.

Seasonally adjusted unemployment rates for the state’s Metropolitan Statistical Areas (MSAs) are:
• Boulder  7.3%
• Fort Collins 7.9%
• Denver 9.4%
• Colorado Springs 10.1%
• Greeley 10.7%
• Grand Junction 11.0%
• Pueblo 11.1%.
These metros areas account for about 86% of the Colorado labor force. A majority of the state MSAs have unemployment at or above 9.4%.

There is more to the story…

Through February, year over year, seasonally adjusted data points to weak employment gains of 13,800 workers.

The areas of net job growth are:
• 11,400  Private education and health care
• 8,200  Tourism
• 8,200  Professional business services
• 2,200  Trade, transportation, and utilities
• 2,100  Oil, gas, and mineral extraction
• 800  Personal services
Employment in these 6 sectors is about 63% of all workers and 57.3% of total wages. The increase is about 32,900 workers.

The areas with continued declines are:
• -8,900 Construction
• -3,900 Financial Activities
• -3,200 Information
• -2,600 Government
• -500 Manufacturing
These 5 sectors have shown losses of 19,100.

It is good news that there is an increase in net jobs; however, there are 3 areas of concern:
• The weak level of net job growth is being driven by a reduction in job losses rather than a significant increase in job gains.
• Many of the jobs that are being added are not primary jobs.
• Many of the jobs being added pay lower wages and have less on an impact on the economy.

So, are we headed for continued improvement and another Roctober or lackluster economic growth and another October watching other teams play in the World Series? A few months from now we will have a much better idea where the economy and Rockies are headed.

©Copyright 2011 by CBER.

1 in 6 Colorado Jobs are Construction or Construction-Related

The following is an excerpt from Colorado’s Construction Industry – Impact Beyond the Hammers and Nails  olorado’s construction and related industries employ one-in-six private-sector covered workers, yet almost 60% of the net jobs lost between 2007 and 2009 were in these sectors.

What type of economic activity is necessary to generate enough construction and construction-related activity to recoup these losses, particularly given the state of Colorado’s housing and commercial markets? (Note: this does not suggest that construction is primary or export industry or that is could or should be).

A financial analyst might suggest that the risk or volatility associated with the construction industry could be reduced if Colorado had a larger, more diverse economy. Therein lies the paradox. Because Colorado is a growth state, it is necessary to have a construction industry to support the current base of five million people and build the homes and buildings that would support a larger, more diverse economy. The Colorado State Demography Office projects continued population increases in the range of 1.5% to 2.0% for the extended future. (Population projections can be found on the State Demography Office website ).

Even with the recent reduction in state construction workers, the 2009 location quotient is 1.29, down from 1.44 in 2001. Because the industry is not considered a primary or export industry, at some point the location quotient will eventually revert to 1.0. At that time Colorado will have a concentration of construction workers comparable to most other parts of the country. Keep in mind that this correction will likely include a comparable adjustment in the related industries identified in this study.

Construction is necessary for the expansion and maintenance of the Colorado economy. It is essential that economic development, public, and private leaders understand the relationship between construction employment, its related sectors and the overall economy. That includes awareness of the volatility of the industry and the likelihood that construction employment will ultimately return to a location quotient of 1.0.

©Copyright 2011 by CBER.

Colorado Legislative Council – State Economic Update December 2010

The recovery of the Colorado economy continues to lag that of the nation, as evidenced in the December 20 release of Focus Colorado: Economic and Revenue Forecast , a quarterly publication of the Colorado Legislative Council . Many of the key economic indicators for the nation were revised upward while there were mixed results in the Colorado update.

The following discussion highlights revisions to key 2011 Colorado indicators:
• With Real GDP growth of 2.9% (U.S.),state employment will increase by 0.9%, slightly less than the September projection. This equates to 19,900 jobs.
• The most notable change is an increase in the 2011 unemployment rate. It was revised upward from 7.6% to 8.4% (Many economists in the state expect this rate to exceed 9.0% and possibly push past the national rate at some point this year).
• With more people on the payrolls, personal income is expected to post a modest increase of 3.1%.
• On the other hand Wage and Salary income will record a meager increase of 1.4%.
• Despite the increase in wages and personal income, projections for retail sales growth was revised downward from 3.1% to 2.5% (It should be noted that this rate of growth does not reflect changes associated with the tax reduction plan passed by Congress).
• On a positive note, the number of home permits was bumped up from 11,200 to 17,200. Continued subpar construction growth is projected beyond 2011 despite population increases in the range of 90,000 to 100,000 people per year.
• Finally, the projection for CPI growth remained at 1.9% for 2011; however, it is expected to ramp up by at least a point in 2012.

Positive factors not mentioned above include:
• Permitting in the oil and gas industry turned upward at the end of 2009 and have continued in that direction.
• While there is optimism within the industry about Colorado’s housing market, it is not yet reflected in the data. If it is any consolation, home prices are faring better in Denver than many other parts of the country.
• Foreclosures remain high, but they are on a downward path.

On the other side of the equation:
• Colorado’s financial sector is plagued with troubled mortgages.
• To illustrate that point, 27% of Colorado insured banks were not profitable at the end of September 2010. This compares to 20% nationwide.
• The state’s lending institutions have high exposure to troubled commercial real estate than other banks in most other states.

While there is good news in the most recent update, it should not be forgotten that the Lost Decade concluded with state employment at a level below the peak in 2001. Despite employment gains this year, it is likely that June 2001 peak employment will be reached again in 2012.


©Copyright 2011 by CBER.