Hospitality Archives - Colorado-based Business and Economic Research

Gap between U.S. and Colorado Unemployment Widens

April 2, 2011May 31, 2014 horvath Leave a comment

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.

Michael Porter Highlights Colorado’s Strengths and Weaknesses in New Study

March 8, 2011May 31, 2014 horvath Leave a comment

Harvard Business Professor Michael Porter is widely recognized for his research in the competitiveness of cities, states, regions, and nations. His studies have emphasized clusters, specialized skills, infrastructure, and commerce as distinguishing factors that delineate the prosperity of these areas.

Most recently Porter measured the performance of clusters within each of the states at the National Governors Association Winter Meeting 2011 (February 26). At that meeting he talked about strategies that would allow the states to become more competitive in the future .

In addition, Porter prepared economic profiles for each of the 50 states. The 50-slide PowerPoint presentations, which were released at the NGA meeting, are formatted in a way that allows for easy comparisons between the states.

For example, it is to match Colorado’s biotech cluster against others in the nation. In 2008, Colorado was ranked 25th in biopharmaceuticals, with 2,032 employees and 11th in medical devices with 13,440 workers.

Each presentation begins with a performance snapshot with a position and trend ranking, by quintile, in five key areas. As well, Porter identified the “strong” clusters for each state.

Colorado’s overall prosperity rating was in the second quintile; however, it was rated in the 4th trend quintile. Essentially the state has strong output per capita; however, it is trending downward. This might suggest Colorado’s competitive position might be in jeopardy.

A second area of possible concern is labor mobilization (labor force/civilian population). On a positive note, Colorado is in the top ten; however, it is in the fourth trend quintile. Again, this is a strength that is trending downward.

There is better news for Productivity (average private wages) and Innovation (Patents per 10,000 workers). Colorado was ranked in the second quintile in both strategic categories. From a trend perspective it was also in the second quintile. These are areas where the state has maintained its strengths and remained competitive.

Finally, the state was ranked in the second quintile for cluster strength and in the top trend quintile. This points to increased strength, as defined by greater market share, in its “strong clusters”.

Porter identified Colorado’s top five clusters as:
• Business Services
• Distribution Services
• Entertainment
• Oil and Gas Products and Services
• Aerospace Vehicles and Defense.

The presentation highlights subtle strengths and weaknesses not mentioned in this brief overview. As such, it is recommended reading for any one interested in understanding the opportunities and challenges Colorado might face moving forward.

Colorado’s Bottom-Up Economic Development Strategy

February 11, 2011May 31, 2014 horvath Leave a comment

The first week in February Governor Hickenlooper (call me “John”) hosted the ninth stop in his Bottom-Up Economic Development tour across Colorado. For about two hours, the region’s top economic developers discussed job creation, economic development, and steps for increasing government efficiencies.

The most frequently discussed topic was transportation and the top priority was to complete FasTracks in a timely and cost effective manner. In addition leaders made a case for completion of the final leg of the beltway (between Broomfield and Golden) around the city, expansion of commercial air, maintenance of our bridges and highways, and reduction of congestion along I-70 into ski country.

Panelists felt that innovation and the attraction/retention of primary jobs was critical if we are to maintain our regional and national competitiveness. They also cited the need to have a well-trained workforce and an efficient, accountable, and adequately funded education system. As well, it is imperative that Coloradans work together to maintain the quality of life that makes the state so attractive. This will require leaders to address issues related to our water supplies, develop parks and recreation areas, invest in infrastructure, and utilize the state’s unique assets to attract commerce.

The metro area’s economic diversity was evident as leaders spoke in support of industries and clusters endemic to their region. For example, they addressed the need for the state to be more “military-friendly”, consider construction of nuclear power plants, understand the importance of refineries, realize the value of our construction and extractive industries, and support gaming and tourism.

As the Bottom-Up discussions continue, it would be beneficial to reflect on past economic-development successes. For example, consider the public-private partnership, the former Colorado Advanced Technology Institute (CATI). During the late 1980s, CATI was established to guide the development of science and technology and the growth of select high-tech clusters. Specifically, the group’s work laid the groundwork for the state’s photonics, materials, hardware, software, telecommunications, and bioscience clusters. While it may not be appropriate to resurrect CATI as it existed, there is merit in having the an organization that would fill many of CATI’s roles in fostering long-term growth.

Four years ago, a state job cabinet was formed, town meetings were held across the state to gather input, and plans were put in place. While that effort was well intended, it did not have the desired impact. Hopefully this Bottom-Up Planning approach with be more successful.

A well-thought out economic development plan couldn’t come at a better time. Colorado employment remains below the 2001 peak and it will be years before state payrolls return to the pre-Great Recession high mark.

University of Northern Colorado Economic Forecast Points to Slow Growth in 2011

January 18, 2011May 31, 2014 horvath Leave a comment

The economic outlook for Northern Colorado matches that of the state – a slow but, painful recovery, according to Dr. John Green regional economist. In his annual forecast, Green pointed to 3.0% Real GDP growth this year with the possibility of a negative quarter.

On a sobering note he indicated that the labor supply will exceed demand – at least until the last of the baby boomers retires (2029). Green also indicated that the computer revolution has decreased the need for certain occupations, which will maintain a high level of competitiveness in the job market.

Green was not particularly optimistic about the housing market. He felt the housing supply was too high, further price declines are possible, mortgage rates are expected to rise, and that problems within the financial/mortgage industry will remain a problem. Finally he expects inflation to higher in both 2011 and 2012.

Locally, Green’s economic model pointed to flat employment growth in Northern Colorado. He felt that a more likely scenario was for employment to recover slowly throughout 2011 and 2012. Growth will be led by agriculture, the biosciences, clean energy, retail and the hospitality sectors. (On a positive note, NPR recently reported that Vestas plans to add 60 employees at its Windsor facility and begin operations in Brighton in 2011. The Windsor facility has a workforce of about 700 workers).

The high levels of foreclosures will prevent the housing market from gaining momentum. In addition, Green reported that houses under $280,000 are moving whereas more expensive ones are not. On the commercial side, construction is likely to resume in late 2011 at the earliest. Lastly, the number of bankruptcies are on the rise in Northern Colorado.

The NCBR Economic Forecast was held on Jan 6, 2011 at the University of Northern Colorado campus and also featured Mark Snead, Vice President, Economist, and Branch Executive Federal Reserve Bank of Kansas City – Denver Branch and Sandra Hagen Solin of The Capitol Solutions Team .