Leeds School of Business Archives - Colorado-based Business and Economic Research

Where is the Colorado Oil and Gas Industry Headed?

May 1, 2015May 22, 2015 horvath Leave a comment

There has been concern by some that the freefall in the price of a barrel of oil last year would cause a sharp downturn in the Colorado economy.

In fact, the University of Colorado Leeds School of Business has projected that the loss of oil and gas jobs will cause total employment to grow at a rate less than 2.0% this year. That means that average employment for the year would be less than 50,000. It would also mean that average job growth for the last three quarters of the year would be at most 41,000 jobs.

The 2015 cber.co forecast projected a slight decline in the rate of growth (+73,000 to 79,000 jobs), in part because of uncertainty in the oil and gas industry. It seems unlikely the decline will be as severe as projected by the Leeds School.

A frequently quoted data set is rig count. The data shows a sharp drop-off in the number of rigs. The immediate reaction is that “the sky is falling.”

Industry experts state this decline in the number of rigs has occurred, in part, because companies have taken their older and poorer performing rigs off-line to increase their efficiency. This is no different than the Denver Broncos cutting Champ Bailey. A decrease in the number of rigs will eventually point to a decline in the number of employees.

In addition, some companies are adopting improved technology, which has the potential to make the drilling process much more efficient and environmentally friendly. Increased efficiency means that when some of these jobs go away they won’t ever come back. In that sense, the oil and gas industry is moving down the same path as manufacturing and other industries.

Another interesting data set is oil production.

Colorado oil production reached records levels in 2014 and is expected to remain strong through Q1 2015. Levels of production may drop off in Q2 as storage becomes an issue.

Another issue affecting production levels is demand. Global demand for oil has been declining as alternate sources of energy have become more available. In addition, more efficient automobiles and other devices have reduced consumption. Despite the decline in demand, the U.S. has become less dependent on foreign countries for our oil supplies. In turn that will drive demand for U.S. oil.

Looking ahead – employment in the Colorado oil and gas industry will either grow at a slower rate or decline slightly in 2015. The state economy is on solid enough footing that many of those lost jobs will be offset by increases in other industries such as construction, finance, and manufacturing.

In short, the Colorado Oil and Gas Industry is in a state of flux, but it is unlikely that volatility will cause a noticeable downturn in state employment.

Colorado Economic Forecasts Point to Growth in 2015

December 20, 2014January 2, 2015 horvath Leave a comment

It is the forecast season and three Colorado economic forecasts are on the streets.

First, the Governor’s Office of State Budgeting and Planning and the Colorado Legislative Council released their2015 Colorado economic forecasts.

Their forecasts are used for policy and budgetary purposes and at times tend to err on the conservative side. (That comment is intended to serve as a reference point, and is not meant as a criticism). The March forecast is often a more accurate reflection of what will happen during the year.

The good news is that both groups are realistically optimistic about the state’s outlook.

OSPB projects U.S. Real GDP growth of 2.7% with state job growth of 68,300. CLC is slightly more optimistic. They project U.S. Real GDP growth of 3.1% and state job growth of 73,600.

The quarterly reports produced by OSPB and CLC are recommended reading for anyone interested in the state economy. They discuss the economy for all regions of the state, key industries, and factors that impact the budget for the state government.

Finally, Richard Wobbekind recently unveiled the CU Leeds School Colorado economic forecast earlier in the month. As usual it was a rewrite of the past four years. He expects the U.S. to see significantly stronger U.S. output growth. At the same time he focuses on Colorado being one of the leading states for job growth, yet he states that Colorado will add jobs at a decreasing rate in 2015 after modest growth in 2014. CU is projecting Real GDP growth of 3.1% and state job growth of 61,300 in 2015. Those numbers just don’t make sense.

Between now and next year, Wobbekind and the CU gang should read the paper “Macroeconomic forecasts and microeconomic forecasters”. Author Owen Lamont raises the question, “Does an experienced research team, with a wealth of knowledge, produce a more accurate forecast or does the added knowledge result in an “arrogance” which may reduce the accuracy of the forecast? The state would benefit from CU producing a Colorado economic forecast based on academic rigor rather than self-promotion.

The good news is that this part of the forecast season has passed and all projections point to continued modest growth in 2015. Bring on the new year!

Leeds Economic Forecast Points to Slower Growth in Year Ahead – AGAIN

December 12, 2013December 12, 2013 horvath Leave a comment

On December 8th Professor Richard Wobbekind and the Leeds School of Business (SOB) released the 49th annual economic forecast for Colorado. Unfortunately, the fundamentals of the 2014 outlook were as questionable as the 2012 and 2013 forecasts.

For three consecutive years (2012 to 2014) the SOB has projected fewer jobs would be added in the coming year, even though Real GDP was predicted to increase significantly in two of those three years.

A summary of the SOB forecasts from 2012 to 2014 are provided in the table below.

Leeds School of Business Forecast – US Real GDP and Colorado Employment
Year	Change in Real GDP	Change in State Employment
2012	In 2012 Real GDP will show a significant increase in the rate of growth for 2011	Fewer jobs will be added in the coming year
2013	In 2013 Real GDP will growth at about the same rate as 2012, a slight decrease is possible	Fewer jobs will be added in the coming year
2014	In 2014 Real GDP will increase at a rate almost double the 2013 rate	Fewer jobs will be added in the coming year

Source: SOB BEOF publications

The actual data for 2012 and preliminary data for 2013 are provided in the table below.

Performance of the Economy – US Real GDP and Colorado Employment
Year	Change in Real GDP	Change in State Employment
2012	The rate of growth of 2012 was significantly greater than the rate of growth for 2011	More jobs were added in 2012 than 2011
2013	The 2013 preliminary rate of growth was significantly lower than the rate of growth for 2012.	More jobs were added in 2013 than 2012
2014	To be determined	To be determined

Source: BLS, BEA, CBER

A historical look at the recoveries from the last three recessions is instructive.

After the 1991 recession, Colorado added jobs at an increasing rate for three years (1992 to 1994). This recovery was exceptionally strong. Job growth in 1994 was second highest in state history.

Following the 2001 recession, Colorado “added” jobs at an increasing rate for four years (2003 to 2006). That rate of recovery for that period was anemic, but improving. Continued job growth at an increasing rate was cut short by the 2007 recession.
After the 2007 recession, Colorado has “added” jobs at an increasing rate for four years (2010 to current). The rate of recovery has been so-so. In other words, there is a strong likelihood that job growth will continue at an increasing rate in 2014.

The saying “Every blind squirrel finds an acorn now and then” can be applied to the 2012-2014 SOB forecasts. If they continue to predict the state will add fewer jobs next year than this year, at some point they will be correct. Will 2014 finally be the year they are right?

We can only hope the SOB is wrong again!

Businessweek Rankings – Top Areas of Study for CU Leeds School of Business Near Bottom of Rankings

July 10, 2013July 10, 2013 horvath Leave a comment

Colleges and universities are held accountable for efficiently providing educational services by state agencies and private companies, such as Businessweek and U.S. News and World Report. In late March, Bloomberg Businessweek produced their 2013 ratings for 124 undergraduate business programs (additional information can be found at www.businessweek.com). The table below shows the rankings by academic specialty for Notre Dame, the top ranked school, and the three Colorado undergraduate business programs that were rated.

The profile for each business school included its top study areas. These are listed below along with their ranking by specialty.

Notre Dame Mendoza

2 Accounting
NA Consulting
4 Finance
4 Management of Information Systems
65 Marketing

DU Daniels

22 Accounting
39 Finance
NA Hotel Administration
60 International Business
100 Marketing
NA Ethics, Social Responsibility, General Business

CU Leeds

NA Certificate programs (Real Estate, Entrepreneurship, and Sustainability)
119 Accounting
73 Finance
NA Human Resource Management
121 Marketing
114 Operations Management

CSU Business School

97 Accounting
84 Finance
113 Management of Information Systems
86 Marketing
42 Operations Management

As expected, Mendoza’s top areas of study were also highly ranked, signifying that it is an elite school. At the other end of the spectrum, the top areas of study for CU Leeds were ranked in the lower half of all schools, between 73rd and 121st. This is an indication that it is a third or fourth-tier school. DU Daniels and CSU fall somewhere in between.

These rankings show the depth and quality of the elite programs and point out deficiencies of the lower ranked schools. While these rankings point out strengths and weaknesses of American business schools, the ultimate measure is whether it meets the needs of the individual students.

DU is Top Business School, CSU is Best Buy, Leeds School Lags

June 28, 2013June 5, 2014 horvath Leave a comment

On March 20th, Bloomberg Businessweek published the 2013 rankings for 124 undergraduate business programs (www.businessweek.com). Much to the chagrin of alumni and staff at the Dyson, Olin, Wharton, and Carroll schools, the Mendoza School of Business topped the charts for the fourth consecutive year.

Once again the rankings for Colorado universities showed the DU Daniels School is the top ranked school, #68, followed by CSU, which moved up in the ranks to #89. Once again the University of Colorado Leeds School of Business brought up the rear. This past year CU Leeds dropped in the rankings from #92 to #101, out of 124 schools.

On the lighter side, the three Colorado business schools were ranked third (DU), fourth (CSU), and fifth (CU) as he best business schools for ski bunnies. The University of Utah and BYU claimed the top slots.

The table, below, compares a portion of the Businessweek ratings for the Daniels, Leeds, and CSU business schools. The data covers three basic areas: cost, diversity/SAT scores, and quality/rankings in key areas.

Cost – The cost to attend these schools for four years, assuming an annual increase of 5% each year, is:
• Notre Dame – Mendoza $241,000.
• University of Denver – Daniels $223,000
• CU – Leeds (out-of-state) – $209,000
• CU – Leeds (in-state) – $119,000
• CSU – (out of state) – $151,000
• CSU – (in state) – $83,000.
The cost for an out-of-state student to attend CU Leeds is slightly less than Mendoza or Daniels, yet the data suggests the quality of the degree is significantly less.

Diversity/SAT of Students – The Daniels School has a higher percentage of female and international students than its peers. It and Mendoza have a greater mix of minorities.

There is no difference between the CU Leeds and CSU average SAT scores and both are significantly lower than the Daniels and Mendoza schools. There are bright students at all schools, but the caliber of students at CU Leeds and CSU is lower.

Quality/Rankings in Key Areas – CU Leeds has positioned itself as an expensive program that focuses on serving a large number of students by having large class sizes, i.e. the primary goal is quantity. Of the 124 programs, CU Leeds is the 21st largest. Only 6 of the top 25 schools have more students than CU Leeds; these schools are ranked 9th, 13th, 20th, 21st, 22nd, and 25th, i.e. quantity is secondary to quality at the top schools. Revenue generation for the University of Colorado is a priority of the Leeds program.

Unfortunately, CU Leeds is ranked 107th in the student survey and 92nd in academic quality. It only received a grade of B in teaching quality. In 2007 a $38 million renovation of Koelbel Hall was completed and the staff was reorganized to better meet the needs of the students. These changes fell short, as yet CU Leeds was only rated B for facilities and services.

A final consideration is the average wages for graduating students. CU Leeds is slightly higher than its Colorado counterparts, but not enough to warrant the extra cost of tuition and the lower quality of education. Most likely the average wages for DU Daniels students is lower because of the number of students that study in hotel management, an industry with lower wages.

It is possible for students to obtain a quality business degree at any of Colorado’s colleges and universities. Rankings such as those produced by Businessweek are a valuable tool for identifying the strengths and weaknesses of various schools and determining which ones are the best match for each individual’s needs.

2012 Undergraduate Business School Rankings – DU is State’s Top Business School

May 16, 2012May 16, 2012 horvath Leave a comment

Higher education is big business. There are commercial training programs to help students navigate the K-12 system, pass the college entrance exams, and select the right college based on published rankings.

In late March, Bloomberg Businessweek produced the 2012 ratings for 124 undergraduate business programs (additional information can be found at www.businessweek.com). They use nine different measures of student satisfaction, post-graduation outcomes, and academic quality to determine the overall rankings.

The following rankings, from Bloomberg Businessweek, show scores for Notre Dame, the top ranked school, and the three largest Colorado undergraduate programs.The Daniels School is clearly the top ranked undergraduate business school in Colorado, yet it is rated near the bottom of the second quartile of schools. CU and CSU have similar ratings and are on the border of the fourth quartile.

The Leeds School is ranked in the bottom quartile in all of the core subject matters. (The state deserves better from its flagship institution).

CU and DU are in the top quartile for their sustainability and ethics classes respectively. If CU and DU are good enough to be top ranked in specialty programs, why aren’t their core classes stronger?

Of the three schools, CSU is clearly the best buy, in terms of cost and quality.

Over time there is usually minimal variance in the rankings, i.e. schools move up and down within a certain range. When looking at rankings over several years it is important to note that there has been a steady increase in the number of schools ranked.

In 2008 Notre Dame was ranked 3rd of 96 schools. It has obviously improved in the rankings, although it didn’t have far to move. It is now 1st of 124 colleges.

Of the Colorado schools, the Daniels School at the University of Denver has improved the most. It was ranked 67th of 96 (70%) in 2008 and is now 57th of 124 (46%) in 2012.

The business school at Colorado State University has stayed the same. It was ranked 73rd of 96 (76%) in 2008 and is now 94th of 124 (76%). It remains in the bottom quartile of schools for its overall ranking.

And the Leeds School has escaped the bottom quadrant (barely). In 2008 it was ranked 83rd of 96 (86%) and it is now 92nd of 124 (74%).

These rankings are much like the BCS rankings in football. They are meaningful to the schools in the upper echelon and provide prestige and bragging rights. As well, they help the schools attract quality students and donors to the program.

The schools below the elite level have deficiencies, based on the ranking criteria. Many college officials tend to respond by saying, “The rankings don’t really matter” or “They just don’t take into account the challenges we face.” or “The criteria don’t really capture what a great school we are.”

There are many variables for measuring the quality of a business education. Most importantly, students must find a program that meets their individual needs. Then they must demonstrate willingness and motivation to learn. When that happens the rankings are irrelevant.

Leeds School Annual Forecast Calls For Slowdown in Colorado Employment Growth

December 5, 2011December 5, 2011 horvath Leave a comment

The Leeds School of Business released its 47th annual business forecast, calling for the U.S. economy to grow at a faster rate and a modest slowdown in the growth rate of the state economy in 2012. The report projected a sharp increase in U.S. Real GDP growth, from 1.8% to 2.4%. Surprisingly that gain translates into an increase of only 23,000 workers in Colorado. This follows on the heels of job gains of 27,500 in 2011.

Job losses are projected for the Manufacturing, Information, and Financial Activities sector. After manufacturing gains in 2011, it is disappointing to see the projected return to negative growth. Evidently renewable energy, which sparked manufacturing growth in 2011, will either flatten or taper off in 2012. Consolidation in the other two sectors will drive further cutbacks.

According to the Leeds School, 2012 growth will be driven by the Health Care and Professional Business Services sectors. Smaller gains will occur in tourism and construction. It is encouraging to see the Construction sector on the positive side of the ledger again.

Although, the 2011 preliminary employment estimates will not be updated until March 2013; the Leeds estimate of 27,500 additional jobs is reasonable. In evaluating their projections for 2012, it is interesting to see how they fared with their 2011 forecast.

1. The Forum (UCCS) error -2,500
25,000 jobs (10/2/2010).

2. OSPB error -3,200
24,300 jobs (12/2010).

3. BBVA Compass error -5,500
22,000 jobs

4. (tie). Legislative Council error -7,500
19,900 jobs (12/2010).

4. (tie). BBER error -7,500
(15,000 to 24,999) (10/2010).

4. (tie) Jeff Thredgold’s Small Business Index error +7,500
(33,000+) (Autumn 2010).

7. CSU Economics Class error – 8,500
19,000 jobs (11/16/2010).

8. CU Colorado BEOF error -17,400
10,100 jobs (12/6/2010).

9. Demographer’s Office error -27,500
No growth (11/5/2010).

10. Moody’s/Dismal.com error +28,500
56,000 jobs (3/2011).

Like most forecasts, the Leeds projections have historically understated periods of growth and decline. If the Leeds pattern of error continues in 2012, then job gains above 30,000 might be more realistic. For additional information on forecast accuracy click here.

Is Colorado Higher Education Effectively Delivering the Goods?

May 17, 2011May 31, 2014 horvath Leave a comment

Earlier this spring Dan Hawkins was replaced as CU football coach because his teams lost too many games and ticket sales began to wane. There was a perception that investments in the CU football program were not paying dividends. A change was made and public sentiment turned from outrage to support when CU leadership announced a replacement (Yes, athletics are an important part of higher education).

When are the masses that cried for the removal of Hawk going to show a similar sense of concern when investments in academic programs do not pay dividends? It only seems fair that college deans should endure the same scrutiny as Hawk when their faculty cannot conduct research or connect with content in the classroom. Shouldn’t deans be held responsible when they manage programs that are irrelevant or not cost effective?

Colorado has one of the most highly educated workforces in the country. An exceptional higher education system is essential if the state hopes to retain it.

Non-farm wage and salary data shows that there are about 66,000 employees at higher education institutions in metro and rural areas across the state (This number includes some student workers). More importantly, they are a source of training for the world’s current and future workforce. Higher education is an economic driver of the state for both reasons.

During the Lost Decade (2000 – 2010), the state’s higher education sector added 12,300 workers. Meanwhile, the private sector (non-farm wage and salary) declined by 50,100 workers.

In Boulder County, higher education employment increased by 2,700 workers. At the same time, private sector employment shed 10,600 workers.

Current wage data for the period 1999 to 2009 shows that average wages for higher education increased faster than the private sector. In 1999 average annual wages for higher education and the private sector were similar, $34,126 and $34,317 respectively. By 2009, there was a noticeable gap between the two groups, $49,610 for higher education and $46,855 for the private sector.

During this time, many businesses were forced to reduce their staffs, cut expenses, and creatively mange their businesses. In the process, the surviving companies became more efficient and productive. All the while, higher education lobbied hard for increased funding and tuition increases. As well, they embarked on the silent phase of a $1.5 billion fund raising campaign.

The question must be asked, “What dividends did Colorado receive from this increase in the number of higher education workers and their higher than average wage increases?”

Consider the value proposition of the Laboratory of Atmospheric and Space Physics (LASP) at CU-Boulder. LASP’s goal is to train the next generation of space scientists, engineers, and mission operators. LASP is the world’s only research institute to have sent instruments to all eight planets and Pluto.

Recently, they were awarded a $425 million grant to work on the MAVEN (The Mars Atmosphere and Volatile Evolution Mission). MAVEN will be launched in 2013 to learn more about the Mars climate and atmosphere. Both undergraduate and graduate students will be taught the basics in the classroom, integrated into all phases of MAVEN, and provided opportunities for on-the-job training that will be invaluable when they enter the job market.

Historically, LASP has had a strong value proposition for students, faculty, sponsors, and its private sector partners.

Also consider the value proposition of the Leeds School of Business at CU-Boulder.

About a year ago, the Denver Business Journal published the results of national rankings for 111 business schools. The DBJ listed rankings for CU, CSU, and DU.

The Leeds School can point with pride to their ranking in sustainability:
• Sustainability: CU/Leeds, 19th; CSU, 36th; DU/Daniels, 40th

The Leeds ranking in the core areas of a business education make Dan Hawkins look like an All-Star:
• Accounting: DU/Daniels, 27th; CSU, 74th; CU/Leeds, 78th.
• Ethics: DU/Daniels, 3rd; CSU, 85th; CU/Leeds, 91st.
• Financial management: DU/Daniels, 50th; CSU, 84th; CU/Leeds, 89th.
• Strategy: DU/Daniels, 55th; CSU, 82nd; CU/Leeds, 105th.
• Operations management: CSU, 45th; DU/Daniels, 57th; CU/Leeds, 109th.
• Marketing: DU/Daniels, 31st; CSU, 73rd; CU/Leeds, 111th.

If the perception exists that Leeds students are not taught the basics, does it really matter if CU/Leeds has a solid sustainability program?

A more recent ranking of MBA programs shows that Leeds provides a solid MBA experience. However, a look at the average GMAT scores suggests that a Leeds MBA falls in the third or fourth-tier.

Why haven’t previous deans and associate deans who oversaw the MBA program been held responsible for not seeking “flagship status” for a Leeds MBA.

Let’s look at the cost of producing these results for Leeds undergraduates and graduates. The faculty pecking order ranges from senior instructor to full professor (tenured), with annual salaries varying from $100,000ish to $300,000+. The directors of the various centers receive salaries in this same range. Many of the higher paid professors have minimal “real-world” experience and often teach fewer students than the lower paid instructors. The leader of the group is the dean, with at salary of $400,000+ per year.

LASP can send a satellite to Mars and incorporate students in the process and the Leeds School can claim that their marketing program is ranked 111th out of 111. It doesn’t take a rocket scientist to see that there is a difference in programs and the accountability of their leaders.

Will the Leeds dean be held accountable for improving the performance of the business school in exchange for the $1+ million he will receive for his brief layover in Boulder? (The life expectancy of a Leeds dean is about 2.5 years). What steps is he going to take to ensure that a Leeds education includes a strong foundation in the basics (marketing, accounting, strategy, operations, and ethics). What is going to be done to make the Leeds School as meaningful and relevant as LASP?

While these two examples focus on CU-Boulder, this isn’t just about them. Every institution of higher education has a number of programs and value propositions. Some are like LASP, some are like Leeds, and others are in between.

Every dean and faculty member at these institutions must be held accountable for efficiently and effectively training our country’s current future workforce.

During the Lost Decade, higher education employment increased and workers received greater wage increases than the private sector. It is now up to higher education to demonstrate and justify the dividends that have been generated because of that investment. If that dividend cannot be confirmed, then higher education has an obligation to reduce employment, eliminate programs, and seek the efficiencies that were gained by the private sector in the last two recessions.

Just as Hawk was held accountable for his team’s performance, stakeholders (state policy makers, parents, business leaders, alumni, and students) must hold higher education leaders accountable for the performance of their system. Colorado deserves a higher education system that pays greater dividends.

Large advertisement at Denver International Airport for CSU’s business school.

A Tale of Two Colorado Employment Forecasts

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

Edgar Fiedler, Assistant Secretary of the Treasury for Economic Policy under Nixon and Ford said, “If you have to forecast, forecast often.” Fiedler’s words are particularly relevant during volatile economic times.

Consider the case of two prominent Colorado forecasts. Both USA Today/Moody’s Colorado and the Leeds School of Business at the University of Colorado prepare composite and sector forecasts for the state.

The two employment forecasts are at opposite ends of the spectrum. Moody’s is most likely too high (2.6%) and CU is hopefully too low (.5%).

The most basic test for measuring forecast accuracy is to determine whether the forecast correctly predicts the direction of the forecast (is it positive or is it negative). CU projects 5 of the 14 sectors will post job losses, while Moody’s says 1 of 14 will shed jobs. Said differently, there is a difference in opinion about the direction of the sectors on these 6 sectors.

There is also great disparity in the magnitude of the forecasts. Projections for only two sectors are remotely similar, with a difference of less than 1% points.

Through Q1, the Office of Labor Market Information reports employment gains of 0.7%.

The country would have to experience a mild double dip to achieve the CU forecast. On the other hand, Colorado would have to add jobs at a rate of at least 3% for the remainder of the year to achieve the Moody’s forecast.

Expect a flurry of forecasts from CU, Moody’s, and others as they try to understand the strength of the recovery.

Forecast Accuracy for the CU Colorado Economic Outlook

December 3, 2010June 12, 2014 horvath Leave a comment

In early December the Colorado Business Economic Outlook Forum (CBEO) will be held in Denver for the 46th consecutive year. The event, sponsored by the Leeds School of Business and BBVA Compass is a forecast of state employment based on the expert opinions of estimating groups for each of the NAICS sectors. Each year, one of the most common questions about the event is, “How accurate are the numbers?”

Reasons for Analysis

In the fall of 2008, I presented a simplistic analysis of the accuracy of the CBEO at the annual AUBER conference (this blog post updates that presentation to include the period 1972 to 2010). The original presentation was motivated by curiosity from estimating group members who wanted to know how accurate their forecasts were.

Questions were also raised from an academic perspective.
• Which is more accurate, a forecast calculated by an econometric model or one determined by committees, based on expert opinion?
• Does financial sponsorship of a forecast by a publicly traded financial institution increase the chance of bias in the forecast?
• An academic paper by Owen Lamont (2001) asked, “Does an experienced research team, with a wealth of knowledge, produce a more accurate forecast or does the added knowledge result in an “arrogance” which may reduce the accuracy of the forecast?

While this simplistic analysis provides insight into some aspects of the forecast accuracy, additional research is necessary to address these issues.

Jobs Gained or Lost

The first test of accuracy measured whether jobs were added or lost (+ or -).

Because an employment forecast is intrinsically a growth forecast, its real value occurs if it can identify the years when jobs are lost.

Colorado employment recorded increases in 34 of 39 years.
• The CBEO accurately predicted growth for all 34 years; however, it inaccurately forecasted growth for three years when jobs were lost.
• Said differently, jobs were lost in five years. The CBEO accurately forecasted 2 of the 5 years, or 40%, when job were lost.

Turns (The key is to accurately predict them)

A second test for measuring the accuracy of the CBEO is to evaluate its ability to recognize turns. A turn is defined by a change in the slope or direction of the trend line (upward or downward). For example, it may change directions from positive to zero or negative.

• There were 17 actual turns in 37 years. During those 17 years, the forecast accurately projected turns 12 of 17 times (12 correct turns, 5 incorrect turns). These errors occurred in 1979, 1987, 1990, 1995, and 1998.
The forecast projected 6 turns during the remaining 20 years when turns did not occur (0 correct turns, 6 incorrect turns). These errors occurred in 1973, 1988, 1989, 1993, 1999, and 2009.

• The CBEO accurately forecasted turns 52% of the time – 12 correct/11 incorrect.

This analysis illustrates the difficulty in preparing an employment forecast. There are clearly challenges in accurately predicting turns, as well as the magnitude of each of the turns. This has been demonstrated by most economists in their projections during the Lost Decade. In the case of the CBEO, its value derives more from the discussions associated with projections for each of the sectors, than the projected changes in total employment.