Tag: US economy

State Economic Agencies Point to Slower Growth in 2013

horvath

The Colorado Legislative Council (CLC) and the Governor’s Office of State Planning and Budgeting (OSPB) recently released their Q3 economic updates. As can be surmised by their names, CLC and OSPB provide comprehensive economic information and forecasts to inform discussion about the state and national economies.

Their most current updates show the two groups are upbeat about the economy for 2012. At this point, they are much less optimistic about the prospects for 2013.

CLC
National Employment
2012  1.3% growth and 133,100,000 employees
2013  0.6% growth and 133,900,000 employees

National Unemployment
2012   8.3%
2013   9.1%

State Employment
2012  1.7% growth and  2,296,600 employees
2013   0.7% growth and 2,312,700 employees

State Unemployment
2012   8.3%
2013   9.4%

OSPB

National Employment
2012  1.3% growth and 133,000,000 employees
2013   0.8% growth and 134,100,000 employees

National Unemployment
2012  8.3%
2013  8.2%

State Employment
2012  1.7%  growth and  2,296,700 employees
2013  1.0%  growth and 2,320,300 employees

State Unemployment
2012  8.0%
2013  7.8%

There are notable differences between the two forecasts for 2013. This begs the question, “Are the two groups intentionally presenting best and worst case scenarios or are their differing viewpoints a legitimate indication of the diverse landscape?”

For more information about updates from OSPB click here.

To view the forecast for CLC click here.

For the most latest cber.co monthly update for Colorado click here.

 

 

©Copyright 2011 by CBER.

National Jobs Data Continues to Disappoint

horvath

The September 7th Bureau of Labor Statistics press release created an uproar with the announcement that the U.S. added only 96,000 net jobs in August. This “anemic” job creation was accompanied by a downward revision in the July data from 22,000 to 141,000.

The private sector added 103,000 jobs for the month. This means government employment declined by 7,000 workers.

The report came on the heels of the ADP employment report which stated that private nonfarm employment had risen by 201,000 in August and July private sector employment had been revised upward by 10,000. Clearly, the two reports on the same topic tell two distinct stories.

At the same time BLS national unemployment slipped to 8.1%. The decline is relatively insignificant.

Of greater concern than the numbers is the impact the current economic conditions are having on the culture in the American workforce. While it is common for workers to feel like they are not valued or part of the decision making process, those feelings are exacerbated during the current economic environment.

Deborah Brackney, Vice President of the Mountain States Employers Council, recently said in an interview with 9News that “Anywhere from 50-60 percent of employees right now say that if they could find another job, they would leave their current employer.” She also added that a recent Gallup poll shows that only 30 percent of employees are engaged in the workplace. Lost productivity associated with this lack of involvement in the company is approximately $300 billion. A critical source of the problem is the lack of communications in the workplace.

In other words, the impacts of the Great Recession have touched both unemployed and employed workers in significant ways.

On average, Colorado nonfarm employment is about 1.72% of the U.S. total. If Colorado grows at the same pace as the U.S. the state data will reflect a gain of about 1,650 jobs. We’ll see what BLS says on September 21.

©Copyright 2011 by CBER.

Unemployment Isn’t the Same for Everybody

horvath

This past month Coloradans took special notice when the unemployment rate was announced because it matched the U.S. rate. The July seasonally adjusted rate for both was 8.3%.

In July, the Bureau of Labor Statistics reported that there were 13.4 million unemployed Americans, based on the non-seasonally adjusted rate (NAR) of 8.6%. This is slightly higher than the more frequently publicized seasonally adjusted rate (SAR) of 8.3%.

A closer look at the data shows distinct differences based on demographics and geography.

Gender
• 6.9 million men unemployed with a NAR of 8.2%.
• 6.5 million women unemployed with a NAR of 9.0%.

Race
• .5 million unemployed Asians with a NAR of 6.2%.
• 9.5 million unemployed Whites with a NAR of 7.6%.
• 2.8 million unemployed African-Americans with a NAR of 15.0%.

Ethnic Origins
• 2.5 million unemployed Latinos with a NAR of 10.3%.

Age Groups
• 4.0 million unemployed, 16-24 years old, with a NAR of 17.1%.
• 2.8 million unemployed, 25-34 years old, with a NAR of 8.3%.
• 2.2 million unemployed, 35-44 years old, with a NAR of 6.8%.
• 2.3 million unemployed, 45-54 years old, with a NAR of 6.6%.
• 1.5 million unemployed, 55-64 years old, with a NAR of 6.3%.
• .5 million unemployed, 65+ years old, with a NAR of 7.2%.

Marital Status
• 4.4 million unemployed married people, spouse present with a NAR of 5.4%.
Despite a steady recovery, there are segments of the population that have not found jobs.

Geographic rates are available for Colorado. In July both the NAR and SAR were coincidently 8.3%.

Metropolitan Statistical Areas (MSAs)
• The NARs for the Boulder and Fort Collins MSAs were less than 8.3%
• The NAR for the Denver-Aurora-Broomfield MSA was 8.3%.
• The NARs for the Pueblo, Colorado Springs, Greeley, and Grand Junction MSAs were greater than 8.3%.

Counties (Most recent data is June 2012).
• Colorado has 64 counties, 25 have NARs greater than the state average and 1 has a NAR equal to the state rate.

• Seventeen of Colorado’s counties are part of the MSAs. Seven of the 17 have NARs greater than the state average.
• Of the 47 rural counties, 28 have NARs less than the state average, 1 has a rate equal to the state NAR, and 18 have NARs below the state average.
• Most of the rural counties with higher than average unemployment rates are on the Western Slope or the south/southwest part of the state.

Cities with populations greater than 25,000 people (Most recent data is June 2012).
• The NARs for Arvada, Boulder, Broomfield, Castle Rock, Fort Collins, Lafayette, Longmont, Loveland, Parker, and Westminster were less than 8.3%
• The NAR for Lakewood was 8.3%.
• The NARs for Aurora, Brighton, Centennial, Colorado Springs, Commerce City, Denver, Englewood, Fountain, Grand Junction, Greeley, Northglenn, Pueblo, Thornton, and Wheat Ridge.

While the state has been steadily adding jobs for two years, there are clearly parts of the state where the economy has not recovered.

For additional information on the Colorado go to https://cber.co/CBEReconomy.html.

 

©Copyright 2011 by CBER.

Colorado Unemployment Rate Up for Fourth Month in a Row

horvath

The Colorado unemployment rate rose for the fourth consecutive month and reached 8.3%. While the BLS indicated that this increase was not statistically significant, it is certainly significant to incumbents seeking re-election in November.

The unemployment rate is a metric that the public pays attention to. They view it as a sign that the economy is not improving – as promised. Specifically, more than 225,000 people are unemployed in Colorado.  The never-ending talk about the fiscal cliff, additional easing by the Federal Reserve, and other doom and gloom projections add to the concerns of the electorate and the woes of incumbents.
The increase to 8.3% is significant for another reason. This is the second consecutive month that the state unemployment rate has matched the U.S. Over the past decade, the Colorado rate has often been a half to a full point lower than the U.S. rate. Seldom has Colorado’s rate been equal to or higher than the nation.

The basic reason for the rise in the rate is that the size of the labor pool increased. In other words, a greater number of people began looking for jobs. Even though the public and private sector have been adding jobs for the past two years, they aren’t being added fast enough to absorb all of the interested workers.

On a positive note, initial job claims are declining. That means there are fewer layoffs.

Continuing claims are also trending downwards – ever so slowly. That means people are either finding work or their benefits have expired. The former is a positive sign, while the latter is not.

The most recent data release shows that after seven months, an average of 40,000 jobs have been added, or about 3,300 jobs per month. Two factors could cause 2012 employment to be less than 2011 (Last year the state added 33,000 jobs).

BLS periodically and systematically revises the unemployment and employment data. Revisions to the data could push the 2012 total downward (an upward revision is unlikely).

As well, there could be a downturn in employment. If employment drops to a monthly average of 23,000 for the last five months then the annual total would be 33,000, or the same as 2011.

The good news is that gross job losses appear have declined, there has been a slight increase in gross job gains, and more people are looking for work. While this scenario is not ideal, it is much better than having a rise in the unemployment rate caused by a drop off in gross job gains and an uptick in gross job losses.

 

©Copyright 2011 by CBER.

Employment Numbers Drive DJIA up by 217 Points

horvath

On August 3rd the Bureau of Labor Statistics reported that the U.S. added 163,000 jobs for the month of July. Employment for May was revised upwards for the second consecutive month to 87,000; however, June was lowered from 80,000 to 64,000. The news drove the Dow Jones Industrial Average up by 217 points.

Through the first seven months of this year, the nation added about 151,000 jobs a month. This compares to a monthly average of 153,000 jobs for the first seven months of 2011. Since the end of the recession the U.S. has added net jobs in 25 months and lost net jobs in 12 months. Employment growth is consistently weak, but since October 2010 it has been consistently positive. About 3.1 million jobs have been added since the end of the recession.

About one-third of the monthly sector employment gains were in the Professional and Business Services, lead by the Temporary Help Services and Computer Systems Design sectors. Jobs were also added in health care, leisure and hospitality, manufacturing, and wholesale trade. Other major sectors were relatively flat.

On an upbeat note, the Conference Board is projecting stronger growth in the second half of 2012. Annual real output growth for the year will be about 1.9%.

Likewise, the USA TODAY/IHS Global Insight Economic Outlook Index calls for Real GDP growth to reach 2% in the latter part of the second half of the year. This index tracks 11 leading and financial indicators. The following four indicators increased – hours worked, real capital goods orders, the real money supply and light-vehicle sales.

On average, Colorado nonfarm employment is about 1.72% of the U.S. total. If Colorado grows at the same pace as the U.S. the upcoming August press release will reflect a gain of about 2,900 jobs.

©Copyright 2011 by CBER.

U.S. Employment – After Six Months, is the Glass Half Empty or Half Full?

horvath

On July 6th the Bureau of Labor Statistics reported that the U.S. added 80,000 jobs for the month of June. Employment for May was revised upwards to 77,000.

For the third consecutive year employment started strong, but fizzled. Through the first six months of this year,the nation added about 150,300 jobs a month. This compares to a monthly average of 160,800 jobs in the first half of 2011 and 145,800 jobs during the second half.

Employment increased in manufacturing; professional and business services, health care, and wholesale trade. Other sectors were relatively flat.

If you compare the first half of 2012 to the first half of 2011 (150,300 vs. 160,800), the employment situation is clearly worse this year and fewer jobs will be added this year, i.e. the glass is half empty.

A comparison of the second half of 2012 to the first half of 2011 (145,800 vs. 150,300) shows improvement in 2012.

Given projections for weak, but slightly stronger output growth in the second half, that means the glass is half full.

Nationally, is the glass half-empty or half-full?

On average, Colorado nonfarm employment is about 1.72% of the U.S. total. If Colorado grows at the same pace as the U.S. the July 20th press release will reflect a gain of about 1,400 jobs. At the moment, Colorado is currently recovering from the recession at a slightly faster rate than the U.S. It would not be surprising if Colorado added 2,500 to 3,000 jobs for June.


©Copyright 2011 by CBER.

Professional, Scientific, and Technical Services – Key to Colorado Recovery

horvath

The Professional, Scientific, and Technical Services (PST) sector is critical to the state. Companies in the sector provide engineering and architecture services, conduct scientific research, and manage computer systems. Of particular note, the sector is composed of companies from the various high-tech clusters (photonics, biosciences, nanotechnology, homeland security, IT, etc.).

PST accounted for about 10.6% of state private sector Real GDP in 2010. Between 1997 and 2010 it expanded at an annualized rate of 4.4% versus 3.4% for the Colorado private sector.

Average annual private sector PST Colorado wages for 2010 (most current year available) were $79,623, compared to $47,916 for the overall state average. In 2010, the Colorado PST sector accounted for 9.1% of total private sector employment. Between 1997 and 2010, the sector added employment at an annualized rate of 2.1% compared to 0.7% for the state.

The Healthcare, Higher Education, Tourism, and Extractive industries are leading the recovery. PST is next. It has added about 9,100 jobs since the low point in 2010.The sector has recovered about 78% of the jobs lost since peaking in 2008. If the positive employment trends continue, that level will be reached later this year.

It’s a long slow road to recovery.

For a more complete update on the recovery of the Colorado economy, go to https://cber.co/.

©Copyright 2011 by CBER.

May Employment Numbers Disappointing, but not Surprising

horvath

Several months after the 2007 recession began, some economists projected the economy would not recover until 2014. Six years sounded like it was much too long, particularly since the country had just gotten back on its feet from the 4 1/2 years of the 2001 recession and recovery. The most recent announcement by the Bureau of Labor Statistics (BLS) illustrates how the ongoing lack of primary job creation has caused the recovery to be so long and painful.

On June 1, the monthly BLS press release stated, “Nonfarm payroll employment changed little in May (+69,000). Employment increased in health care, transportation and warehousing, and wholesale trade but declined in construction. Employment was little changed in most other major industries.”

If Colorado is growing at the same pace as the U.S., the BLS will announce, later in the month, that the state will post a gain of about 1,200 jobs in April. (Colorado nonfarm employment is about 1.72% of the U.S. total.)

When this release hit the newswires, the equity markets tanked. In addition to the weak job gains, investors were worried about Greece’s debt problems, U.S. debt, the recession in parts of Europe, the slowdown in the Chinese and Indian economies, and much more. While these are clearly legitimate concerns, the decline in employment should not have come as a surprise. Past economic forecasts prepared by The Conference Board foretold of the pending dip.

TCB has forecasted that 2012 output will be at its lowest level in Q2. It stands to reason that subpar output will be accompanied by weak employment growth for April, May, and June. On a positive note, output (consumption, housing starts, and capital spending) is projected to improve slightly in Q3 and Q4. The average rate of output growth for the year will be about 2.2%. This suggests that employment will improve along with the increased output. Next year, 2013, will only be slightly better. The good news is that the trends are in a positive direction.

The recovery will continue to be painfully slow for a number of reasons:
• According to the TCB, output in advanced economies is growing at a rate of 1.3% – worse than the U.S. The emerging economies have stronger growth, 5.6%. Colorado companies that export agricultural and manufactured goods may have greater opportunities in emerging countries.
• The number of federal workers continues to decline.
• The intent of the stimulus funding was to create private sector jobs. Those jobs were supposed to kick in when stimulus funding was reduced. Unfortunately, too few private sector jobs have been created and funding is being diminished. This makes the stimulus efforts appear to be ineffective.
• Although revenues have improved for many state and local governments, their budgets remain tight. In Colorado, state employment is flat and local governments have fewer jobs than one year ago.
• Overall inflation has been kept in check; however, energy prices, and the prices of other commodities, are noticeably higher than when the recession started.
• The construction and housing markets have not rebounded as quickly as anticipated. Colorado construction employment is at the same level as it was in the mid-1990s, although it is finally trending upward.
• Companies have been able to meet their sales targets by investing in capital rather than labor. Productivity gains have allowed companies to maintain a competitive position without adding workers. At some point in the next 18-24 months this will change and companies may be forced to add workers.

The latest job numbers are disappointing, but not surprising. There will be slight improvement in the second half of the year, with continued volatility in 2013.

Continued patience is required. At the earliest, 2014 will be the year when stronger growth can be expected.

 

©Copyright 2011 by CBER.

Construction Finally on the Uptick

horvath

Construction was hit harder than most employment sectors during the Great Recession. For a number of years Colorado has had an oversupply of construction workers, relative to other industries. That has significantly lengthened the time of recovery.

Nationally, seasonally adjusted employment peaked in April 2006 at 7,726,000 workers. The number of workers declined with the Great Recession and appears to have bottomed out in January 2011 at 5,456,000. A total of 2,270,000 workers lost their jobs over that 57 month period. Since bottoming out, only 95,000 construction jobs have been added in 14 months.

There was a similar pattern for Colorado, but not as severe. Construction employment peaked in July 2007 at 170,100. It declined with the recession and appears to have bottomed out at 110,400. A total of 59,700 construction jobs were lost over this 47 month period. Since reaching bottom, 6,500 construction jobs have been added in nine months.

To put this in perspective, national tourism employment moved from peak-to-trough-to-peak in 50 months, while it took Colorado tourism employment 44 months to make the same journey. It has taken the Construction sector longer to go from peak-to-trough than it took the tourism industry to lose jobs and regain them.

On April 24, 2012 Aldo Svaldi of the Denver Post reported that the number of homebuilders in the state declined by 80%, a decrease of 2,903 to 616 builders.

Holy Moly Batman!

For additional information on the overall economy go to the cber.co website.

For additional information on the construction industry check out the cber.co report,Colorado’s Construction Industry – Impact Beyond the Hammers and Nails .

 

©Copyright 2011 by CBER.

Leisure and Hospitality Leads the Recovery

horvath

The Leisure and Hospitality (L&H) Sector has played a critical role in the recovery of the national and state economies. It is important because of the number of jobs added and because it is part of the economy in every county in the state.

Nationally, seasonally adjusted employment peaked in December 2008 at 13,560,000 workers. The number of workers declined with the Great Recession and in March 2012 employment surpassed that previous peak, reaching 13,587,000. It took 50 months for the sector to go from peak-to-trough-to-peak.

There was a similar pattern for Colorado. L&H employment peaked in May 2009 at 276,000. L&H Employment declined with the recession and in January 2012 it surpassed the prior peak at 277,800. It took 44 months for the state sector to recover.

While 50 and 44 months is a long time, it is possible that the overall state economy may take close to six years before it reaches the 2006 peak.

Nationally, the time from peak to trough was 24 months, or two years. During this time 637,000 jobs were lost. The recovery period was slightly longer, 26 months.

At the state level, the time from peak-to-trough was 20 months. About 16,000 jobs were lost during this period. The recovery period was 24 months.

It is depressing to consider some of these number; however, it is even more unsettling to think that these numbers describe one of the state’s stronger sectors.

For additional information on the overall state economy go to the cber.co website.

©Copyright 2011 by CBER.