Colorado
Economic Outlook
Autumn 2005
Written by Jeff Thredgold, President, Thredgold Economic Associates
Economic Consultant to Vectra Bank Colorado
Best in Five
The Colorado economy continues to impress, with the largest gain in new jobs since 2000. The state has rebounded in a big way from the economic pain of 2001 to 2003.
The Colorado economy added roughly 45,000 net new jobs during the most recent 12-month period, a growth rate of 2.1%. More solid Colorado employment gains are in line with strong performance of other states in the Intermountain Area.
Nevada, Arizona, Idaho, and Utah currently rank #1 through #4 as enjoying the nation?s strongest job creation rates during the past 12-month period. However, even as we expect job creation rates in these four states to slow somewhat in 2006, we expect Colorado job gains next year to be stronger.
Tight Labor
Colorado?s unemployment rate has averaged 5.0% year-to-date, down from the 5.5% average during 2004 and down sharply from the 6.1% average of 2002-2003.
Tighter labor markets will make it slightly more difficult for Colorado employers to find and retain quality employees. However, the unemployment rate is not so low as to severely challenge employers as during the period 1997-2000, when the Colorado jobless rate averaged 3.1%.
The quality of new jobs added in Colorado has been favorable. Colorado employment sectors adding at least 4,000 net new jobs during the past 12 months include construction (+11,700 jobs), professional & business services (+10,400 jobs), government (+8,500 jobs), education & health services (+5,900 jobs), trade, transportation & utilities (+4,700 jobs), financial activities (+4,200 jobs), and leisure & hospitality (+4,100 jobs).
The
natural resource & mining sector added 1,600 jobs, while ?other services?
employment rose by 1,700 jobs. Less favorable news was found in the information
and manufacturing sectors, which lost a combined 7,500 jobs. Persistent
employment weakness in the information sector has been a key factor in
prohibiting Colorado from returning to the stronger job creation days
of 1993 to 2000, when Colorado added an average of 77,000 net new jobs
annually.
Housing Strength
The Colorado real estate sector is slowly regaining its luster, with rising sales activity. Data from the National Association of Realtors noted a rise of 13.6% for the average home across the nation during the 12-month period ending June 30, 2005, the largest 12-month rise on record.
The NAR?s survey of 149 metro areas noted the median price (half cost less, half cost more) was $208,300. Denver recorded a modest 2.7% rise to $248,400, while Boulder saw the median price rise 4.5% to $346,200. Colorado Springs recorded a solid 13.0% gain, with a median price of $214,200.
The Federal Office of Housing Enterprise Oversight noted a similar 13.43% rise for the same time period, the largest rise in more than 25 years. Colorado ranked 43rd of the states, with the average home price rising 5.66%.
Denver-Aurora recorded a 4.35% rise by this measure, while Boulder saw a 4.77% rise. Colorado Springs recorded a 7.75% rise, with Fort Collins-Loveland up 4.42%. Grand Junction homes rose 9.75%, with Greeley homes up 1.88% and Pueblo prices up 5.96%. We expect stronger Colorado economic activity to support home price increases closer to national norms in 2006 and 2007.
Ski Colorado
The upcoming ski season has thousands of Coloradoans and likely visitors chomping at the bit. Colorado?s resorts recorded their third best year ever last season, with nearly 12 million skier visits. In addition, Colorado resorts saw international visitors rise by 28%, a very favorable development.
Another positive development was a recent story in Ski magazine ranking the best places to ski in North America. Colorado dominated the list, with five of the top eight resorts listed.
Air Colorado
The nation?s airlines were hit extremely hard by the horrific events of September 11, 2001. Overall air travel was cut by roughly 20% in the year following September 11, with many people fearful of flying.
Strong U.S. economic growth has since led to rising air travel, although the monthly number of seats on scheduled departing flights is still down 6.1% from the 2001 average (USA TODAY). Such has not been the case in the state. Colorado-based departures were essentially unchanged between July 2001 and July 2005.
For those travelers who utilize the Denver International Airport (DIA), the news has been favorable. During 2005?s first seven months, the number of passengers traveling through the airport rose by 2.2% versus the same period in 2004 (fly.denver.com). DIA continues to rank as the fifth busiest in the nation and the 10th busiest in the world.
The Colorado Outlook
Colorado?s economy has largely prospered during the past year, following one of the most painful periods on record during 2001 to 2003. We expect solid job gains in 2006, although persistent weakness in the technology sector will impair Colorado?s return to the stronger job creation days of the 1990s.
The state?s housing sector is strengthening, with more impressive home price gains likely in 2006. Resident access to air travel remains world-class. The Colorado economy is clearly moving in the right direction.
Happy Talk
The ?dismal science? of economics…like the nation?s media…typically
focuses on ?bad? news. However, there are many favorable developments taking
place within the U.S. economy. This special feature focuses ONLY on the ?good?
news…
- For every dollar of U.S. economic output generated today, we burn less than half as much oil as 30 years ago
- Violent crime overall is down 55% since 1993, with violence by teens down 71%
- Donations to U.S. charities set an all-time high in 2004, with a total of $248.5 billion donated by individuals, foundations, and corporations. Individuals donated roughly $188 billion last year alone
- Today?s moms and dads, whether working or at home, are spending four to six hours more per week with their kids than did the previous generation
- Educational achievement gaps between white students
and Black & Hispanic students recently fell to the lowest levels ever, with
all rising
- The year 2004 was the safest ever for U.S. and global airline passengers. U.S. civil aviation accidents fell by 18% last year, with 9% fewer deaths
- Average U.S. life expectancy has reached 77.4 years, the highest ever. This compares to 68 years in 1950 and 47 years in 1900
- Today?s U.S. jobless rate of 4.9% is lower than the averages during the 70?s, the 80?s, and the 90?s. U.S. job creation during 2004 was the strongest of the past five years
- Men are spending up to two hours doing household chores on any given day, nearly double the time spent 25 years ago. Women now spend 2.5 hours daily on chores, down from four hours in 1977
- The upward ?mobility? of the typical American remains
the greatest in the world. Why? The U.S. economy ?rewards? the combination
of hard work and educational achievement more than ever before…and more
than any other country in the world
- Alcohol-related traffic fatalities in the most recently reported year dropped by more than half versus 20 years ago
- Women earned 57% of all bachelor?s degrees awarded in 2003, versus 43% in 1970 and 24% in 1950. Within five years, the number of women in undergraduate and graduate programs is expected to exceed that of men by one-third
- Productivity of the average American worker rose an average of 3.7% annually during each of the past three years, the largest gains in 51 years. Rising productivity is a long-term key to higher standards of living
- American household net worth as of yearend 2004 exceeded
$48.5 trillion, the highest ever. Net worth—the difference between assets and liabilities—rose
9.3% versus one year earlier. Higher home and stock prices led the way
- The share of American children with no health insurance has fallen to 10.1%, an all-time low. Why? More kids defined as ?near poor? or ?poor? are covered by government insurance
- Air pollution declined 25% over the past 30 years even as the population and the economy grew. Water quality also continues to improve
- Cancer survival rates reached an all-time high in 2003, with nearly two of three patients now living at least five years after being diagnosed with the disease
- The U.S. rate of home ownership exceeded 68% of households in recent quarters, the highest ever
- Flexible work schedules are now the norm for 43% of workers, up from 29% in 1992 and 13% in 1985. This allows greater flexibility for more people, especially those with children
- The share of women who smoke recently fell below 20% for the first time in 30 years. The number of people who have quit smoking (46 million) now exceeds the number who still smoke (45 million)
- The number of women in medical schools now equals that of men
- Immunization of American infants and toddlers reached an all-time high in 2003, with nearly 80% of children vaccinated against nine diseases before their third birthdays
- Women now make up 15.7% of the top-ranking executives at America?s largest companies, versus 12.5% in 2000 and 8.7% in 1995
- Computer and internet time are replacing TV time for more and more children. Unlike TV, computers are interactive. Even if kids are playing games, they are often required to read, react, write, and think
- Seat belt usage by Americans is a record 79% this year, versus 49% in 1990 and 14% in 1983
- A record 29% of men have earned a bachelor?s degree or higher, versus 26% of women, also a record. This compares to a combined 7.7% in 1960. A record 84.6% of adults over age 25 now have at least a high school diploma, versus 24.5% in 1940
- The teen birthrate dropped 30% during the past 10 years. The reasons? More use of birth control, more work opportunities, and more girls who ?just say no.? The birthrate for American girls ages 10 to 14 fell to its lowest level since 1946
- Divorce rates…after doubling between 1960 and 1990…stabilized
during the 1990s and declined in recent years
- Children?s deaths from unintentional injury have dropped by almost 40% since 1987. Bicycle deaths fell 60%, while firearms-related deaths have declined by 72%
- Roughly 30% of trash was recycled or composted in the latest year, versus 16% in 1990
- During the five year period 1997?2002, business start-ups by women were twice the rate of all start-ups, reaching 6.5 million businesses. Black-owned businesses rose by 45%, while Hispanic-owned businesses grew 31%
- The U.S. role of dominance in the global economy in recent years has been as clear-cut as at any time since the 1950s