Colorado Economic Outlook Winter 2011
Written by Jeff Thredgold, President, Thredgold Economic Associates
’11 Equals Growth!
Modest employment growth has returned in Colorado, with the economy adding jobs during each of the past three months. Overall performance is expected to improve during 2011, while even stronger performance seems on tap during 2012. Such welcome growth follows the most painful Colorado recession since the Great Depression.
Improving Colorado economic performance has resulted in part from a return of U.S. and global economic growth. The U.S. economy officially returned to growth in June 2009, following 18 months of serious recession. The global economy returned to growth later in 2009.
The Colorado economy lost an estimated 10,500 net jobs during the most recent 12-month period, an annualized decline of 0.5%. However, reported employment declines during the most recent 12-month periods have declined for 11 consecutive months. Such a pattern, combined with expectations of stronger U.S. and regional economic performance during 2011, suggests that year-over-year job gains will be reported as soon as 2011’s first quarter.
By comparison, neighboring states of Idaho, Montana and Nevada rank among the 10 worst performing states in regard to job performance during the past year. Overall, three-fourths of the 50 states recorded minimal to modest additions to employment during the period.
Gains & Losses
Colorado job gains during the most recent 12-month period were exclusively within the private sector, with total government employment falling by 2,700 jobs. The state’s goods production sector continued to struggle, with a loss of 11,200 jobs (down 4.1%).
Construction employment fell by another 9,400 jobs during the past year, contributing to a net loss of 60,000 jobs since 2007. Manufacturing lost another 1,900 jobs, while mining and logging added 100 jobs.
The much larger service providing sector added an estimated 700 jobs during the past year, a gain of less than 0.1%. Education and health services added 8,300 jobs, while professional & business services added 2,300 jobs. Leisure & hospitality added 1,200 net new positions, while “other services” added 200 jobs.
The information sector lost 3,500 jobs, with financial activities employment down by 2,500 positions. Trade, transportation & utilities lost an estimated 2,600 jobs.
The state’s unemployment rate averaged 8.4% in recent months, the highest level in decades. The rate is expected to return to more traditional levels during the next 3-4 years as solid employment growth returns.
Improving economic growth has led state tax revenues to improve, both in Colorado and across the nation. The Centennial State’s tax revenues are now coming in stronger, following declining revenues in 2008 and 2009 which led to painful spending reductions. State tax revenues nationwide rose during the July-September 2010 period for the third consecutive quarter. However, such revenues still trail those of two years earlier.
While massive budget deficits have been commonplace in recent years in California, Illinois and New York, states of all sizes are dealing with a collective shortfall estimated at $41 billion in the next fiscal year, according to the Fiscal Survey of States, released by the National Governors Association and the National Association of State Budget Officers. Slow revenue growth, increased spending demands, and a drop in federal stimulus assistance during 2011 will all contribute to the problem.
Let it Snow!
Colorado’s winter sports business is underway with (as usual) wishes for more of the white stuff. In addition, ski resort bookings have risen. A report from the Mountain Travel Research Program noted that bookings at 265 property management companies in Colorado, California, Oregon and Utah were up more than 15% during 2010’s final quarter from a year earlier. Advance bookings for early 2011 also rose.
Ski magazine’s latest survey of readers was again dominated by Colorado, with six of the top 10 North American ski resorts within the state. Vail ranked second, with Beaver Creek ranking fourth. Utah’s Deer Valley was named North America’s #1 ski resort for the fourth consecutive year.
A Colorado Accolade
Forbes magazine ranked Colorado among the top five in its annual rankings of the “best states for business and careers.” Other top five states included Utah, Virginia, North Carolina and Washington.
Colorado in 2011
The state’s recovery from its most painful and pervasive recession since the Great Depression continues to unfold, with net job gains expected in 2011. More traditional solid performance is expected in 2012. Rising national and international recognition of Colorado as a great place to invest, to work and to play will pay major dividends for years to come.