Look for Colorado to grow in 2010
During 2010, the Colorado economy is expected to continue a transition from one of the most painful recessions since the Great Depression to modest economic growth. Such expected improvement will be in line with slow but steady improvement in a majority of the nation’s states, including most of Colorado’s neighbors.
All 50 states have recorded declines in employment during the most recent 12-month period. Note: Washington DC has added a modest number of net new jobs as the expansion of government continues. Such declines have ranged from 1.5 percent or lesser declines in North Dakota and Alaska to declines of 5.5 percent or more in Arizona, Michigan, Nevada, and Wyoming.
Colorado’s job decline during the most recent 12-month period is estimated at 3.8 percent, placing the state in the “lower half” of the states. Colorado’s year-over-year decline three months prior was estimated at 4.7 percent.
The state’s net loss of roughly 90,000 jobs during the past 12 months, while enormously painful, compares favorably to a loss of 112,000 jobs just three months ago. Such comparisons will continue to “improve” in coming months, with the state likely to see monthly employment gains by the summer of 2010.
As is true across the nation, Colorado job losses have been concentrated in goods producing sectors, including construction (down 21,900 jobs) and manufacturing (down 13,300 jobs). The mining and logging sector has lost 6,400 jobs during the past 12 months.
Additional job losses have occurred in trade, transportation & utilities (down 17,300 jobs); professional & business services (down 16,200 jobs); leisure & hospitality (down 9,600 jobs); financial activities (down 8,300 jobs); information (down 4,300 jobs); and other services (down 3,700 jobs). Net employment gains were recorded in education & health services (up 6,900 jobs) and government (up 4,200 jobs).
The Centennial State’s unemployment rate remains relatively low when compared to other states. The Colorado Department of Labor and Employment estimated an average 7 percent jobless rate over the most recent three months, versus a 7.5 percent average monthly jobless rate during the prior six-month period.
Only 11 states had a jobless rate lower than the latest 6.9% Colorado rate. Fourteen states had double-digit jobless rates in the latest month. The lower Colorado jobless rate also compares favorably to the nation’s 10 percent jobless rate in November.
As noted previously, two events must take place before the Colorado economy can begin to grow again. The first of these events is a return of U.S. economic growth, which has been underway since last summer. The second event is a return of global economic growth, a development now seemingly underway.
More concrete signs of renewed economic growth during 2010 will heighten competition between states to attract jobs. Too much of the focus will be on enticing employers from higher-cost states to lower-cost states, with costly incentives a key part of the equation.
Rocky Mountain states will focus on California companies. Smaller states in the Northeast and the Midwest will focus on employers in New York, Massachusetts, Illinois and Michigan. While any successes in enticing out-of-state employers make for good “front page” news, two other components of economic development too often get the short end of the stick.
Economic development is a three-part process…attraction of outside existing or new employers, retention of existing employers, and expansion by existing employers. What can Colorado’s political and business leaders do to entice outside employers to the state at reasonable costs? What can such leaders do to keep Colorado employers in place, even as other states are focusing on Colorado’s best companies? And what can such leaders do to entice existing employers to expand their operations in Colorado?
Thousands of Colorado’s struggling homeowners, like those in all states, can benefit from the most attractive 30-year fixed-rate conventional mortgages in 40 years. National rates have averaged below 5 percent in recent weeks, in part tied to aggressive buying of mortgage-backed securities by the Federal Reserve.
Such attractive rates may not be available later in 2010 as the Federal Reserve concludes its purchase program and, at some point, begins to sell such securities. Painful job losses and home price weakness in Colorado and around the nation have reduced the number of people who can refinance a mortgage or finance a new home. Still, timing is critical to “lock in” such enormously attractive mortgage interest rates.
Colorado in 2010
Better days are ahead! More signs of Colorado and regional economic rebound from the painful recession will be seen as 2010 matures.
A return of U.S. and global economic growth provides the framework for renewed Colorado economic growth later in 2010 and especially during 2011. The state’s longer-term economic potential tied to solid population gains, a moderate cost of doing business, a business-friendly public sector, and outstanding recreational opportunities ranks with any in the country.