Colorado's economy will continue to grow in a steady and manageable way during the second half of 2007, according to Richard Wobbekind, an economist with the University of Colorado at Boulder's Leeds School of Business.
"We went into the year predicting a little bit of a slow down, a 1.9 percent job growth rate," Wobbekind said. "Right now we're slightly lower than that, but actually we're pretty much on the mark because we think the second half of the year is going to be stronger."
Wobbekind, who made the forecast at the Leeds School's 2006 Business Economic Outlook Forum last December, recently met with his research team from the school's Business Research Division and the forum's committee members, representing the state's major economic sectors, for a midyear update on Colorado's economy.
He was most excited by the growth so far in 2007 in the information sector, which includes the high-paying telecommunications industry.
"I take the most comfort in the turnaround of the information sector, which has turned into positive territory after being on a long decline since late 2000 to early 2001," Wobbekind said. "This sector has really taken a tremendous beating and continued to suffer the last couple of years after we thought it would level out. It's such an important sector for the state in terms of the concentration of information jobs compared to the rest of the country. But it is also important because it is a high-paying wage sector for the state."
The professional and business services sector, which includes engineers, computer systems designers, scientific research and development groups and corporate headquarters, continues to have very strong job growth. The natural resources and mining sector and the healthcare and tourism industries also are strong so far this year.
"So the state's overall unemployment rate is very reasonable or even low at this point," Wobbekind said. "In general people are finding jobs across a wide spectrum. However, if you are in need of a really high-wage job, there are only a few sectors that are generating those kinds of jobs," such as information technology.
Population growth for the year is expected to be about 2.1 percent, which is a healthy growth rate, according to Wobbekind.
On the negative side, the early data for housing starts in Colorado is negative, which translates into fewer jobs in the construction sector.
"Not being insensitive to someone without a job or not having enough work in this particular area, but by and large I think we shouldn't be building very many houses in the state right now, given some of the foreclosure issues and the current supply of homes for sale on the market," Wobbekind said. "The reduction in new homes being built is a good thing for the housing market to get more into stability, but the jobs lost are certainly something the construction industry is feeling."
But other areas of construction, particularly commercial and industrial, are looking quite strong, he said.
Manufacturing in Colorado is still a real disappointment, absorbing the loss of several thousand jobs so far in 2007, while nationally it isn't losing jobs at that rate, according to Wobbekind.
"A lot of manufacturing job generation here in Colorado appears to be in smaller five- or 10-person firms, and that really isn't the domain of manufacturing in general," Wobbekind said. "Even though we have a lot of little manufacturing firms in Colorado, when you think about the manufacturing industry, you think of big firms creating a lot of jobs, and we don't have a lot of those in place right now."
The high gasoline prices in Colorado and across the nation are affecting the lowest income brackets most so far in 2007. But if a major hurricane hits this summer or something affects oil output in the Middle East and gas prices go up to $4 or $4.50 per gallon, the effects could be felt by many more people.
"When you start to take the middle class out of the consumption game, you start to have serious problems in the U.S. economy," Wobbekind said.
Wobbekind doesn't see any specific concerns about the Colorado economy that are not related to the national economy.
"Clearly, if the national economy really did falter, a lot of our information sector and our high tech, which is business-to-business in nature, would be affected, so we would have some serious concerns about whether we could continue our job growth," he said. "But that doesn't seem likely at this point."
MP3 audio files of Wobbekind's comments on the midyear economic update for the state of Colorado are available to listen to or download for broadcast on the CU-Boulder News Center Web site at .