Colorado's economy will experience modest growth in 2008, and should outpace the national economy, according to economist Richard Wobbekind, of the University of Colorado at Boulder's Leeds School of Business.
Wobbekind's announcement was part of the 43rd annual Business Economic Outlook Forum hosted Dec. 10 by CU-Boulder's Leeds School of Business and Compass Bank.
"With the incredibly unstable national economic environment we have been experiencing, 2008 has been the most difficult year we've ever had to forecast," Wobbekind said. "That said, the Colorado economy seems to be going along at a pretty good clip and doesn't seem that shaken by national events, so we think the impacts on Colorado's economy will be more incremental if there is a national downturn."
Much of the economic uncertainty in Colorado is led by the seizing of the credit markets on one hand and the resetting of adjustable rate mortgages to higher rates at the same time.
"It turns out that part of our foreclosure problem in Colorado is that we have a lot of people in ARMs and these are resetting as we speak," Wobbekind said. "So, how many of these are resetting, and how many are resetting at a rate that is going to make it very uncomfortable for Colorado homeowners to continue to make payments, or to go out and spend money during the holidays? Nobody knows at this point."
In 2008, Colorado will add 43,300 jobs, an employment growth rate of 1.9 percent compared to a national rate of 1.1 percent, according to Wobbekind. Colorado's unemployment rate for 2008 is expected to be 4.2 percent, compared to a national rate of 4.9 percent.
Job growth in the state will be led by the professional and business services sector, which will add 15,500 jobs, many of which are high-paying jobs including engineers, computer systems designers and scientific research and development groups.
"However, in terms of relative growth, far and away the fastest growing sector in the state is natural resources and mining," Wobbekind said. "The strength in this sector is a big part of the reason for the growth in professional and business services because we're seeing the need for design people, accountants and all sorts of support businesses that are serving this sector."
Colorado's education and health-care services, leisure and hospitality sectors also are expected to be strong in 2008.
Agriculture did extremely well in 2007, thanks in large part to the blizzards that hit the state in December 2006.
"The blizzard, while hurting the livestock industry, also delivered a huge amount of moisture that led to very strong crops in Colorado," Wobbekind said. "On top of that, droughts and untimely storms in other agricultural areas lessened the supply of wheat and corn available to the market this year."
Agriculture will be strong again in 2008 with net sales of $843 million, up from $771 million in 2007, according to Wobbekind.
"This was one of those years where if you look at Colorado, I think you'd have to say the rural areas of the state have done quite a bit better than the urban areas," Wobbekind said. "The urban areas did OK, but the Eastern Plains did quite well with agriculture and the West Slope did incredibly well with energy. So you're really seeing more prosperity out in the rural areas this year."
On the down side, for the eighth consecutive year the manufacturing sector in Colorado is expected to lose ground, shedding 4,000 jobs in 2008.
"Colorado continues to be tech-heavy in manufacturing, and the tech sector has really been struggling with offshoring," Wobbekind said. "This year is particularly bad because the Intel facility is closing in Colorado Springs, and that's going to be a big hit for Colorado."
Colorado's population is expected to grow at a rate of 2.1 percent in 2008 with a net migration of 62,500 people to the state. Colorado's population is expected to exceed 5 million for the first time during 2008.
Wobbekind's presentation at the Business Economic Outlook Forum was followed by a Q-and-A session featuring some of the state's top economists and keynote speaker Rob Katz, CEO of Vail Resorts Inc.
University of Colorado at Boulder
Leeds School of Business
Sector Highlights for 2008 Economic Outlook Forum
Dec. 10, 2007
oAgriculture - Net income for the agriculture sector is expected to rise from $771 million in 2007 to $843 million in 2008, from gross sales of $6.8 billion. Net income from the livestock sector, Colorado's largest agricultural sector, will fall from $3.9 billion in 2007 to $3.8 billion in 2008. Livestock sales dropped below the $4 billion level in 2007 for the first time since 2003. The state's ethanol industry, which will use about 30 percent of Colorado's total corn production to produce 130 million gallons of ethanol, will continue to impact, both directly and indirectly, the net farm incomes of Colorado's farmers and ranchers in 2008. Generally high corn prices will translate into increased profitability for farmers and higher feed costs for livestock and dairy producers. The blizzards of December 2006 were devastating to cattle ranchers in southeast Colorado, where more than 15,000 head of cattle were killed. At the same time the moisture was a boon to wheat farmers, who after multiple years of drought harvested one of the largest wheat crops since the late 1990s.
oNatural Resources and Mining - Increased demand for energy products and Colorado's strength as an energy- and mineral-rich state has resulted in growth in employment, output and total sales in Colorado's energy sector. 暗网禁区 5,000 workers will be added in 2008, an increase of about 20 percent over the 24,800 who were employed in the sector in 2007. This growth is being driven primarily by increased production of natural gas. The total value of oil, gas and carbon dioxide production and coal and mineral mining in Colorado is forecast to be worth $11.6 billion in 2008, up from $11.1 billion in 2007. In 1999, the value of the sector's products was $2.9 billion.
oConstruction - While the biggest story in the construction industry in 2007-08 has been the decline in home building, the total value of construction is expected to increase 4.3 percent in 2008, to nearly $12.5 billion, boosted by nonresidential and nonbuilding construction. Single-family home building permits are expected to fall 5 percent in 2008, following a 39.4 percent decline in 2007. Boosted by apartment vacancy rates, multifamily unit building permits are expected to increase by 6.3 percent. Overall, the sector is expected to lose 1,000 jobs for a total of 164,500 employed for 2008.
oManufacturing - Colorado's manufacturing sector, which has lost more than 50,000 jobs since 1998, will continue its steady decline in 2008 with the loss of 4,000 jobs. The sector will employ 140,700 people in Colorado in 2008, down 2.8 percent from the 144,700 employed in 2007. The largest decline is expected in the computer and electronics sector as a result of Intel Corp.'s decision to relocate their Colorado Springs facility to China. On a positive note, manufacturing productivity has outpaced productivity in all other business sectors, increasing productivity by 94 percent between 1987 and 2005, compared with 38 percent in the rest of the business sectors.
oTrade, Transportation and Utilities - Colorado's largest job-producing sector will grow by 1.3 percent, or 5,400 jobs in 2008 for a total employment of 436,000 people in the state. Retail jobs will lead the sector in 2008, with 3,000 jobs added, followed by 1,200 in transportation, 1,000 in wholesale trade and 200 jobs in the utilities sector. Retail employs more people than any other sector in Colorado, accounting for more than 10 percent of the workforce, or about 258,000 people.
oInformation - After shedding nearly 33,000 jobs since 2000, the information sector bottomed out in 2006, before growing by 100 jobs in 2007. Growth in software publishing, Internet publishing, telecommunications and motion pictures will lead to a marginal increase of 900 jobs in 2008. With higher-than-average wages and a strong employment base, stability in this sector is significant for the health of Colorado's overall economy.
oFinancial Activities - Much of the recent job growth in the financial activities sector has occurred in the credit-intermediation sector, such as banks, mortgage lenders and credit unions. In recent months employment in this area has declined as a result of mergers and fallout from the subprime lending problem. In 2008, job growth will remain flat in the finance and insurance sectors, while about 400 jobs will be added in the real estate and rental and leasing sector. Strong growth in the residential market will occur along the Western Slope, tied to the low and relatively stable interest rates and the booming energy economy. In spite of the housing slump and credit crunch, some employment growth will be necessary to handle transactions related to foreclosures. Between 1997 and 2006, about 8.5 percent of all jobs added, or 25,500, were in the financial activities sector.
oProfessional and Business Services - The expansion of the economy has increased the demand for professional and business services including architects, engineers, computer systems designers and scientific research and development groups, and in 2008 this sector will lead Colorado in employment growth, with an increase of 4.4 percent or 15,500 jobs. The professional, scientific and technical services sector, which includes high-skill, high-wage jobs averaging $71,536 annually in 2006, will add 8,800 jobs in 2008. The administrative and support services sector will add 5,200 positions, while the management of companies and enterprises sector will gain 1,500 jobs. Growth in the professional and business services sector is important because of its close ties to Colorado's research universities, federal labs and high-tech business clusters.
oEducational and Health Care Services - This sector has enjoyed job growth during every year in the last decade, and that will continue in 2008 with the addition of 8,000 jobs. Health care and social assistance employment will grow by 6,800 jobs and the private education sector will increase by 1,200 jobs. However, the health care sector will continue to be limited by the supply of quality labor. By 2010, Colorado is projected to have 17 percent fewer nurses than it will need to serve the public. One source of the problem is a shortage of nursing instructors.
oLeisure and Hospitality - The outlook for this sector, which includes the recreational and entertainment activities of Colorado residents and tourists and business travelers to and within Colorado, is bright for 2008. Buoyed by the state's aggressive advertising and marketing of tourism, a strong convention outlook for Denver (including the Democratic National Convention) and a weak dollar, which makes Colorado an increasingly attractive destination for international tourists, the sector is expected to add 6,000 jobs in 2008. Colorado set a record in overall market share by capturing nearly 23 percent of the ski business market in the United States
during the 2006-07 ski season with 12.56 million skier visits. The 2007-08 season is expected to draw another record with 12.62 million skier visits.
oOther Services - This sector, which is composed of private businesses that provide personal services such as auto repair shops, Laundromats and beauty salons, is expected to add 2,000 jobs in 2008.
oGovernment - As a result of Colorado's growing population, the government sector is expected to add 5,100 jobs in 2008. 暗网禁区 100 federal jobs will be gained and 1,600 state government and education jobs will be added. The improved budgetary flexibility provided by Referendum C, coupled with growth in state tax revenue, contributed to the 2007 and expected 2008 employment growth. An economic impact study of the federal facilities in the metro Denver area conducted by the Leeds School concluded that federal operations had a $6.7 billion impact on the local economy. The impacts would be far greater if El Paso County and other parts of the state were included.
oInternational Trade - Colorado exports are expected to rise 1.5 percent in 2008, following a decrease of 11 percent in 2007. The expected rebound is due to slower global economic growth, a more competitive U.S. dollar and continued growth in Colorado agricultural exports.
Regional and Area Economic Forecast Highlights:
oBoulder County - The number of jobs in Boulder County rose an estimated 3 percent in 2007, outpacing employment growth for the nation, 1.3 percent, and the state, 2.4 percent. The county's unemployment continues to be low, falling from 3.8 percent in mid-year 2006 to 3 percent at mid-year 2007. Boulder County has a high concentration of professional and scientific jobs, supported by the presence of CU-Boulder, major federal research facilities and companies in aerospace, bioscience and information. In 2006, per capita income in Boulder County was $48,324, significantly higher than the per capita income for Colorado ($39,587) and the United States ($36,629).
oLa Plata County - Construction, retail, tourism, health care and natural gas extraction are significant contributors to the local economy. Population growth will continue to fuel the construction and real estate sectors of the economy. Although it appears the housing market in La Plata County is cooling off from recent years, it is still relatively strong, with median residential housing prices rising 9.7 percent from the second quarter of 2006 to the second quarter of 2007.
oMesa County - The Grand Junction gross domestic product grew by 80 percent over the past decade, and the economy was recently named the 15th fastest growing in the nation. With energy extraction as its primary driver, followed by energy service industries and construction, the Grand Junction economy is projected to remain very strong in 2008. One of the immediate issues in the county is the availability of workers, as the county has an unemployment rate of 3 percent. The rapid growth of the economy also has reduced housing vacancy rates to all-time lows and driven up the costs of construction and land for both residential and commercial purposes.
oNorthern Colorado (Larimer and Weld counties) - This region is expected to experience growth of 1.9 percent, or about 4,000 jobs. A substantial number of those jobs are expected to be in high-paying sectors. Emerging clean energy technologies may stem recent job losses in manufacturing. In 2006, 33 firms and organizations employed 2,132 workers in northern Colorado's clean energy cluster. In 2008, two renewable energy companies will open new facilities in the region, creating 1,100 jobs.
oPueblo County - Historically, Pueblo County has experienced moderate population growth. This trend will change when the Pueblo Springs Ranch is complete. The 23,000-acre subdivision in northeast Pueblo County is expected to have about 75,000 households, or 200,000 people when completed. The Historic Arkansas Riverwalk Project has begun to pay the economic dividends its creators intended. In August 2007, the new 44,000-square-foot headquarters of the Professional Bull Riders Association was dedicated, and new restaurants and other establishments have opened near the new building. Pueblo County is ranked fifth in Colorado Front Range counties in foreclosures per occupied dwelling with one out of 78 occupied homes.
oSouthern Colorado (El Paso County) - El Paso County has been strongly influenced by rising foreclosures, stagnant wage increases, a weak residential construction industry and deployments of troops from Fort Carson to Iraq. All of these factors directly affect the region's employment, retail, wholesale and commercial activity, and the overall economic outlook of the region.