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Northern Colorado
            2008 Northern Colorado Economic outlook
                             Executive Summary

         time of uneasiness                                                     National housing market
         may be the best way                                                    meltdown is primary culprit
         to describe northern                                                   Media reports make it
Colorado’s economic                                                             abundantly clear that
performance over the past                                                       widespread foreclosures,
12 months, as many of the                                                       dramatic reductions in home
nation’s ills have spread                                                       prices, and an oversupply of
to the region. Perhaps the                                                      new housing have created
most notable change is the                                                      havoc in the construction,
increase in joblessness. With                                                   real estate and mortgage
nearly 4,000 more workers                                                       sectors. But the housing
unemployed in June than a                                                       market crisis has had far-
year earlier, the region’s unemployment rate stands    reaching impacts by helping put the brakes on
at 4.9 percent, its highest rate since 2005.           consumer spending, the country’s most important
    Despite rising unemployment, the region            economic driver.
is still adding jobs. As of July 2008, Bureau of           Confronted with declining home equity,
Labor Statistics surveys indicate that northern        ballooning mortgage payments, and stagnant
Colorado’s employment totals grew approximately        incomes consumers have retrenched. As a result,
2.3 percent from the year prior, notably faster than   spending growth will likely remain slow, especially
the state’s 1.3 percent rate posted over the same      as the effects of the federal tax stimulus checks wane.
time period. Yet since some of this growth reflects    And little near term action on interest rates can be
short-term seasonal changes, we expect that            expected from the Federal Reserve Bank, which is
2008’s final numbers will show 1.8 percent annual      increasingly concerned about creeping inflation.
employment growth (3,800 new jobs), down from              Due to its integration with the national
2.6 percent in 2007.                                   economy, northern Colorado is not immune to these
    More detailed data from 2007 shows                 effects. Yet the fact that the region’s housing bubble
employment expansion continued to be led by            never inflated to the extent that it did elsewhere has
Health care and social assistance (1,541 net new       meant a less bumpy ride than in places such as Las
jobs), and retail (692 net new jobs). The primary      Vegas, Phoenix, and southern California.
declining sector was Finance and insurance, which
lost 84 jobs. In 2007, Larimer County added             By the Numbers – Northern
2,949 jobs (2.3 percent) while Weld County’s            Colorado’s Economy
employment rolls increased by 2,515 (3.1 percent).      •	 2008	population	528,500
                                                        •	 Projected	2013	population	612,700
    The region’s job market performance in 2007         •	 4,994 new jobs created between July 2007 and 2008
was in line with the state, which saw 2.5 percent          (2.3 percent)
                                                        •	 4,000 projected new jobs added to the region in 2009
job growth. Both the region and state substantially
                                                        •	 Unemployment	rate	(July	2008)	4.9 percent,
outperformed the national economy, which witnessed         1.1 percentage points lower than the U.S.
                                                        •	 $38,465 earnings per worker in 2007, up 7.6 percent
1.1 percent job growth over this time period.
                                                           (inflation adjusted) since 2001 and 2.1 percent
                                                           since 2006
                                                        •	 1,500 projected new Single Family building permits
                                                           issued in 2008, its lowest level since 1992
and hospitality (370 new jobs).    industrial trends, predicts         on overall manufacturing
     Education and health          negative job growth in              job growth while these three
care will continue to make         Manufacturing.                      companies create positions.
substantial contributions to            It is important to note that       The slow down in job
regional employment growth,        we do not explicitly incorporate    creation will lead to slightly
adding approximately 640           the announcements from              higher regional unemployment
jobs in 2009. While growth         several large manufacturing         in 2008. After experiencing
in natural resources, mining,      employers such as AVA, Vestas,      relatively low unemployment
and construction is expected       or La Prima. These companies        rates in 2006 and 2007, we
to slow to 0.3 percent, we still   collectively have indicated         expect unemployment rates
forecast the sector to add an      the desire to hire up to 3,000      to hover around 4.5 percent
additional 600 jobs in 2009.       workers, although it is not         in 2009. This marks a slight
     Despite positive job          clear exactly when these jobs       reduction from the July
growth in 2007, our model,         will be created. This forecast      2008 unemployment rate for
which incorporates current         should then be interpreted to       northern Colorado, which
                                   indicate downward pressure          stood at 4.9 percent.

2009 Jobs Added by Industry

                 “Our forecast models indicate slightly more than
                 4,000 new positions will be added to payrolls in
                        2009, a projected 1.9 percent increase.”
                                                                    Local Economy Startin
                                                         Northern Colorado’s population expected
                                                         to exceed 612,700 by 2013
                                                         Current estimates peg the         14,000 more people called the
2009 will be better, but “typical” employment
                                                         region’s population at about      region home each year.
growth remains a year away                               528,500 residents, with 284,000       After two years of slower
                                                         living in Larimer County and      growth the Colorado State
Northern Colorado’s diverse economy, skilled
                                                         the remaining 244,500 living      Demographer projects the
workforce, and national leadership in the booming        in Weld County. While the         region to add about 13,600
clean energy sector should help the region bounce        1990s saw annual population       new residents in 2009 (2.5
                                                         growth rates average more than    percent). Over the next five
back faster than the nation. In 2009 we expect
                                                         3 percent per year, the pace of   years, approximately 74,900
Larimer and Weld counties to add 4,200 net               expansion has slowed somewhat     more people are expected to live
new jobs. The 1.9 percent growth rate is slightly        in the new millennium. Still,     in northern Colorado, lifting the
                                                         between 2000 and 2007 nearly      total population to 612,700.
slower growth than we expect for Colorado, which
we predict will see employment totals grow by
2.1 percent.
                                                         Northern Colorado’s population continues
    Looking further out, we expect a return to           to grow about 3 percent per year
near-trend growth, as the region shakes off the
cobwebs of the current downturn. For 2010 we
predict a 2.1 percent increase in total Larimer and
Weld County employment.
    While job growth has slowed, the region’s
population continues to expand. Recent data from
the State demographer shows combined population
in the two counties passed the half million mark in
2006. According to the state, population totals are
expected to grow 3.2 percent on average over the
next five years. At such a rate, northern Colorado’s
population should exceed 612,000 by 2013.
                                                         Source: Colorado Demographer
    While we are cautiously optimistic that the
regional economy will rebound soon from the
current downturn, stagnant household incomes             In-migration has been the major source
                                                         of regional population change
remain a concern. Recent Census data shows the
region’s per capita income ($32,284) is only 0.3
percent above its inflation-adjusted 2000 level. One
of the main reasons for this is the stubborn flatness
of average worker earnings, which have increased
only 1.2 percent per year over the past seven years
after accounting for inflation. To promote household
well-being, it is important for the region to reaffirm
its commitment to creating high-paying jobs.

A more detailed version of this report is available at

                                                         Source: Colorado Demographer
g to Feel the Effects of the National Downturn
       Looking at municipalities,                 Over all, the region’s            Regional unemployment creeps up, but remains
   Larimer County’s recent                   population has grown by an             relatively low…
   population growth remains                 estimated 105,100 people since
   concentrated in Fort Collins              1999, with approximately               Northern Colorado is feeling              percentage point greater than a
   (132,150 people, 13,500 new               70,700 of those residents              the effects of the national               year earlier and its highest rate
   residents between 2000 and                migrating to the region.               economic downturn. In                     since January of 2006. Despite
   2007) and Loveland (62,100                Demographers consider two              July 2008 the number of                   increased joblessness, the
   people, 11,500 new residents              components of population               unemployed workers was                    regional unemployment rate
   between 2000 and 2007).                   growth: net migration                  14,902, a 3.6 percent increase            remains lower than that of the
   Weld County’s population                  (in-migration minus                    from 12 months earlier. As                state and nation, continuing a
   growth has been primarily                 outmigration) and natural              a result the July regional                trend that has held throughout
   concentrated in Greeley/                  change (births minus deaths).          unemployment rate stood at                the decade.
   Evans (110,350 people, 23,900             While net migration continues          4.9 percent, more than one
   new residents), and the                   to lead population change,
   southern parts of the county              especially in Weld County,
   (e.g., 5,870 new residents in             natural change is becoming a
   Firestone, 5,400 new residents            larger share of total growth.         Regional unemployment rates track state and
   in Frederick, and 5,000 new                                                     U.S. average, but remain relatively low
   residents in Erie).

   Wages and per capita incomes up slightly
                                                                                 Unemployment Rate

   Inflation-adjusted real wages                  Flat wages have had
   increased 2.1 percent in 2007,            important effects on individual
   ending a two year period of               well-being. In 2007 the region’s
   stagnant take home pay that               per capita income was $32,284.
   saw real wages increase by an             This marks an inflation-
   average of less than 1 percent            adjusted 1.5 percent increase
   per year. For the year, earnings          from 2006, and is the first time
   per worker averaged $38,465.              real regional per capita income
                                             has climbed above its 2001 level.
                                                                                   Source: Bureau of Labor Statistics, Colorado Department
                                                                                   of Labor and Employment/LMI

   After adjusting for inflation, annual per worker earnings and
   per capita income have been flat throughout the decade

                                                                                                       “Despite increased joblessness,
                                                                                                      the regional unemployment rate
                                                                                                     remains lower than that of the state
                                                                                                     and nation, continuing a trend that
                                                                                                      has held throughout the decade.”

   Sources: Bureau of Economic Analysis, Colorado Department of
   Labor and Employment/QCEW, Bureau of Labor Statistics
…yet the slow housing market is acting as a drag                      New single family building permits continue to plummet

Reported job losses in             also declined in 2007, but not
Construction and Finance and       as dramatically as single-unit
insurance are not surprising       construction.
given the problems in the              Looking at 2008, year-to-
national housing market,           date SF totals are well below
and the effects are further        their totals one year earlier.
witnessed in building permit       As of June, the two counties
trends. In 2007, single-unit       issued 860 SF permits, a 645
(SF) permits totaled 2,621, less   (-42.9 percent) unit decline
than half the number issued in     from 12 months earlier. Given
2005 and its lowest level since    these trends we expect SF to
1992. Multi-unit construction      total 1,500 in 2008.

                                                                      Source: U.S. Census Bureau, Colorado State University (2008 July – December)

Regional outlook: Northern Colorado Will Add
 Jobs, But Growth Will Remain Below Trend
A national sentiment of            pummeling felt elsewhere.          Near term employment growth forecasts
uneasiness about the economy,      One reason the local housing       remain below recent averages
especially regarding inflation     market has not been as affected
and the unknown breadth of         is that home values did not
ongoing credit and financial       increase as dramatically locally
market problems, will              as they did across the country
continue to have important         over the period 2001-05.
effects in northern Colorado       Further, the region’s mix of
in 2009.                           industries is diverse and is not
    Consumers are feeling          overwhelmingly reliant on
pinched by higher oil and          finance, construction, or other
food prices, which in turn         industries that were negatively
affect virtually every aspect      affected by the housing bubble
of the economy. Meanwhile,         burst. They are important,
housing related industries         but northern Colorado has
such as mortgage lenders and       many other sectors that act as
home builders are struggling       counterbalances.
as housing prices correct               When the final numbers
                                                                      Source: Bureau of Labor Statistics, Colorado Department of Labor
from a run-up fueled, in           are in for 2008, we expect
                                                                      and Employment/QCEW, Colorado State University
part, by speculation and bad       them to show the regional
loans. Fears of recession in       slowdown will not be nearly as
Europe, which would dampen         dramatic as what happened in
U.S. exports, compound the         2002 or 2003. In particular, we    forecast models indicate                   2.2 percent (4,900 new jobs)
uncertainty.                       expect the year to end up with     slightly more than 4,000                   employment growth in 2011.
    Northern Colorado is           about 3,800 new jobs in the        new positions will be added                    Looking closer at our
somewhat insulated from these      region. The 1.8 percent annual     to payrolls, a projected 1.9               sector-level forecasts, we
problems, but not completely.      growth will be the slowest         percent increase. In the                   expect that the top-two job
Although foreclosures have         since 2003, however.               following years we expect                  growth sectors in 2009 will
affected many families most             Turning to 2009, we           the momentum to increase                   be Trade (primarily retail),
neighborhoods have been            expect the regional economy        somewhat, with 2.1 percent                 transportation, and utilities
spared from the ongoing            to slowly pick up steam. Our       (4,600 new jobs) in 2010 and               (540 new jobs) and Leisure
…and job growth remains positive…                                       Employment growth was strong in 2007,
                                                                        but declined from the previous year
Even though unemployment                  2007 also witnessed
is increasing the region              changes in several industry
continues to add jobs,                trends. Health care continued
although at a slower rate than        to thrive, adding more than
in previous years. Between            1,500 jobs. After losing
July 2007 and 2008, northern          nearly 5,000 jobs from 2001
Colorado added an estimated           to 2006 the Manufacturing
5,000 non-farm jobs. This             sector posted a positive gain
lifted total employment in the        of nearly 300 positions (1.2
two counties to 220,426.              percent). Meanwhile, Finance
     Looking at the two               and insurance, which posted
counties, the past 12 months          positive job growth every year
saw approximately 2,400 and           since 2001, declined by 84 jobs
2,600 net new jobs in Weld and        (-1.2 percent). Construction,
Larimer Counties, respectively.       another historically strong
Non-farm employment totaled           sector, experienced essentially   Source: Colorado Department of Labor and Employment/QCEW
135,369 in Larimer County             zero growth in 2007, losing 15
and 85,057 in Weld County.            positions (-0.1 percent).

Health care and educational services remain important employment drivers

                                                                                                                      “Health care
                                                                                                                       to thrive in
                                                                                                                     2007, adding
                                                                                                                        more than
                                                                                                                       1,500 jobs.
                                                                                                                       After losing
                                                                                                                      nearly 5,000
                                                                                                                    jobs from 2001
                                                                                                                       to 2006 the
Source: Colorado Department of Labor and Employment/QCEW                                                              sector added
                                                                                                                       nearly 300
About the CSU NCEDC partnership
In 2006, the Northern                  CSU’s Office of Economic
Colorado Economic                 Development (OED) is part
Development Corporation           of the Office of the Vice
(NCEDC) committed to a            Provost for Outreach and
five-year partnership with        Strategic Partnerships. OED’s
Colorado State University         mission is to leverage CSU’s
(CSU) to hire a regional          capabilities to grow the health
economist and collaborate         of the Colorado economy by
on economic development           building partnerships with
oriented programs and             industry, local communities,
research. This report is one      and economic development
outcome of this initiative.       organizations; implementing
     NCEDC is a 501(c) 6          economic development
designated, public/private, not   outreach programs; and
for-profit corporation serving    supporting CSU start-ups.
northern Colorado. Funded         OED’s three primary program
by investments from regional      areas are: Growing Economies
businesses and government         and Empowering Local
entities, the focus of the        Communities; Economic
NCEDC is to leverage public       Development Research; and
and private funds to strengthen   Support for Entrepreneurs and
existing employers, support       Emerging Enterprises.
expansion projects, provide            To find out more about the
critical research for decision-   NCEDC and CSU’s Office of
making, and recruit new           Economic Development please
employers who create primary      visit and
jobs, invest capital, and add
vitality to the economy.

About the Authors
Martin Shields is an associate    David Keyser is a research
professor of economics at         economist at Colorado State
Colorado State University.        University. He completed his      Colorado State University is an equal opportunity/
He completed his Ph.D. in         master’s degree in economics      affirmative action institution and complies with all Federal
agricultural and applied          at Colorado State University      and Colorado State laws, regulations, and executive orders
                                                                    regarding affirmative action requirements in all programs.
economics at the University of    in 2006, concentrating on
                                                                    The Office of Equal Opportunity and Diversity is located
Wisconsin-Madison in 1998.        regional economics and            in 101 Student Services. In order to assist Colorado State
His research program focuses      econometrics. His current         University in meeting its affirmative action responsibilities,
on the factors that influence     research involves improving       ethnic minorities, women, and other protected class members
regional economic growth,         statistical forecasting models,   are encouraged to apply and to so identify themselves.
emphasizing policy options        impact and cluster studies, and
that will enhance economic        analyzing regional effects of
opportunities and quality         how employment is distributed
of life for the residents of      with respect to sectors and                          Printed on recycled stock
northern Colorado.                occupations.

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