2009 Northern Colorado ECoNomiC oUTLooK 2008 Northern Colorado Economic outlook Executive Summary A 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 www.csuoed.com. 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 continued to thrive in 2007, adding more than 1,500 jobs. After losing nearly 5,000 jobs from 2001 to 2006 the Manufacturing Source: Colorado Department of Labor and Employment/QCEW sector added nearly 300 positions.” 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 www.ncedc.com and jobs, invest capital, and add www.csuoed.com. 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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