Business cycle different this time
The past year brought little change to an already slow economy in Mesa County. The news — and overall outlook — isn’t grim. But the continued lack of growth has contributed to a stagnant economy that reflects a different kind of business cycle.
Such local economic indicators as sales and use tax collections remained steady with the prior year during 2013. Building permits showed little increase. While the unemployment rate has decreased to 6.9 percent, that’s not all good news. Many people have left the work force, moved or remain underemployed.
The no-growth, no-confidence situation has taken a toll on a number of industries. The construction and energy sectors, formerly driving forces in the economy, have been hit especially hard. Moreover, businesses that provide goods and services to construction and energy companies and their employees have been affected as well. Commercial real estate clients remain in a wait-and-see mode. Many have opted to lease rather than buy. Downsizing and shorter leases have become the norm.
The latest downturn isn’t as dramatic as what happened in 2009, but our economy is changing. Mesa County and the Western Slope are accustomed to boom-and-bust cycles. The sharp ups and downs brought activity and opportunity. The trend now isn’t as black and white. So what now? How do we adapt and go forward? We need confidence to return. There seems to be life outside the Western Slope, why not here?
Maybe confidence has returned to a degree — if you look hard enough. There isn’t an influx of big box retailers or energy companies returning to right the ship. But there are small pockets of growth. New speculative homes are under construction. Even some custom luxury homes are going up. Many manufacturers are hiring even as small manufacturing businesses open. These companies are here because of choice and don’t necessarily serve just this area. Their products and services reach far beyond Mesa County.
The health care sector doesn’t seem to be downsizing. Advancements in medicine and corresponding technology bring different and new services, and we’re seeing those expand in our area. Our medical sector also serves clients outside the Western Slope.
We still need to get around in gasoline-powered vehicles, and gas stations, auto parts stores and car dealers are providing those necessary goods and services.
Commercial real estate agents have experienced different demand from our clients. Many clients are looking to invest in income-producing real estate rather than find space in which to open or expand businesses. Commercial real estate agents have had to change their focus, too.
There does seem to be some light at the end of the tunnel. Interest rates remain low and are predicted to stay low through 2014. That’s key in enabling businesses to expand operations with new equipment, upgrades and possibly real estate.
Individuals are replacing clothing, furniture, cars and even homes because they’ve held on to old products and lived in older or smaller houses as long as they can. Many view this as an opportune time to move forward because of low interest rates. They’re feeling confident enough that growth is coming and should take advantage of lower costs before they increase.
It’s an increasingly connected economy, too. National and even global trends affect us on the Western Slope. Consequently, we need to think outside our geographic boundaries.
I’ve worked in commercial real estate in Colorado for more than 25 years. The past year was one of the most challenging I’ve experienced. I used to be able to tweak and change course, but old practices haven’t worked. Our economy isn’t repeating itself in this cycle, it’s moving in a different direction that requires us to adapt.