Economic forecast: Recovery — and challenges — lie ahead

The Colorado and United States economies are expected to continue to recover in 2013, although challenges likely will persist.

Three speakers shared their outlooks for the year ahead during economic forecast breakfasts hosted by Vectra Bank Colorado in Boulder, Colorado Springs and Denver.

Patricia Silverstein, president of Development Research Partners, said Colorado outpaces the country in economic recovery.

More than 20 percent of Colorado businesses plan to increase staffing, Silverstein said. Payroll gains are projected for the business and professional services, education and health care and wholesale and retail trade sectors. Government hiring also should increase, although manufacturing employment likely will remain low.

Personal income nearly has returned to pre-recession levels, Silverstein said. Increased spending has driven up retail sales.

A number of challenges likely will keep the recovery slow and long, however, Silverstein added. Those issues include global economic unease; uncomfortable levels of unemployment; and uncertainty over taxes, health care and government spending.

Mark Snead, an economist and president of RegionTrack, said he expects 2013 to be a transition year toward more organic growth.

“Impediments are diminished and there is fuel in the system,” Snead said.

The Federal Reserve continues to promote economic growth through historically low short-term interest rates and monetary easing, Snead said. Corporations are seeing higher cash balances and household net worth has rebounded, he added.

The uncertainty surrounding the presidential election is gone, which in turn reduces some of the uncertainty about federal policies, Snead said.

George Feiger, chief executive officer of Contango Capital Advisors, said that from an investor’s perspective, the United States remains the “least bad place.”

Still, debt remains an obstacle to economic recovery, Feiger said. When personal, business and government debt has climbed to high levels in the past, the crisis usually was resolved though increases in inflation of up to 5 percent. Consequently, inflationary pressures and structured reforms should be expected over the next few years, he said.

Given technological advances, manufacturing employment likely will continue to decrease, Feiger said. People working in professional services, particularly those with master’s degrees, likely will earn the most wealth in the future. Shifts in education and wages will further widen the income gap, he added.

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Posted by on Feb 5 2013. Filed under Business News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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