Midyear update: Colorado economy better than expected
Phil Castle, The Business Times
The Colorado economy has performed better than expected with improving job growth and increased residential construction and tourism activity, according to a mid-year update prepared at the University of Colorado.
While the update doesn’t include a breakdown for geographical areas, a number of the trends could portend improving conditions for a Mesa County economy that’s lagged behind other areas of the state, said Richard Wobbekind, an economist and executive director of the Business Research Center at the Leeds School of Business. “I would think that’s possible.”
Wobbekind prepares an annual business economic outlook with the assistance of a steering committee comprised of representatives from major industry sectors. Wobbekind recently met with committee members to update the forecast.
“The performance of the Colorado economy has modestly exceeded our December 2012 forecast,” Wobbekind said. “Obviously, we are pleased with the higher level of job growth and hope it will continue throughout the remainder of 2013.
Nonfarm payrolls increased 52,400 between May 2012 and May 2013, a gain of 2.3 percent. Wobbekind said he expects job growth to rise to about 2.5 percent, well above the initial projection of 1.8 percent. Payrolls have grown on a year-over-year basis in every industry sector except for financial activities, information and natural resources and mining.
The value of single-family residential construction increased nearly 41 percent and multifamily construction climbed more than 72 percent through May 2013, Wobbekind said. Nonresidential construction has held steady, with increased work on office buildings and medical facilities.
Increasing tourism activity has bolstered job growth in the leisure and hospitality sector. The Colorado ski industry reported an increase in skier visits during the 2012-2013 season, while Denver reported its best year ever for tourism in 2012.
On the downside, drought conditions could affect farm and ranch production, Wobbekind said. “We had anticipated an extremely strong year for Colorado agriculture. Unfortunately, the lack of precipitation in a timely manner will significantly impact this year’s production.”
Wobbekind initially forecast continued economy recovery in Mesa County during 2013 with growth in industries, wages and population.
Mesa County was late going into the Great Recession and has been late in fully recovering, Wobbekind said, with higher unemployment rates and lower job growth rates and per capita personal income than other metropolitan areas in Colorado.
Moreover, the Mesa County economy isn’t as diversified as the Front Range and therefore subject to more localized conditions, he said.
Still, a number of trends signal improvement, he said.
He cited increasing real estate activity and rising home prices as one example. For the first half of 2013, the number of real estate transactions in Mesa County increased 5.5 percent and the dollar volume of those transactions increased 9.3 percent over the first half of 2012.
For the 10-year span between the first quarters of 2003 and 2013, home prices increased more in Mesa County than any other metropolitan area in Colorado, although much of that appreciation occurred before the downturn, he said.
Statewide gains in tourism activity also bode well for increased tourism business in Mesa County, Wobbekind said.
A surge in oil production, primarily in Weld County, won’t affect Mesa County directly, he said. But increased profits for energy companies have implications for their operations elsewhere, including Western Colorado. Still, low natural gas prices will continue to curb regional activity, he added.