Phil Castle, The Business Times

Rich Wobbekind foresees good things in the year ahead for the Mesa County economy and local businesses.

“Right now, the economy here looks to be in a very strong growth phase,” said Wobbekind, senior economist at the Leeds School of Business at the University of Colorado at Boulder.

The agriculture, energy and tourism sectors are expected to fare well in 2022 and bolster the economy even as wages and incomes rise. Increases in building permits and bank deposits also bode well, Wobbekind said.

Challenges remain, though, among them the effects of the COVID-19 pandemic, inflation, labor shortages and supply chain disruptions. That’s not to mention what could be additional challenges not yet known.

The business research division at the Leeds School of Business compiles an annual business and economic forecast for Colorado with sections for various industry sectors and geographic regions. Business, industry and government officials contribute to the report. 

Wobbekind detailed the forecast for Mesa County as well as the state and nation during a presentation hosted by the Grand Junction Area Chamber of Commerce.

The broad measure of goods and services produced in Mesa County rebounded in 2021 from a decrease in 2020, he said.

The seasonally unadjusted jobless rate dropped from a high of 12.8 percent in April 2020 to 4.7 percent in November 2021, the latest month for which estimates are available.

Overall employment has grown over the last year with gains in warehousing and business and professional services. Employment remains down in the mining and leisure and hospitality sectors. Wages and personal income remain strong, Wobbekind said.

“Life is pretty good based on those indicators,” he said.

Building permits, an indicator of construction activity, are up, as is the value of residential and nonresidential construction and infrastructure.

The number of passengers using commercial air service at the Grand Junction Regional Airport has increased. So has the count of drilling rigs operating in Western Colorado, he said. 

Bank deposits, a proxy for subsequent lending activity, have increased as well, he said. “This is a good sign.”

As for Colorado, Wobbekind said the forecast calls for nonfarm payrolls to grow 73,900 in 2022 as the state finally recoups jobs lost because of the pandemic and related restrictions. Gains are expected in each of 11 industry sectors.

The leisure and hospitality sector likely will realize the biggest gain at 31,700 jobs, but also suffered the biggest decrease in the pandemic.

Professional and business services are expected to add 8,200 jobs, followed by government at 7,000, education and health services at 5,900 and financial activities at 5,100. Payrolls are forecast to grow 4,900 in the trade, transportation and utilities sector and 4,000 in construction. At 600 each, the smallest job gains are expected for the natural resources and mining and information sectors. 

Labor shortages likely will limit would be additional gains, Wobbekind said. “We don’t see the workers right now.”

Housing shortages also will present challenges, he said. While construction has filled some of the gap, it hasn’t made up what he called a significant deficit.

Higher prices have spurred activity in the energy sector in Colorado, and the natural resources and mining sector is expected to add back jobs for the first time in two years, he said. Colorado ranks fifth nationally for crude oil production and seventh for natural gas production.

Wobbekind said he also expects a good year ahead for the agriculture industry, although drought remains a concern.

The United States has bounced back to pre-pandemic levels for many economic measures, he said. Gross domestic product is expected to grow at an annual rate of 4 percent in 2022.

Full employment is expected to return by the end of 2022, a year ahead of what many economists forecast. “This has really been kind of miraculous,” he said.

Between October and November, the U.S. jobless rate fell four-tenths of a point to 4.2 percent. Employment has increased 18.5 million since April 2020, but remains 3.9 million lower than February 2020.

At the same time, wage compensation has climbed to its highest level ever, Wobbekind said.

Labor shortages persist, however, and businesses struggle to hire and retain employees, he said.

Inflation, as measured by the Consumer Price Index, was 6.8 percent higher in November than the same month last year, he said. “This is ugly and you know it.”

Concerns over inflation have affected consumer confidence, which could in turn reduce consumer spending and business investment. 

Wobbekind said he expects supply chain issues to be worked out by the third quarter of 2022, but continue to present challenges until then.