Colorado will continue to fare well in 2017 as more people move to the state and find jobs. The national economy is expected to grow as well, although there’s potential for the kinds of excesses that lead to recession, an economist and investment officer predict.
Patricia Silverstein, president and chief economist of Development Research Partners, and Burt White, chief investment officer for LPL Financial, presented their outlooks for the coming year during an annual Vectra Bank Colorado economic forecast event in Denver.
Silverstein said Colorado is “running on all cylinders.”
Net-migration reached a record-high 45,000 in 2016 and is expected to total 40,000 in 2017, Silverstein said.
In the metro Denver area, every industry sector expanded at historic rates in 2016, she said.
Colorado is expected to remain among the top 10 states for employment growth in 2017, although grow has been slow in Grand Junction and some other areas of the state, she said.
Because of rising housing costs, businesses could have to increase wages and benefits to attract workers, she said.
Silverstein said she expects retail trade activity to increase in 2017, but rising inflation could take a bigger “bite” out of incomes.
On the national level, White said the forecast for 2017 calls for growth with no chance of recession.
The post-recession recovery has been slow, though, with just 2 percent annual growth in gross domestic product, the broad measure of goods and services produced in the country.
Low interest rates have made it easier to borrow, but hampered the ability of consumers to increase savings and, in turn, prepare for retirement, White said.
In 1980, a person needed about $764,000 to generate a $100,000 in annual interest income. By 2000, it took $2 million to generate $100,000 in interest income. Today, a person must accumulate $14 million to make $100,000 in interest income, he said.
The stock market continues to offer a good investment option, White said, although stock ownership has declined. While 49 percent of people play the lottery, only 52 percent of consumers invest in stocks, he said.
Although inflation on such items as electronics, clothing and furnishings remains negligible, inflation on health care and college tuition is much higher at 5 percent to 7 percent, he said.
While the pro-growth promise of the Donald Trump administration could bode well for the country, White warned excesses lead to recessions.
“It’s ain’t over until ‘overs’ are everywhere … overborrow, overhire, overspend, overleverage,” White said. “We were overextended and over in 2009. Today, we don’t see overs. But a pro-growth agenda could also create too many overs that could drive another recession.”