Payrolls will continue to grow in 2018 in Colorado, particularly along the Front Range, although increasing housing costs pose a challenge.
The United States economy will grow at a moderate rate even as corporate earnings increase on a combination of global growth, higher business spending and lower taxes.
An economist and investment strategist shared their outlooks for the year ahead during an annual forecast event hosted by Vectra Bank Colorado in Denver.
Patricia Silverstein, president and chief economist of Development Research Partners in Littleton, focused on the Colorado economy. John Lynch, executive vice president and chief investment strategist for LPL Financial headquartered in Boston, focused on the national economy and investing.
Nonfarm payrolls in Colorado are expected to increase 50,000 during 2018, Silverstein said, with most job growth occurring in Denver and along the Front Range. Fort Collins and Greeley will continue to experience strong job growth. Payrolls will grow in Colorado Springs as well, although at slower pace.
Grand Junction has yet to replace jobs lost in the recession as the area works to find its footing in a changing economy, Silverstein said.
About half the people moving to Colorado are members of the millennial generation aged 18 to 34, and Denver will compete for talent with such cities as Atlanta, Austin, Dallas, Portland and Seattle, Silverstein said.
Rising housing prices on the Front Range pose a challenge, though, she said. With a median home price of $600,000, the Boulder market is the seventh most expensive in the country. Denver ranks 14th with a median home price of $435,000.
While the pace of increases in rental rates has slowed even as apartment construction has ramped up, Denver remains underserved by 32,000 housing units, Silverstein said.
Gross domestic product, the broad measure of goods and services produced in the United States, is expected to increase at an annual rate of about 2.5 percent in 2018, Lynch said.
Corporate earnings will rise 10 percent to 12 percent with growth in the global economy and business spending along with lower corporate tax rates, he said.
Lynch said he expects a return to fundamentals, allowing investors to pick winners and losers based on earnings, sales and cash flows. Bonds will remain an important part of balanced and diversified investment portfolios and help mitigate risk should equity markets decline, he said.
Lynch said he foresees a healthy U.S. economy for the next two years, followed by a recession in 2020 or 2021. With measured growth, unhurried increases in interest rates and slow inflation growth, a recession likely will be mild, he said. “The next recession will have occurred before we realize it.”