A fresh take on the outlook for the local, state and national economies offers some encouragement, but also raises concerns about the effects of slowing in the energy sector as well as diminishing confidence among Colorado business leaders.
Two economists with the Federal Reserve Bank of Kansas City detailed their outlooks during an economic forum the bank hosted in Grand Junction. Meanwhile, the latest results of a quarterly survey of Colorado business leaders provides a look at their expectations heading into the fourth quarter.
Although Mesa County continues to lag behind the more robust recovery that’s occurred on the Front Range, local labor and home markets are improving, according to Alison Felix, vice president and executive at the Denver branch of the Federal Reserve Bank of Kansas City. While recovery initially was slow in the aftermath of downturns in the regional energy industry and overall economy, growth since has accelerated, Felix said.
While most of the payroll and population growth has occurred on the Front Range, Felix noted the seasonally unadjusted unemployment rate in Mesa County has dropped to 5.4 percent, the lowest level so far this year. Unfortunately, the overall labor force is also smaller at 13 percent below its peak in November 2009, she said.
The highest home price appreciation in Colorado also has occurred on the Front Range. But home prices have increased in Mesa County, too, Felix said. According to the latest numbers from CoreLogic, home prices in Grand Junction rose 5.9 percent between August 2014 and August 2015.
Separate numbers reported by Annette Miller at Heritage Title Co. in Grand Junction reflected year-over-year gains in both the number and dollar volume of real estate transactions in September. Miller expects what she described as a “strong” fall to help push year-end numbers to their highest levels since 2008.
George Kahn, an economist and vice president with the Federal Reserve Bank of Kansas City, said moderate growth should continue nationally even as labor conditions improve.
Declining oil and natural gas prices have had a greater effect on the United States than in the past because of increased energy production, Kahn said. But lower prices should still constitute a “net positive” as the savings to consumers bolster spending on other goods and services.
In Colorado, however, Felix said the prospect of a prolonged downturn in the energy sector presents the biggest risk to continued growth in the state. A survey of energy producers shows they expect prices to remain low for the next 18 months.
Meanwhile, the latest results of a quarterly survey of more than 250 Colorado business leaders continue to reflect more positive than negative responses. But their confidence has slipped for a second consecutive quarter. The overall reading for the Leeds Business Confidence Index retreated nearly five points to 53.5. Individual readings also slipped for all six of the metrics the index tracks, including expectations for the state and national economies, hiring, capital expenditures, sales and profits.
While labor conditions continue to improve nationally and especially in Colorado, consumers have been less willing to spend in part because volatility in the stock markets has left them feeling less wealthy, said Richard Wobbekind, executive director of the business research division of the Leeds School of Business at the University Colorado, which calculates the index.
As is usually the case, the latest economic prognostications include both good and bad. Here’s hoping the reality is more good than bad.