Phil Castle, The Business Times
Mark Vitner jokes the growing gains and pains in Colorado could be compared to the popular restaurant described in the contradictory quote attributed to baseball great Yogi Berra. “Nobody goes there anymore. It’s too crowded.”
Even as economic growth accelerates in Colorado in 2017, tightening labor and housing markets and thickening traffic congestion could become headwinds, said Vitner, a senior economist with Wells Fargo Securities.
Increased fossil fuels development related to higher commodity prices and a more receptive presidential administration could add to growth in Colorado. And, overall, the economic outlook remains upbeat, Vitner said. “It’s mostly good news.”
Vitner and Jamie Feik, an economist with Wells Fargo Securities, compiled a report offering an overview of what they expect for the Colorado economy during the coming year. “After slowing this past year, Colorado’s economy appears set to regain momentum in 2017,” they wrote.
Just as slowing was attributed to downturns in commodity prices and energy exploration, an uptick is expected as oil prices and production increase, Vitner said.
Moreover, Vitner said he expects the Donald Trump administration will be more receptive to fossil fuel development than the Barack Obama administration. At the same time, though, the changing political climate could create headwinds for alternative energy projects in Colorado and another important industry sector. “It’s as if we did a 180.”
Meanwhile, other industries continue to perform well in Colorado, including the aerospace, information technology, health care and leisure and hospitality sectors, he said.
Increased employment in construction has helped offset layoffs in energy and mining. The information sector had added jobs at its fasted pace with new positions in software development and data processing firms.
“This diverse mix of industries is pulling in job seekers from all over the country,” Vitner and Feik wrote.
The population of Colorado increased nearly 92,000 in 2016, with about two-thirds of that gain from people moving from other states or countries.
Vitner and Feik project nonfarm payrolls in Colorado to increase 2.4 percent in 2017, an increase of 61,000 jobs.
Growing gains have resulted in growing pains, though, they said. “Colorado’s strong run of economic growth is now becoming one of the region’s greatest impediments.”
Even with more people moving to Colorado, a lower labor pool has made it difficult for employers in some areas of the state to fill job openings, Vitner and Feik said.
Although construction continues to trend upward, demand for homes and apartments in some areas has outpaced supply. Prices and rents have rapidly appreciated, they said.
That makes it especially difficult for younger workers to find housing, they said. “There is a growing mismatch between the housing market and Colorado’s status as a millennial magnet, which might at some point inhibit businesses from attracting the worker they need.”
Growing pains also are evident on Colorado roadways in worsening traffic congestion — especially in the Denver and Boulder areas, Vitner and Feik said.
“Lengthening commute times threaten one of the state’s key competitive advantages, Colorado’s laid back lifestyle and tourism industry centered on the outdoor activities.”
While it’s difficult to quickly address some of the problems associated with growth, Vitner said it’s crucial Colorado continue to foster a culture of innovation. “That’s such an important element of Colorado’s success.”