Grand Junction has suffered some of the worst downturns in the labor and housing markets in a state that continues to lag behind the nation in economic recovery.
A number of factors continue to hamper the Grand Junction economy, including lower educational attainment levels and household incomes, according to Scott Anderson and Ed Kashmarek, economists with the Wells Fargo Securities Economics Group.
In writing an updated economic outlook for Colorado, Anderson and Kashmarek also offered their assessments of a number of cities, including Grand Junction.
Grand Junction has experienced one of the worst downturns in the labor market among major metropolitan areas in Colorado, the two said.
Citing figures from June, the latest month for which estimates are available, the two said Mesa County employment has declined 3.4 percent over the past year.
Weakness has been widespread, they said, with the construction, mining and trade sectors accounting for about half of job losses since the official end of the recession in June 2009.
While the monthly unemployment rate has trended downward in recent months, Anderson and Kashmarek attributed the drop to a shrinking labor force rather than an increase in jobs. The overall Mesa County work force has declined 3,475 over the past year.
Meanwhile, the Grand Junction housing market remains in the “doldrums,” the two said, with prices falling to a new cyclical low in the first quarter.
According to statistics from the Grand Junction Area Realtor Association for the second quarter, the median sales price for residential property dropped 14.4 percent to $162,500.
Anderson and Kashmarek said structural factors continue to hamper the Grand Junction economy, including lower educational attainment and income levels compared to other areas of Colorado.
In their statewide assessment, Anderson and Kashmarek said Colorado continues to lag behind the United States in a number of measures, including job growth.
Weakness in industries that pay high salaries and have a higher-than-average concentration in Colorado have pulled down job growth. Momentum in the high-tech sector and a resurgence in tourism has helped, though, they said.
In June, the statewide seasonally adjusted unemployment rate fell two-tenths to 8.5 percent, the lowest level since November. Nonfarm payrolls increased 4,500 over the month and 14,300 over the past year.
The downturn in the construction sector remains the biggest drag on job growth with a loss of 25,000 positions in the state since the end of the recession. There’s been additional weakness in the financial and information services sectors.
At the same time, employment in the high-tech sector has surpassed overall employment growth and helped pull down jobless rates in cities with high-tech centers, including Boulder, Denver and Fort Collins.
In contrast, cities with little concentration in the high-tech sector, including Grand Junction, have some of the highest unemployment rates in the state.
A resurgence in the tourism industry has helped to revive employment in leisure and hospitality, although that sector pays lower wages.
Anderson and Kashmarek said they expect Colorado to continue to lag behind the U.S. in job growth until the housing market recovers. With an inventory of inexpensive homes on the market that includes foreclosed properties, though, it could be years before homebuilders expand payrolls.
The Colorado housing market remains “sluggish,” the two said, although there have been some signs of improvement. Housing starts peaked in Colorado earlier than in other western states and, consequently, bottomed out earlier. Moreover, housing prices generally are holding up better in Colorado than neighboring states.
Cuts in the state budget continue to affect the Colorado economy as well, Anderson and Kashmarek said.
The budget axe has chopped most deeply into kindergarten through 12th grade public education with $225 million in cuts enacted in the latest state budget. School districts in turn have been forced to lay off teachers.
Until major industry sectors get back on track, the state budget and overall economy will continue to suffer, the two said.
Despite the recent downturn and lagging recovery, Anderson and Kashmarek said they expect Colorado to outperform other states in the long run. A well-educated work force, scenic tourist destinations and high quality of life continue to make the state an attractive destination for businesses, tourists and students, they said.