Denver Business Journal – by Neil Westergaard
The new year likely won’t herald a big economic recovery in Colorado or the rest of the nation, with slow, steady growth predicted to continue in 2011, according to a new forecast.
That’s the view of University of Colorado economist Richard Wobbekind, who presented his annual outlook on behalf of the University of Colorado Leeds School of Business. He was joined by Patty Silverstein of Development Research Partners, a member of the team of economic prognosticators that puts out the annual forecast.
The state’s employment growth will continue to lag historical growth in the coming year, but at least will show a reversal of devastating job loss experienced in 2009 and 2010 which saw nearly 140,000 jobs disappear from the economy, the forecast suggests.
“I think the overall economic picture for Colorado in 2011 is slow, steady growth much like the national economy,” Wobbekind said. “We would all like a more rapid recovery, especially in terms of jobs, but we’re just not going to see that yet.”
The Leeds forecast pegs total job gain in 2011 at about 10,100 jobs.
Strongest employment sectors appear to be professional and business services, including engineers, computer systems designers and scientific research and development groups. That sector is expected to add 7,000 jobs in 2011, well off of the 16,100 jobs the sector added in 2007, before the recession.
Agriculture, health services, energy development and scientific and research activities are expected to increase in the coming year.
However, construction, manufacturing and government sectors are likely to shed jobs, as continued sluggishness in new housing starts, available money for transportation projects and governments adjust to flat or declining tax bases.
Leisure and hospitality, education and health services and trade, transportation and utilities sectors jobs are expected to add 9,800 new jobs, but together they can’t completely offset job losses in the other categories.
“All the job growth in these sectors is still subpar in a historical context,” Wobbekind said. “It will not be enough to bring down the unemployment rate in any meaningful way or create great momentum in the state economy, but at least it’s moving in the right direction. It is just moving at a slower pace than we would like.”
Colorado’s jobless rate was 8.4 percent in October, the most recent month reported. The national rate was 9.8 percent in November. Colorado’s unemployment rate could reach 8.8 percent in 2011 before coming back down, the forecast suggests.
Looking back on 2010, Colorado did not see the recovery in employment anticipated by many economists, the new forecast says. From that perspective, the state lagged the nation in recovery.
“We went in thinking we would be in the top 15 or states for job growth in 2010, but came out in the bottom 10,” Wobbekind said.
The financial recession has caused many businesses to do more with less. Until businesses are sure that revenues are back up, it’s unlikely to see large increases in total employment, he said.
“We’ve seen tremendous investment in capital in the economy in the last year and a half,” Wobbekind said. “Companies are buying machines as opposed to hiring people. In the long run this is great for the U.S. economy, but in the short term it is very painful in terms of unemployment rates.”
Until banks and other lenders start lending again, economic growth is going to be blunted, he said.
“As we’ve seen, we’re out of the recession a year and a half now and we’re still not seeing lending back at pre-recession levels,” Wobbekind said.
One somewhat bright spot is Colorado’s tourism and hospitality sector. Most categories are predicted to remain level or increase slightly.
“Unfortunately, there remain a number of concerns in the tourism sector,” Wobbekind said. “The hassle factor is coming up to the top of the list. It’s not only driving to the high country, but in terms of flying, between security issues and rising ticket costs, a lot of people just don’t know if they want to take it on anymore. But, overall, we’re expecting a pretty good year for tourism.”