Colorado's economy will continue to grow at a stronger pace than much of the nation in 2007, but at a slower rate than it did this year, according to University of Colorado at Boulder economist Richard Wobbekind.
Wobbekind's announcement was part of the 42nd annual Business Economic Outlook Forum hosted Dec. 4 by CU-Boulder's Leeds School of Business and Compass Bank.
"We think Colorado will have a much more solid economy than the nation and that will feed migration to the state," Wobbekind said.
In 2007, Colorado will add 42,300 jobs, an employment growth rate of 1.9 percent, compared to the national rate of 1.4 percent, according to Wobbekind. Total state employment will be 2.32 million in 2007.
However, in 2007 Colorado's population will grow at a stronger rate, resulting in a rise of the unemployment rate to 4.8 percent, only slightly less than the national rate of 5 percent, according to Wobbekind. The state is expected to have net migration of 54,000 in 2007.
"Our growth in population will increase to 2 percent, and migration in 2007 will be the strongest it's been in the last five or six years," Wobbekind said. "If this projection holds up, we will be one of the fastest growing states in the nation next year, certainly in the top ten and probably in the top five among population growth in the country."
The leader in job growth in Colorado in 2007 will be the professional and business services sector, which will add 13,900 jobs. Over the past five years, the addition of high-paying jobs within this sector, which includes engineers, computer systems designers and scientific research and development groups, has helped offset the losses of high-paying jobs in the manufacturing and information supersectors.
Colorado's energy and tourism sectors also are expected to continue to be strong in 2007, according to Wobbekind.
"Energy is a very significant contributor to Colorado's economy," Wobbekind said. "It has ancillary employment associated with it in terms of business support services in Denver, but maybe far more important is the construction and residential building it has spurred on the Western Slope. The mineral severance tax is providing a substantial flow of tax dollars to many rural counties in Colorado, so overall, it certainly is helping buoy the state economy."
Colorado tourism and manufacturing exports have benefited from a declining U.S. dollar, according to Wobbekind.
"The falling dollar makes visiting the United States a better deal from an international destination," Wobbekind said. "It also makes U.S. products cheaper in international markets."
For the seventh consecutive year the manufacturing sector in Colorado is expected to lose jobs, with 100 fewer in 2007.
High fuel and fertilizer costs and increased feedstuff costs for livestock producers will cause Colorado net farm income to dip to $700 million in 2007, the state's lowest level since 2002.
Coloradans' per capita income is expected to increase to $40,749 in 2007, slightly above the national average of $37,345.
Wobbekind's presentation at the Business Economic Outlook Forum was followed by a Q-and-A session featuring some of the state's top economists and keynote speaker Richard Bell, president of Gates Corp. in Denver.
Sector-specific highlights include:
oAgriculture - Drought was a dominant feature of Colorado agriculture in 2006, causing pasture and range conditions in Colorado to deteriorate during the summer, but strong livestock prices continued to underpin the agriculture economy. Total livestock sales in Colorado will be nearly $4 billion in 2007. However, livestock producers will face higher prices for corn as ethanol production in Colorado increases. Total crop sales in 2007 will reach nearly $1.7 billion. Total farm and ranching revenues will be $6.5 billion in 2007. However, high fuel and fertilizer costs and increased feedstuff costs for livestock producers will cause Colorado net farm income to dip to $700 million, the state's lowest level since 2002.
oNatural Resources and Mining - While consumers have not benefited from rising energy costs, increased demand for energy products has resulted in growth in employment, output and total sales in Colorado's energy sectors. Overall, the Natural Resources and Mining sector, driven primarily by increased production of natural gas, will add 2,300 workers in 2007, for a total of 23,000 jobs. After a down year in 2006, coal production in 2007 will increase to 38 million tons, with output growth limited by Colorado's production rail infrastructure. Production of gold and molybdenum will increase in 2007 due to rising prices. After being shut down in 2006, Colorado uranium mines will open again in 2007 due to sharp price increases in vanadium.
oConstruction - Nationally, housing starts are projected to drop from 1.84 million to 1.61 million in 2007. Colorado construction is projected to remain positive, but to grow at a slower rate in 2007 with an addition of 3,000 jobs, compared to the more than 7,000 jobs added in 2006. The total number of residential permits in Colorado will increase by 4 percent to 42,400 in 2007 on the strength of multifamily permits. A large inventory of resale homes will drag down the number of permits issued for single family homes. The total value of construction is expected to increase by 8.3 percent, or $1.47 billion, on the strength of residential, nonresidential and nonbuilding construction. Between 1996 and 2005, the construction sector was one of the state's top employment drivers, adding 47,900 workers, or about 15 percent of the total jobs added for that period.
oManufacturing - For the seventh consecutive year the manufacturing sector in Colorado is expected to lose jobs, with 100 fewer in 2007. Between 1995 and 2005, the sector has shed 30,500 workers. Manufacturing in Colorado is still a $14.5 billion industry, representing about 7.3 percent of the total value of goods and services produced in the state.
oTrade, Transportation and Utilities - This supersector is Colorado's largest producer of jobs, and is expected to grow by 1.4 percent, or 5,900 jobs, for a total of 428,200 workers in 2007. Retail trade, which provides more than 10 percent of Colorado's jobs, is expected to add 3,800 jobs for a total of 254,600 in 2007. An additional 1,600 jobs will be added in wholesale trade. With a record number of passengers projected to pass through Denver International Airport in 2007, the transportation sector will add 200 jobs. The final sector, utilities, is expected to add 200 jobs.
oInformation - After six consecutive years of job losses, the information sector will add 300 jobs in 2007. Despite the overall increase in information employment, the telecommunications sector is expected to shed an additional 500 jobs in 2007 as a result of continued consolidation.
oFinancial Activities - The financial activities supersector will add 2,300 jobs in 2007, with 900 jobs in the finance and insurance sector and 1,400 jobs in the real estate and rental and leasing sector. While positive, the job growth in this supersector is not as strong as the period between 1996 and 2005 when about 30,200 jobs were added, many in the credit intermediation subsector that includes banks, mortgage companies, savings institutions, credit unions and credit card issuers.
oProfessional and Business Services - As the second largest supersector, professional and business services is expected to add the most jobs of any sector in the state in 2007, adding 13,900 jobs. Between 1996 and 2005, the supersector added about 61,900, about 19 percent of the new jobs in the state during that period. Over the past five years, the addition of high-paying jobs within the sector has helped offset the losses of high-paying jobs in the manufacturing and information supersectors.
oEducational and Health Services - Led by growth in the health care sector, the educational and health services supersector will add 4,500 jobs in 2007. However, the health care sector will continue to be limited by the supply of quality labor.
oLeisure and Hospitality - On the heels of record lift ticket sales, casino revenues and passengers traveling through DIA, the leisure and hospitality supersector will add 4,600 jobs in 2007. During the past year, the tourism industry received a $19 million investment that will help the state promote tourism. However, the industry will be challenged by the volatility of energy prices, high levels of consumer debt, competition from in-home entertainment alternatives and national trends that suggest that travel has become a slow-growth industry.
oOther Services - This supersector, which is composed of private businesses that provide personal services such as auto repair shops, Laundromats and beauty salons, is expected to add 1,200 jobs in 2007.
oGovernment - A total of 4,500 government workers will be added in 2007, as Colorado's growing population has increased the need for government services. All sectors of the government are expected to grow in 2007 with the exception of the federal government, which will shed jobs in the U.S. Postal Service and U.S. Department of Defense. The state government will add about 800 jobs, with 500 of those being added in the education sector. The largest growth will occur at the local level where about 3,800 jobs will be added, split evenly between K-12 education and local government organizations.
oInternational Trade - An improved global economy in 2006 led to increased Colorado exports as the state total in 2006 grew by 18 percent to more than $8 billion for the first time. Despite a slowing global economy in 2007, Colorado exports are expected to increase by 11 percent and approach $9 billion. About 40 percent of Colorado exports are shipped to NAFTA trading partners, and 11 percent go to Japan and China. Colorado's top manufactured products include semiconductors, computers and peripherals, computer components, telecommunications equipment, medical instruments and scientific/measuring equipment. About 40 percent of Colorado's agriculture exports are beef and meat products.
Regional and Area Economic Forecast Highlights:
oLa Plata County - Although La Plata County enjoys significant benefits from winter tourism, the strength of the economy is provided from summer tourism and the stability of Fort Lewis College. Local tourism has benefited from a lack of forest fires over the past couple of years. Energy, particularly natural gas, also remains a major contributor to the local economy despite a recent drop in prices. Throughout the recent recession and into 2006, La Plata County has had a lower unemployment rate than Colorado and the nation. Per capita personal income in the county has improved in recent years to $31,887 in 2004, the most recent data, compared to $36,113 for Colorado. The county's population continues to grow at a 3 percent rate, which is above the state average. This growth has occurred despite the county having a median home price of $325,000.
oMesa County - Mesa County weathered the 2001 recession better than other regions in the state due to increased economic diversity, and is now experiencing growth at a stronger rate than most other parts of the state. The energy and construction sectors are driving much of the region's growth. Construction activity in 2005 and 2006 is double the total activity from 2000, and is expected to grow by nearly 50 percent through 2014, adding more than 2,000 jobs. Other services including retail, health care and government - the bulk of Mesa County's employment - are expected to grow in conjunction with expansion of the energy and construction segments. Mesa County is a regional medical, service and retail hub serving half a million people in western Colorado and eastern Utah. The largest unknown for Mesa County and western Colorado is the future of oil shale as a source of domestic oil.
oNorthern Colorado (Larimer and Weld counties) - This region continues to outpace the state in employment growth with accommodations, food services, finance, insurance, health care, social assistance, retail and construction industries driving the regional economy. In September 2006, the unemployment rate in the region reached 3.7 percent, causing concern about a worker shortage. However, the manufacturing sector in the region continues on a downward trend. While national forecasts predict the manufacturing sector will expand in northern Colorado, the area remains at risk due to the relative importance of a few large employers. An increase in demand for oil and natural gas has benefited Weld County.
oPueblo County - Pueblo is poised for stable job growth in 2007. The area's economic expansion is being fueled by a combination of growth in residential construction, expanded employment opportunities and several large construction projects, all of which appear likely to continue through 2007. Larger projects include the $225 million GCC American cement plant and the $1.3 billion Xcel Energy power plant. Although the rate of job growth remains below the state average, Pueblo has very inexpensive housing prices.
oSouthern Colorado (El Paso County) - The southern Colorado economy showed significant slowing during 2006, led by weakness in residential construction, new car sales, air passengers at Colorado Springs Airport, consumer sentiment and increased foreclosures. Continued sluggish growth is expected through 2007. On the positive side, wages and retail sales were higher and the unemployment rate in the region is expected to fall in 2007 to 4.9 percent.
The complete 2007 Business Economic Outlook is available on the Business Research Division Web site leeds.colorado.edu/brd.