Colorado’s economy will return to stability but not growth in 2010, according to economist Richard Wobbekind of the University of Colorado at Boulder’s Leeds School of Business.
Wobbekind’s announcement was part of the 45th annual Colorado Business Economic Outlook Forum hosted Dec. 7 by CU-Boulder’s Leeds School of Business and BBVA Compass Bank.
“We still have some serious kinks to work through, but we see 2010 as a stabilizing year that will put the state economy in a position for more sustained growth in 2011 and 2012,” he said.
Overall, the forecast calls for a loss of 3,200 jobs statewide in 2010, compared with the 100,000 jobs the state lost in 2009. Job losses will continue through the first quarter, before leveling off in the second quarter and moving into positive growth in the third and fourth quarters, Wobbekind said.
“I think people will be disappointed to hear that we think there will be continued job loss in 2010, but in relative terms, it will seem like we’re in recovery because the job loss is very small compared to what has happened in 2009,” Wobbekind said.
And it’s just not one or two years of poor job creation that are dragging the state down, he said. From an employment perspective, the decade beginning in 2000 can best be described as the lost decade for jobs in the state, with only 117,900 jobs added while Colorado’s population increased by 870,000 people.
“Over the last decade, we really haven’t generated the number of jobs that we need for the growing population of this state,” he said. “Our recent job growth is very low compared to the past three decades.”
Wobbekind said the current recession has hit rural areas of the state harder than the urban areas, which wasn’t true during the 2002-03 recession, in which urban centers were hit harder.
“This economic downturn has had a big impact on tourism, which is a major part of the economy in many rural areas of the state,” he said. “In addition it’s hurt the energy industry, which is concentrated on the eastern plains and the Western Slope. The combination of those two sectors along with a slowdown in agriculture means many rural jobs lost.”
The best-case scenario for Colorado coming out of the recession is if economists have underestimated how fast employment will recover nationally, he said. If there is a higher rate of recovery nationally, Colorado also will pull out of the recession more quickly.
Among the strongest sectors for projected job growth in Colorado in 2010 is the professional and business services sector, which is home to many high-paying jobs including engineers, computer systems designers and scientific research and development groups. The sector is expected to add 6,500 jobs in 2010, a far cry from the 16,100 jobs the sector added in 2007.
“This is a very important sector for Colorado because it includes important sectors in technology and many of the jobs are high paying,” Wobbekind said. “But it also includes temporary workers who can be viewed as a leading economic indicator of the future condition of the overall job market. And we have already seen an increase in the hiring of temporary workers.”
The education and health services sector has been short of workers for the past several years and has continued to grow even in the downturn, he said. The sector is expected to add about 6,600 jobs in 2010.
While several sectors are performing poorly in the state, Wobbekind said the construction, manufacturing and financial services sectors will lead in job losses next year. In 2010, construction is projected to lose 9,000 jobs, manufacturing 3,800 and financial services 2,900.
“In construction we do see a slight uptick in home building in 2010, but we don’t see an increase in commercial development given the current vacancy rates,” he said. “Overall, it’s going to take longer for this sector to recover.”
Retail sales are projected to grow by 3% in 2010, compared to a 12% decline in 2009. The trade, transportation and utilities sector, which includes retail trade, will add 2,700 jobs in 2010.
“Retail sales has been one of the softest spots in the economy, and one of the most impactful,” Wobbekind said. “The steep declines we witnessed this year really had a powerful impact on the tax collections of local and state governments.”
Even though many areas in Colorado have experienced a large number of foreclosures, other factors such as steady prices have led to a stable housing market for most of the state, and Wobbekind doesn’t expect that to change in 2010.
“Colorado’s housing market is very stable and is one of the reasons we could see Colorado returning to positive growth in sync with the national economy, even though the state went into recession later than the nation as a whole,” he said.
Colorado’s unemployment rate for 2010 is expected to increase from 7.3% at the end of 2009 to 8.1%, compared with a projected national unemployment rate of 9.8%.
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Wobbekind’s announcement was part of the 45th annual Colorado Business Economic Outlook Forum hosted Dec. 7 by CU-Boulder’s Leeds School of Business and BBVA Compass Bank.
“We still have some serious kinks to work through, but we see 2010 as a stabilizing year that will put the state economy in a position for more sustained growth in 2011 and 2012,” he said.
Overall, the forecast calls for a loss of 3,200 jobs statewide in 2010, compared with the 100,000 jobs the state lost in 2009. Job losses will continue through the first quarter, before leveling off in the second quarter and moving into positive growth in the third and fourth quarters, Wobbekind said.
“I think people will be disappointed to hear that we think there will be continued job loss in 2010, but in relative terms, it will seem like we’re in recovery because the job loss is very small compared to what has happened in 2009,” Wobbekind said.
And it’s just not one or two years of poor job creation that are dragging the state down, he said. From an employment perspective, the decade beginning in 2000 can best be described as the lost decade for jobs in the state, with only 117,900 jobs added while Colorado’s population increased by 870,000 people.
“Over the last decade, we really haven’t generated the number of jobs that we need for the growing population of this state,” he said. “Our recent job growth is very low compared to the past three decades.”
Wobbekind said the current recession has hit rural areas of the state harder than the urban areas, which wasn’t true during the 2002-03 recession, in which urban centers were hit harder.
“This economic downturn has had a big impact on tourism, which is a major part of the economy in many rural areas of the state,” he said. “In addition it’s hurt the energy industry, which is concentrated on the eastern plains and the Western Slope. The combination of those two sectors along with a slowdown in agriculture means many rural jobs lost.”
The best-case scenario for Colorado coming out of the recession is if economists have underestimated how fast employment will recover nationally, he said. If there is a higher rate of recovery nationally, Colorado also will pull out of the recession more quickly.
Among the strongest sectors for projected job growth in Colorado in 2010 is the professional and business services sector, which is home to many high-paying jobs including engineers, computer systems designers and scientific research and development groups. The sector is expected to add 6,500 jobs in 2010, a far cry from the 16,100 jobs the sector added in 2007.
“This is a very important sector for Colorado because it includes important sectors in technology and many of the jobs are high paying,” Wobbekind said. “But it also includes temporary workers who can be viewed as a leading economic indicator of the future condition of the overall job market. And we have already seen an increase in the hiring of temporary workers.”
The education and health services sector has been short of workers for the past several years and has continued to grow even in the downturn, he said. The sector is expected to add about 6,600 jobs in 2010.
While several sectors are performing poorly in the state, Wobbekind said the construction, manufacturing and financial services sectors will lead in job losses next year. In 2010, construction is projected to lose 9,000 jobs, manufacturing 3,800 and financial services 2,900.
“In construction we do see a slight uptick in home building in 2010, but we don’t see an increase in commercial development given the current vacancy rates,” he said. “Overall, it’s going to take longer for this sector to recover.”
Retail sales are projected to grow by 3% in 2010, compared to a 12% decline in 2009. The trade, transportation and utilities sector, which includes retail trade, will add 2,700 jobs in 2010.
“Retail sales has been one of the softest spots in the economy, and one of the most impactful,” Wobbekind said. “The steep declines we witnessed this year really had a powerful impact on the tax collections of local and state governments.”
Even though many areas in Colorado have experienced a large number of foreclosures, other factors such as steady prices have led to a stable housing market for most of the state, and Wobbekind doesn’t expect that to change in 2010.
“Colorado’s housing market is very stable and is one of the reasons we could see Colorado returning to positive growth in sync with the national economy, even though the state went into recession later than the nation as a whole,” he said.
Colorado’s unemployment rate for 2010 is expected to increase from 7.3% at the end of 2009 to 8.1%, compared with a projected national unemployment rate of 9.8%.
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