It’s time to check the pulse of Colorado’s economy — either that or there was a dearth of local financial seminars this week. Go figure.
It’s July and half the city, it would seem, is on vacation.
Notwithstanding, yours truly still remembers the good old days, say, last summer, when she interviewed economists who said only a handful of states were in recession.
But, now that the national economy — not to mention the global economy — is and has been in full-blown recession for some time (19 months to be precise), well, wouldn’t you know it, 49 of the 50 states are likewise in recession.
And, yes, Colorado has plenty of company, which misery loves, as the adage goes.
Whom should we envy?
The residents of North Dakota, the stalwart state — according to the last 12 months of employment data — being the lone resister of recession.
“Everybody’s impacted by what’s going on around the country and the world,” said Jeff Thredgold, chief economist for Vectra Bank Colorado. “In Colorado, we’re down almost 100,000 jobs from a year ago.”
By comparison, Ari-zona is down 200,000 jobs during the same time period.
Colorado lost 42,000 jobs in goods production industries (including construction, manufacturing and natural resources), and 56,000 in service providing sectors (including professional/ business services, trade, transportation, utilities and retail).
“Problems in the financial markets have hurt Colorado Springs and all over,” Thredgold said.
The U.S. economy is likely to return to “slightly positive growth” (don’t laugh, that will be a distinct improvement compared to what it has been) in gross domestic product for the third quarter (yes, of this year — believe it or not).
“That’s not to suggest that problems in housing, delinquencies and foreclosures are behind us,” he said. “But data suggests the worst is behind us.”
Thredgold called this the “longest and deepest recession since the Great Depression.”
By way of comparison, the recessions of 1990-1991 and 2001 were each eight months in length.
By the fourth quarter, positive growth will signal an end to the recession.
“In hindsight, NBER (National Bureau of Economic Research) will probably call the end of the recession in October or November,” he said, which puts it at 22 or 23 months.
But, the next mountain to climb is unemployment.
The nation is at 9.5 percent unemployment, which is likely to hit 10 percent later this year — bearish forecasts say 11 percent or higher.
“A net decline of 3.1 million jobs made 2008 the worst year for employment in America since 1945,” Thredgold said. “But 2009 will be worse. We’ve already lost 3.5 million jobs in the first six months. Employment is a bit of a lagging indicator. But we’ll probably move back to slightly positive job growth at the end of the year.”
(Seems that “slightly positive” is an economists’ euphemism for “one step above catastrophe.”)
But monthly job losses will start to decline.
Just to make you, dear reader, realize how courageous and robust you are — here’s a tidbit: you are living through the first time since “right after World War II that the United States, Europe and Japan” have been in simultaneous recession.
After that, you can live through anything, nicht wahr?
During the past few weeks, news has been a little better.
Although “down from 11 percent 18 months ago, China’s GDP is growing at 8 percent, and India’s is growing at 5 percent,” Thredgold said. “And there is stabilization in Europe and (soon-to-be) modest growth in the U.S.”
As for Colorado, there are two “preconditions” to move it out of recession: The U.S. needs to move back toward growth and the global economy needs to move back toward growth.
(Hope you weren’t expecting spaceship science there. Economic recovery is more along the lines of one plus one equals two, despite governmental attempts at beguiling us into believing that recovery requires regulatory magic and sleight-of-hand. Oops. My editor will say I’m dangling over the cliff on that one.)
Anyway, where were we?
“Most of the Western states will lag the U.S. economy in pulling out of the recession,” Thredgold said. “Colorado’s been hit hard, but the worst in the Rocky Mountain region are Idaho, Arizona and Nevada.”
And, in the Pacific Northwest, California and Oregon are in “bad” shape.
Suddenly Colorado and its 54 14ers look even better than usual.
Colorado’s unemployment has nearly doubled, “averaging 7.5 percent in recent months, versus the 3.9 annual average during 2007.”
And half the total employment decline was within the Denver metro area.
The state’s recession is expected to continue another nine to 12 months, “before a modest upturn during 2010’s second half,” Thredgold said.
Rebecca Tonn covers banking and finance for the Colorado Springs Business Journal.