Colorado’s economy is better than many other states’, but the recovery will be steady, if not painfully slow.
The general view of economists is that significant job losses in Colorado will continue through the first quarter of 2010, before a “turnaround” during the second quarter. By the third and fourth quarters, some jobs will be generated, said Richard Wobbekind, executive director of Business Research Division at Leeds School of Business at the University of Colorado at Boulder.
Nevertheless, year over year, for 2010, job creation will be negative, about 3,000 positions.
Almost all sectors lost jobs except for private education and private health care.
“There are too many categories continuing to lose jobs and not enough generating them,” Wobbekind said.
Education and health care will continue to grow during 2010, and professional and business services appear poised to “go into positive territory.” Wholesale trade is flat, but retail will grow a bit. Other services sector — including nonprofits, which have a significant base in the Pikes Peak region — will grow.
“Needs have gone up, and funding hasn’t, but some of the philanthropy (will probably) increase as the economy comes back,” he said. “End-of-year giving should go up with the return of stock market gains.”
Goods-producing sectors will suffer job losses during 2010, but substantially smaller than during 2009.
Residential increases won’t offset the losses in the commercial sector. But military cuts won’t affect the state because there’s “still plenty of funding for Homeland Security.”
Tourism will stabilize and improve a little, but not “huge.”
“We’re coming out of one of the deepest holes we’ve seen in some time for most of the state,” Wobbekind said. “But Colorado Springs has looked relatively better with housing prices. The outside view is that the Pikes Peak region will be a little ahead of the curve for Colorado, with income, retail sales and housing prices.”
Retail sales for 2010 in Colorado are expected to increase 3 percent, but Colorado Springs might be in a better position for retail because of income increases and military population increases.
The employment forecast for Colorado natural resources and mining is minus 2 percent, compared to minus 9.9 percent during 2009. Construction employment will rise from minus 15.3, 2009, to minus 6.6.
The goods-producing sector will lose 13,300 workers during 2010. Manufacturing will lose jobs for the 10th consecutive year. But service-producing sectors will add 10,100 jobs during 2010. Health and education will add about 6,600 workers.
The state has shifted from producing goods to producing services. During 1990, 16.5 percent of employees were in goods-producing sectors — manufacturing, construction, mining and natural resources. But by 2010, only 12.5 percent of workers will be employed in goods-producing industries, which typically pay higher wages and have a greater multiplier effect than service industries.
In Colorado, the government is the second largest supersector, comprising 16.3 percent of nonfarm employment. Historically, government lags private sector recessions.
But there is some opportunity for Colorado companies during 2010 in key export sectors. The International Trade Committee has projected a 10 percent increase (in dollars) in the state’s merchandise exports. Increased global demand is likely to benefit the following export sectors: agriculture, mining, cleantech, aerospace and medical devices.
Meanwhile, businesses and individuals need to maintain a positive attitude to ride out the lingering after effects of this global shake-up.
Rebecca Tonn covers banking and finance for the Colorado Springs Business Journal.