Federal budgetary haggling could derail local recovery

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Local employment figures for March show slow economic recovery for El Paso County, but political wrangling in Washington, D.C., has the power to derail progress.

El Paso County’s unemployment rate dropped to 9.3 percent in March, marking a steady march downward from a high of 10.1 percent in November 2010.

“Once you control for season variations, for the weather, basically, you can see that there is a slow, steady trend here,” said Fred Crowley, professor of economics at the University of Colorado at Colorado Springs. “It’s good news.”

The state’s official numbers for Colorado Springs is 9.7 percent. Crowley’s figures reflect adjustments for weather and other seasonal issues.

The recovery is occurring, he said, just as he predicted it would during last fall’s Southern Colorado Economic Forum.

“It isn’t happening as fast as we thought it would,” he said. “But clearly it is happening. It’s a real trend. It’s not artificial.”

The good news: El Paso County experienced an up-tick in manufacturing and tourism jobs, gains in two areas that could be affected by higher gas prices as well as politics in Washington.

The new figures put the area just slightly ahead of the state’s average unemployment rate of 9.2 percent — a noticeable difference from a few months ago, when job growth in the Springs lagged behind the rest of the state.

“Those manufacturing jobs are a high multiplier of other jobs in the area. They need parts, that kind of thing,” he said. “We definitely need more of those.”

Construction jobs seem to be picking up as well. Crowley points to the 70 multi-family housing permits that were issued last November as a good sign.

“Rental vacancies are around 7 percent,” he said. “That tells people to raise rent and build more of these things. And that’s what they’re doing.”

Add the 70 permits to 230 single-family permits pulled in northwestern Colorado Springs and it means an increase in construction, one of the heaviest-hit parts of the economy.

“Of course, those jobs aren’t paying what they once did, because unemployment in construction is still so high,” Crowley said. “But they pay better than retail jobs.”

Fellow economist Daphne Greenwood agreed the unemployment figures show a steadily improving economy. She feels the recovery is only tenuous because Congress is still bickering over budgets and the nation’s debt ceiling.

“That’s what makes it tenuous,” she said. “People aren’t sure what’s going to happen.”

Haggling over the deficit could spell trouble in the future for El Paso County. About 40 percent of its economy stems from the military presence here. President Barack Obama has said nothing is off the cutting block, not even defense.

“If they decide — and they could — to cut $100 million from Fort Carson that would be a big deal here,” Crowley said. “That would mean 1,500 soldiers and an additional 1,700 civilian jobs along with it.”

Nothing is certain, he said, despite the military’s decision to move a combat aviation brigade and 2,700 soldiers to Fort Carson. The new brigade could see the budget ax before the first construction project starts.

“We don’t have the private industry to offset losses in the military,” he said. “That’s one of the weaknesses of the economy here.”

El Paso County weathered the recent recession because of the high concentration of military and defense contractors. But Crowley believes it’s time to diversify the economy.

“We can’t rely on just the military — not with these cuts in Washington,” he said.

Given the slow pace of recovery, Greenwood believes politicians should be less worried about the deficit and more concerned about jobs.

“This is exactly what happened in the 1930s,” she said. “There was a recession, then there was worry about deficits. President Roosevelt cut the budget, and the Great Depression was a result. Don’t we ever learn?”

Macro-economists — regardless of political stripe — believe now is the time to add jobs and backfill state and local governments, whose budgets have also taken a hit.

“Once the economy recovers, the deficit isn’t a problem anymore, because people are working, there are more sales tax going into coffers, there are more income taxes being paid.”