Once wrecked, then patched up for several years, the economy locally continues to improve, rolling along at a modest pace. Not that the region — or the nation, for that matter — ought to expect robust growth any time soon, if ever.
“The new normal” of economic growth, as Jim Paulsen, chief investment strategist at Wells Capital Management, said last month at the Southern Colorado Economic Forum, is “slow, but steady,” and repeat “slow.” So one might as well get used to it and learn to appreciate it. On the upside, when growth occurs at a snail’s pace, precipitous drops tend not to occur.
Instead, business picks up almost imperceptibly until finally the growth becomes, well, obvious. At Central Bank & Trust, for instance, there’s been a steady increase this year in applications for real estate loans.
“We’re seeing a lot of business owners being given the opportunity by their landlords to buy the building they lease,” said Central Bank’s Market President Gary Markle. Clients frequently talk about how “fantastic” business has been lately, especially on the B2B side.
“Our clients are getting a lot of consumer business now,” he said. “People feel optimistic about their jobs, the prospect of keeping their jobs, the stock market, the regeneration of their 401ks — people want to buy things.”
Not just furniture and cars. They also want loans to buy production facilities and office buildings. Nearly unthinkable a mere 18 months ago.
“I’m really optimistic about our economy. Having been here through the downturn [nice euphemism for “Great Recession”] and seeing what happened, now my banker colleagues and I are seeing growth with loan demand,” Markle said.
Growth can be a relative term, though.
Over at Kirkpatrick Bank, Colorado Market President Trenton Stafford stands on the more cautious side of the spectrum. Economically, he said, Colorado could be divided into two states: Northern Colorado and Southern Colorado, with lower unemployment rates in the former and El Paso County not as strong in employment and other indicators.
“In general, we’re extremely liquid. Loan demand is relatively soft, and deals are extremely competitive,” Stafford said. “Customers are certainly getting a good bang for the buck.”
Southern Colorado lacks some industries, such as oil and gas, that drive job growth in the north. Although the county has seen improving unemployment rates, overall job growth is relatively stagnant, Stafford said.
On the other hand, homebuilders have been doing well in the past year or so with pent-up demand. Inventory for builders doesn’t have time to stagnate — it doesn’t stay on the market for long.
Outside of the construction sector, however, the region remains heavily dominated by the military, and the uncertainty relative to defense spending keeps contractors in a state of inconsistency, resulting in a fair amount of contraction and not much hiring, he said.
In another sign of improving times, banks have been hiring executives. Earlier this year, a popular method involved luring them from other area banks. Now that the economy has shown intentions of continued growth, banks apparently have offered incentives to keep executives.
“Banks are getting primed and poised (for more economic growth) by hiring people,” Markle said. In fact, we have a couple of key positions open. Bankers aren’t willing (these days) to make a move — they’ve weathered the storm in their bank. That indicates banks want to hang on to their quality people. And we may have to go out of the area (to fill those positions).”
Paying attention, bank execs?
The mainstay of the economy, small businesses employ 49.2 percent of private-sector workers, creating 64 percent of new private-sector jobs, according to Small Business Administration data. Therefore, understanding the economy includes keeping an eye on small business.
The Colorado Springs Metropolitan Statistical Area had an increase in sole proprietors and the self-employed from 35,000 in 2001 to about 42,500 in 2007, when it “leveled off … possibly due to the recession,” according to the Pikes Peak United Way Quality of Life Indicators.
In 2010 and 2011, our region had about 43,000 companies with fewer than 500 employees (one of the generic definitions of “small business”).
“Removing obstacles to the creation and operation of small business can stimulate economic growth by offering residents the opportunity to create their own employment and employ others,” the Quality of Life report stated.
If your bank or credit union hosts an economic forum or special seminar, let me know ahead of time. If schedule and space allow, I may write about it. Send announcements to firstname.lastname@example.org.