Editors: Contents embargoed from release until Monday, Dec. 15, at 6 a.m.
An expanding national economy, led by increased business spending and improving equity markets, has prompted improved economic conditions in Colorado and laid the foundation for modest growth in 2004, according to CU-Boulder economist Richard Wobbekind.
Wobbekind's announcement was part of the 39th annual Business Economic Outlook Forum hosted Dec. 15 by the University of Colorado at Boulder's Leeds School of Business.
While the economic recovery has been largely a "jobless recovery" for many areas of the country, including Colorado, 2004 is expected to see some job growth.
"We expect an increase in employment of 1.5 percent in 2004," said Wobbekind, director of the Business Research Division at the Leeds School of Business. "Growth will be led by renewed demand for professional and business services, the ongoing need for health care and a return of tourism-related industries."
Wobbekind said that each area is growing for different reasons.
"Pent-up demand and increased confidence in the economy will increase the need for such services as engineering, computer systems design and other professional or technical business services," Wobbekind said. Almost 12,000 jobs are expected to be added to the professional and business services sector in 2004.
Health care employment, which grew at an annual compound rate of 3.5 percent between 1993 and 2002 and was one of the few sectors to grow during the recent downturn, will continue its growth in 2004. "Nationally, there is a critical need for health-care workers, particularly nurses," Wobbekind said. "Even though five new hospitals have been built in the metro area, employment continues to be limited by the supply of quality labor." Health care employment is expected to increase by 3,500 jobs in 2003 and 6,900 jobs in 2004.
In line with the improving national economy, Wobbekind said that about 8,200 jobs are expected to be added in the leisure and hospitality sector, which is the foundation of the tourism industry. In total, Colorado is expected to gain 32,300 jobs in 2004, breaking a span of two consecutive years of job losses in the state.
Colorado lost 41,700 jobs in 2002 and is expected to lose 34,600 jobs in 2003. Since 1939, when the Bureau of Labor Statistics began tracking employment data, Colorado had never experienced job losses in two consecutive years.
Between 2000 and 2003, the manufacturing sector lost 38,000 jobs, professional business services lost 29,500 jobs and 19,700 jobs were lost in the information sector.
"It has been especially difficult to lose jobs in these areas because average wages for these sectors are much higher than the overall average wage," Wobbekind said. "The good news is that we will be seeing a strong recovery in professional and business jobs, as well as more modest recovery in information and telecommunications."
Also on a positive note, retail trade sales are expected to again grow at a rate greater than inflation. "The last three years have been challenging for retailers. In parts of the state the retail market is saturated and in many cases heavy discounting has been necessary for stores to remain competitive," Wobbekind said.
Wobbekind's presentation at the Business Economic Outlook Forum was followed by a Q-and-A session featuring some of the state's top economists and keynote speaker Larissa Herda, chairman and CEO of Time Warner Telecom.
Sector-specific highlights include:
*Employment - The goods-producing sectors of the economy will again decline in 2004, with job losses totaling 5,000. These declines will be offset by growth in the service-producing sectors, which are expected to increase by 37,300 jobs. In 2004, overall employment will increase by 1.5 percent or 32,300 total jobs.
*Agriculture - If 2002 is remembered as the year of the drought, 2003 will be remembered as the year cattle prices rose to levels never before experienced. It is unlikely that these prices will continue into 2004. Crops in general are expected to show a modest increase next year. While 2003 appears to be a banner year for crop and livestock sales and net farm income, it remains to be seen how much impact the drought will have on future crops and livestock herds.
*Natural Resources and Mining - In 2004 the natural resources and mining supersector will experience job growth for the fourth consecutive year. Eight hundred positions will be added in both 2003 and 2004, reaching a total of 14,700 jobs next year. This growth will be driven by increased production of natural gas. Crude oil and coal production are expected to remain flat, while carbon dioxide production is expected to decrease.
*Construction - Construction lost about 15,800 jobs between 2001 and 2003. Another 4,700 jobs will disappear in 2004. Total valuation of construction is expected to increase by 7.1 percent on the strength of single-family and nonresidential construction. Gains in these areas will be offset by substantial decreases in multifamily and nonbuilding construction.
*Manufacturing - After losing 25,000 jobs in 2001 and 2002, the Colorado manufacturing industry is expected to contract by another 11,000 jobs in 2003 and 1,100 jobs in 2004. Nondurable goods employment is anticipated to decrease by 1,200 positions in 2003 and 200 jobs next year. Cuts in durable goods employment are expected to be more severe, with a loss of 9,800 jobs in 2003 and 900 jobs in 2004.
*Trade, Transportation and Utilities - Between 1994 and 2002, about 9,800 positions were added annually to the supersector. The largest sector, retail trade, is expected to lose 1,100 jobs in 2003, but gain 3,100 jobs in 2004. This employment growth is based on projected retail sales growth of 3.5 percent in 2004. In addition, 1,600 jobs will be added in wholesale trade. With an improving economy and expansion at DIA, all areas of transportation are expected to show slight increases in employment in 2004, adding a total of 900 jobs. The final sector, utilities, is expected to grow by 100 jobs in 2004. Overall, the trade, transportation and utilities sector will increase by 1.4 percent, or 5,600 positions.
*Information - Employment in telecommunications, the primary component of this supersector, decreased from 46,800 to 36,400 jobs between 2001 and 2003. Â鶹ÊÓƵ 3,300 of these were lost in 2003. The second largest sector, publishing, will contract by 400 jobs in 2003. All sectors are expected to show positive job growth in 2004, with overall information employment posting a 3.7 percent gain, or 3,300 jobs.
*Financial Activities - Between 1993 and 2002, financial activities grew at a compound annual growth rate of 2.8 percent, with the strongest employment growth occurring in securities, 6.6 percent. As a result of scandals and the downturn in the equities markets, about 1,100 jobs will be lost in securities in 2003. In 2004, the supersector will increase by 0.5 percent, or 700 jobs, with most of the jobs added in the rental and leasing sector.
*Professional and Business Services - Pent-up demand and growing confidence in the economy will increase the need for such services as engineering, computer systems design and other professional or technical business services. In 2004, 6,300 jobs will be added in professional and technical services, administrative and support services will grow by 4,900 positions and management of companies and enterprises will gain 600 jobs. Overall, the supersector will post an increase of 4.2 percent, or 11,900 jobs, in 2004.
*Educational and Health Services - This supersector showed growth ranging from 1.8 percent to 4.8 percent between 1994 and 2002, averaging 6,500 new jobs each year. Declines in education budgets should boost demand for services provided by private education organizations, increasing education employment by about 1,200 jobs in 2004. The larger health-care sector is expected to grow by 3.7 percent, or 6,900 jobs, in 2004. Overall, the supersector will increase by 3.8 percent, or 8,100 jobs.
*Leisure and Hospitality - A number of indicators point to a recovery in the Colorado tourism industry. For example, casino revenues, ski lift tickets, park visits and DIA passengers are projected to grow in 2004. From an employment perspective, this sector is expected to add 8,200 jobs in 2004, an increase of 3.4 percent.
*Other Services - This supersector is composed of private businesses such as auto repair shops, Laundromats and personal services. Because these businesses fulfill many basic needs, growth often is contingent on population growth more than the state of the economy. As a result, this supersector experienced gains during the recent economic downturn. This growth is expected to continue as 700 jobs will be added in 2003 and 800 jobs will be added in 2004.
*Government - As the state's population has grown, so has the need for government services. After showing strong growth in 2002, the government supersector lost 4,300 jobs in 2003 as a result of budget cuts, layoffs, early retirements and employees accepting jobs in the private sector. This decline will continue in 2004 as 1,700 jobs will be lost. The largest sector, local government, will incur the largest decrease in jobs.
*International Trade - The United States seems to be driving the recovery with its pro-growth monetary and fiscal policies. Europe is expected to show modest growth in 2004, while economic growth remains weak in the Americas. SARS has taken a toll on Asian economic activity in 2003, but there are many positive growth indicators from Japan. Because of projected uneven growth in the global economy and the instability of the U.S. dollar, Colorado exports are expected to enjoy a 4.5 percent increase in 2003 and a 5 percent increase in 2004. Canada, Japan, Western Europe, and Mexico will continue to be our top trading partners.
AROUND THE STATE
As part of the annual report, economists from around the state provided snapshots of economic activity in their areas.
* La Plata County - Most sectors of the La Plata County economy expanded in 2003 and are expected to see further growth in 2004. Historically, La Plata's economy has been driven by tourism, which has declined since 1992. Proposed construction at Durango Mountain Resort should help create tourism-related activity in that area.
* Mesa County - Mesa County has felt the impact of the recent downturn less than other parts of the state because of its diverse economy. The recent upswing in economic indicators and growing interest in monitoring economic growth bode well for the county.
* Northern Colorado - Over $1 billion in new capital construction is expected for the region in 2004. This will lead to the creation of more than 3,000 jobs in 2004.
* Pueblo County - After tough years in 2002 and 2003, the Pueblo County economy is expected to grow in 2004. Increases are expected in construction, aviation, environmental projects, health-care and retail services, and correction facilities.
* Southern Colorado (El Paso County) - The average unemployment rate for El Paso County for 2003 is expected to be 6.1 percent. A modest improvement is expected in 2004 as the rate will drop to 5.8 percent. Nonagricultural employment is expected to remain flat in 2003 and grow by 1.7 percent in 2004. The loss of economic activity due to the deployment of troops from the region has slowed recovery.