Economists predict stronger growth in 2013
The University of Colorado’s Leeds School of Business released its Colorado Business Economic Outlook 2013 on Dec. 3. The forecast predicts strong growth in almost all industries and sectors and employment growth that beats the national average.
“For the state, we see a very positive environment for 2013,” said Richard Wobbekind, executive director of CU’s Business Research Division, which wrote the forecast. “We’re seeing a wide array of jobs being added, and they’re diversifying our state economy.”
Colorado’s job growth next year will build on momentum gained this year, when Colorado added 47,900 jobs. Colorado is expected to be in the top 10 states for job growth in 2013 and perhaps in the top six or seven, according to Wobbekind.
If the forecast is accurate, Colorado’s unemployment rate will fall from 8 percent in 2012 to 7.4 percent in 2013, which is comparatively better than the national unemployment rate.
From a national perspective, measures like employment growth, incomes and the gross domestic product are headed in the right direction, but still not fast enough to make up the ground lost in the recession, Wobbekind said.
“Three and a half years have passed since the official end of the recession, and the nation continues to see low economic growth,” Wobbekind said to open his annual presentation of the forecast at a conference in Denver.
Jobs remain a concern. The unemployment rate will remain just under 8 percent, with full employment expected to remain a few years away. Too many workers remain in part-time or temporary jobs.
“The pace needs to accelerate to decrease unemployment and underemployment.”
On the bright side, employment growth is expected in every state in 2013. The unemployment rate also will remain high even as new jobs are created because a better economy will draw workers who had given up their job searches back into the labor force.
But growth might not be evenly distributed throughout the year, Wobbekind said. The forecast predicts growth in the first and second quarters might be slowed by national and international issues, such as budget negotiations in Washington D.C. and Europe’s ongoing debt crisis.
Europe’s struggles managing sovereign debt are well known at this point. The major problem in Washington is the potential expiration of tax cuts passed during the Bush Administration coinciding with budget cuts passed last year.
The combination could create a serious drag on the economy and even result in another recession, Wobbekind said. He expects it will be resolved before too much damage is done, and that assumption is included in all the forecast’s projections.
“Resolution of the so-called fiscal cliff and the resolution of the European debt crisis will have impacts on the national economy and that will filter down to the state level,” Wobbekind said.
“Once that uncertainty gets resolved, we then expect business investments to start flowing again and consumers to start making decisions based on a known environment. We think the recovery will be quite a bit smoother after that,” he said.
Federal budget decisions could have a major impact on the Boulder area, especially on the University of Colorado-Boulder, federal laboratories such as the National Center for Atmospheric Research and National Renewable Energy Laboratory and small tech firms that rely on research and development money from the federal government.
“While continued growth is expected in 2013, any significant reduction in federal research funding would have a significant negative impact, affecting federally funded research labs and the university, as well as numerous businesses that depend on federal research contracts, Small Business Innovation Research (SBIR) grants, and other funding programs to develop and refine new technologies,” according to the full forecast report.
Otherwise, the forecast predicts a good year for Boulder County. The area adds jobs faster than the state and nation, and household incomes will remain higher. In 2011 — the data provided by the forecast — Boulder County’s median household income was $65,571, compared to $56,345 for Colorado and the U.S. median of $51,484.
New jobs added to the state also will be in sectors that are area strengths.
The strongest sector for projected job growth in Colorado in 2013 is the educational and health services sector. The sector is expected to add 7,600 jobs in 2013.
Other leading growth sectors for 2013 include the professional and business services sector with 7,400 jobs added and leisure and hospitality with 5,000 workers added, mostly in the areas of accommodation and food services.
The construction sector is expected to grow by 6,300 jobs in 2013 — up from a 2,800-job increase this year — and produce $12.6 billion in total value of construction. The factors driving that growth — new investment in infrastructure projects like U.S. 36 and construction of multifamily housing developments — can been seen in Boulder and Broomfield as well.
New home construction is picking up as well. Unlike in 2010 and 2011, residential construction is not being distorted by government incentives such as the new home buyer tax credit.
“The fundamentals of housing supply and demand are once again taking hold and will drive the industry,” Wobbekind said during the presentation.
Commercial real estate is expected to continue its climb, as rents are predicted to increase in all categories, said co-presenter Patty Silverstein, president of Development Research Partners. One interesting development is that an increase in grocery stores is driving gains in retail real estate, she said.
The only sector not expected to grow is the information sector, which includes publishing and telecommunications. Growth in software publishing and film are expected to be offset by loses in traditional publishing. It is expected the sector will lose 2,100 jobs this year and 600 next year.
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