Brower: Robust growth may slow, but contraction isn’t in the picture
Colorado’s economy slowed in 2019 and is likely to continue to slow in 2020. Job gains in Colorado in 2020 will drop to levels not seen since 2011.
I know all that sounds like bad economic news for Grand County and Colorado, but it isn’t. The latest Colorado Business Economic Outlook from the University of Colorado in Boulder, released in December, contained those seemingly negative news blurbs.
But it also concluded this: A contraction of the economy in Colorado isn’t in the forecast.
Sometimes I wonder how much relevance a macro-economic look at the overall Colorado economy really affects Grand County. After all, we don’t have the strong urban economies that dominate the Front Range and we don’t have the strong agricultural influence that farming has on the Eastern Plains.
So a big chunk of the big picture simply doesn’t apply here.
But our tourism economy, which is increasingly driving economic growth here, depends directly upon the good fortune and growth in the economy along Colorado’s Front Range. Those city people, after all, are the ones who vacation in Grand County.
So, yes, the big picture of Colorado’s economy has a real bearing on us here in Grand County. Even to the point where the seeming “down” news has positive implications.
Take, for instance, the position of the report that Colorado’s economy slowed in 2019 and is likely to continue to slow down in 2020. Hmmm. Based on retail sales collections in the county and Grand County towns, there wasn’t much of a slowdown in spending here in 2019. So if that’s a contraction, then, wow, what does growth look like? We’ve been seeing growth above 10% in those collections now for two and even three years. If there is a “contraction,” then it won’t have a huge impact here in my opinion.
The truth is, we can barely handle the growth we’ve got, which relates directly to the counter-intuitive good news of the study’s conclusion that job growth (Note: This is the rate of job growth, not overall jobs) will slow to a 2011 level. The truth is that most employers here can’t handle any more job growth. The new jobs being created, largely in tourism and construction services sectors, aren’t getting filled because employers can’t fill them.
So will the market give us a break from this highly volatile job growth? It sounds like the answer is “yes” and that’s good news. We need to catch up with ourselves. It’s that simple. As Richard Wobbekind, the author of the study, stated in a Denver Post interview: “You can’t accommodate faster job growth. Everybody is working, incomes are going up.”
This is especially true in Grand County, where high housing costs and a seasonal, tourism-based economy adds insult to injury for workers.
Overall, he concludes that “we avoid a recession.” This is mainly because interest rates at the federal level are low enough to keep businesses borrowing money and because the national economy will continue to grow, although not as robustly as in 2019.
The report mentions the troubling demographic trends for the long term, in which Colorado deaths out-pace births and where all the influx of newcomers is targeted for the Front Range.
Of course, all of these prognostications could go flying out the window with one or two unexpected and dramatic events. As I’ve pointed out in the past, this same study from CU back in 2007 failed to note the upcoming Great Recession, easily the greatest economic downturn in most of our lifetimes.
So let’s hope the study’s measured predictions for 2020 hold true. Happy New Year!
Patrick Brower is the Enterprise Facilitator for the Grand Enterprise Initiative. He provides free and confidential business management coaching for anyone who wants to start or expand a business in Grand County. He can be reached at 970-531-0632 or at email@example.com.
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