Agribusiness  January 25, 2017

Economic forecast: positive outlook, but ample uncertainty about ‘Trump Effect’

GREELEY — Northern Colorado’s economy should record a positive year of growth in 2017, but policies of the new Trump administration create both bullish outlooks and causes of concern at the national and local levels.

That was the consensus opinion of panelists at the Northern Colorado Economic Forecast, Jan. 25, at the University of Northern Colorado’s University Center. The event attracted more than 500 people and was presented by BizWest. The event was moderated by Paul Bobrowski, dean of the Monfort College of Business at the University of Northern Colorado.

“By historical standards, this is getting to be a long recovery and a long expansion,” said Rich Wobbekind, executive director of the Business Research Division in the University of Colorado Boulder’s Leeds School of Business. Wobbekind served as the keynote speaker at the forecast.

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Wobbekind said that increasing interest rates could cool the economy, but some policies of the new Trump administration could lead to higher growth nationwide in 2020, perhaps as high as 3 percent.

“I do think it could go closer to 3 percent, and we haven’t been there for a long time,” Wobbekind said.

But Wobbekind said that the national economy is nearing the end of its current business cycle, with some economists predicting a recession around 2020. He added, however, that any downturn should be modest.

Areas of focus, Wobbekind, said, include personal tax reform, corporate tax reform, repeal and/or replacement of the Affordable Care Act, reform of social programs, the potential for large-scale infrastructure investment, regulatory reform, renegotiation of trade agreements and immigration.

While some of those policies could spur growth, others would have an uncertain impact, Wobbekind said.

He noted that Colorado has recorded the second-highest growth in population, contributing to a surge in housing prices along the Front Range, which is responsible for 96 percent of the state’s population growth.

He expressed some optimism about the energy sector, which has lost jobs in Colorado and in Northern Colorado.

“We’re seeing the turn in rig count nationally, and in Colorado,” he said, adding, “We are starting to see positive movement on the oil side — not much movement on the natural-gas side.”

The Greeley and Fort Collins-Loveland metropolitan statistical areas — Weld and Larimer counties — represent the two fastest-growing MSAs in Colorado in terms of employment, although the rate in the Greeley MSA is expected to be revised downward, possibly to negative growth.

Agriculture, Wobbekind said, will experience its second tough year in a row, as the industry continues to suffer from low commodity prices.

Wobbekind said his concerns include interest rates, global growth, commodity prices, value of the dollar, drought & weather and policy.

Here are key thoughts from other speakers:

Keith Dickelman, executive vice president of business banking, Guaranty Bank and Trust Co.:

Dickelman said that the Trump election has been “bullish” for equities and the energy sector. He also predicted some easing of the regulatory burden on the nation’s banks.

“There’s a guy in washington that’s not afraid to use his pen,” Dickelman said.

He expressed some concern about what increasing interest rates will mean for the housing sector, but said housing should be stable, “as long as that first [interest-rate number] is not a ‘5’.”

Overall, he said, “We’re going to have about three more years of good, solid, consistent growth — my prediction.”

Kevin Unger, president and CEO, Poudre Valley Hospital and Medical Center of the Rockies:

Unger said that potential repeal and/or replacement of the Affordable Care Act makes it difficult to predict what will happen in the health-care sector, which accounts for almost 20 percent of national gross domestic product.

“If there’s ever a time when there’s uncertainty in health care, today is the day,” Unger said.

He noted that the ACA has had some positive effects in Colorado, with the number of uninsured dropping from 17 percent of the population to 6.7 percent.

Additionally, only 2.5 percent of Colorado children under 19 are uninsured, he said, with 1.3 million more people of all ages insured in Colorado than before the ACA.

“We really don’t know what’s going to happen,” Unger said. “Is it going to be repealed and replaced, and what exactly does that mean?”

He noted that 14 different plans for replacement of the ACA are currently being considered.

Don Shawcroft, president, Colorado Farm Bureau:

Shawcroft referred to the “Trump Bump.”

“Agriculture generally is cautiously optimistic,” Shawcroft said, pointing to regulatory reform that could ease environmental restrictions and tax policies that could repeal the estate tax and reform individual and corporate taxes.

He expressed concern, however, about the pullout from the Trans-Pacific Partnership and attempts to renegotiate NAFTA, as well as immigration policies that could remove laborers from the agricultural workforce.

Matt Vance, director of research and analysis, CBRE:

Vance predicted a “gradual deceleration through 2018 and 2019” in the overall economy, with slower, but still positive, growth in the commercial real estate sector. The office, industrial and retail markets should remain strong in Northern Colorado, with low vacancies, perhaps with modest increases in vacancy rates.

The potential for trade restrictions could prompt softer demand for some space, particularly in the industrial market, he said.

Some policies, such as a potential large-scale infrastructure-spending plan, could provide a tailwind for commercial real estate, he said. But he added: “There are other policies that could detract from that rosey outlook.”

“It is possible that we do see an extension to the [economic] cycle,” he said. “We certainly don’t see a cliff ahead of us.

GREELEY — Northern Colorado’s economy should record a positive year of growth in 2017, but policies of the new Trump administration create both bullish outlooks and causes of concern at the national and local levels.

That was the consensus opinion of panelists at the Northern Colorado Economic Forecast, Jan. 25, at the University of Northern Colorado’s University Center. The event attracted more than 500 people and was presented by BizWest. The event was moderated by Paul Bobrowski, dean of the Monfort College of Business at the University of Northern Colorado.

“By historical standards, this is getting…

Christopher Wood
Christopher Wood is editor and publisher of BizWest, a regional business journal covering Boulder, Broomfield, Larimer and Weld counties. Wood co-founded the Northern Colorado Business Report in 1995 and served as publisher of the Boulder County Business Report until the two publications were merged to form BizWest in 2014. From 1990 to 1995, Wood served as reporter and managing editor of the Denver Business Journal. He is a Marine Corps veteran and a graduate of the University of Colorado Boulder. He has won numerous awards from the Colorado Press Association, Society of Professional Journalists and the Alliance of Area Business Publishers.
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