Northern Colorado economy fundamentally sound

Moderate growth expected to continue into next decade

An analysis of available economic indicators shows, not surprisingly, that Northern Colorado’s economy is still as strong as an ox and should continue to grow at a moderate pace well into the next decade.

That’s according to the second quarterly installment of the 1st Choice Bank/Northern Colorado Business Report Leading Economic Indicators, compiled by University of Northern Colorado economist John Green.

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Like links in a chain, economic indicators are separate but interdependent measurements of the strength of national, state and local economies. Green classifies these data series as long-run indicators, intermediate-run indicators and short-run indicators.

Last quarter, his examination of long-run indicators, or data available with a two-year or longer lag, showed dramatic economic growth in Northern Colorado over the past two years or more. Figures on unemployment, new-home sales and other long-range categories indicated that rapid growth was expected to continue, though perhaps at a slightly slower pace, through 1997.

Green this month looks at intermediate-run indicators, which he defines as data available with a six-month lag: Population, new businesses, motor-vehicle registrations, residential income, bank deposits, sales-tax collections and retail sales are included as fundamental indicators of economic strength.

Population growth is a crucial intermediate indicator that affects every other area of a region’s economy. Northern Colorado’s healthy, annual population growth rate of 2.3 percent is directly accountable for and the result of a strong economic forecast.

“Unless it’s a transitory pattern, which is unlikely, consistent population growth will eventually impact housing sales and sales of expensive durables, as people settle in,´ said Stephan Weiler, assistant professor of economics and regional economist at Colorado State University in Fort Collins.

Consistent population growth in the region is expected, though Weiler notes that the frenetic growth rate we’ve seen recently has slowed as the cost of living along the Front Range goes up.

“Resources are limited, and housing prices are rising,” he said. “The kind of jobs you need to support this lifestyle are not as plentiful as lower-wage jobs.”

Still, Green suggests that the region’s bounty continues to attract newcomers, who arrive with or without employment.

“Usually, people move to an area because they have a job, but now I think more and more young people are moving to Fort Collins without employment because they’ve heard good things about it,” Green said.

Increased new-business growth in the region is another strong indicator of economic health.

“This is an incredibly robust environment for new business,´ said Mike Hauser, president of the Fort Collins Area Chamber of Commerce “We’ve averaged over 1,000 new sales-tax licenses each year for the past six years, and we expect to meet or exceed that again this year.”

Another area of growth for new businesses is in smaller companies that spring from large ones.

“A strong economy makes it feasible for well-paid employees of large companies to leave their jobs and start their own businesses,´ said Don Churchwell, executive director of the Loveland Economic Development Council.

New businesses, if they survive that first year, don’t tend to stand still, Weiler added. As they grow, they employ more people and contract out more services, and that brings more job opportunity, which brings more people to the region.

The influx of folks from California and elsewhere may have peaked a few years ago, but it continues at a slower pace today. It is evidenced by the growing number of motor-vehicle registrations in the state — 47,300 in April alone. And the undeniable increase in traffic is another sign that more people have “discovered” Northern Colorado.

Exacerbating the fact that there are more cars on the road is the fact that people are spending more money and therefore have more cause to travel. Green’s tallies reveal that residential income in Colorado continues to grow more rapidly than in other areas of the country.

Hauser points to healthy growth in higher-paying industrial-sector jobs and an increase in lower wages due to a greater demand for labor as reasons for rising incomes. But Weiler questions whether low unemployment has actually translated into higher wages, noting that Colorado’s is a particularly bifurcated labor market without much of a middle ground in terms of wages.

Bill Neal, president of Wheeler/Fowler Real Estate Co. said his development decisions are based on the employment base.

“If you zero in on the Fort Collins-Loveland market, you see at least a 5 percent expansion in the number of jobs each year,” he said. “It’s not a boom-or-bust environment. We’ve seen strong steady growth for several years, and it’s become regional.”

Neal said certain segments of the real estate market have been overbuilt, and caution is warranted, but there is still room to grow.

“It’s hard to be anything but opimistic right now,” he said.