Local economies rule

During the last decade the economy has seen plenty of ups and downs. Despite the impact of the peaks and valleys that characterized the 1990s, Northern Colorado’s economy grew quickly relative to the rest of the country.

According to data compiled research firm Global Insight, Northern Colorado’s two metropolitan areas ranked in the top 20 in the nation for annual economic growth between 1994 and 2004.

The report, recently unveiled for the U.S. Conference of Mayors earlier this year, measured the total value of goods and services generated by each of the country’s 361 metropolitan areas.

According to the study, the Greeley metro area, which includes most of Weld County, ranked No. 11 in annual economic growth during the 11-year period. The average annual growth for Greeley during that time period was 7.7 percent. Fort Collins-Loveland came in at No. 20 with 7.3 percent growth. Altogether, the Northern Colorado region is in the top 5 percent of metro economies in the nation for growth rate.

Other Colorado communities faired well in economic growth during the past decade as well. Grand Junction ranked the highest for the state at No. 9, with an average annual growth rate of 7.7 percent; Colorado Springs came in at No. 36 with 6.9 percent growth. Boulder ranked 45th with 6.6 percent annual growth and Denver-Aurora ranked No. 55 with 6.5 percent growth.

The report measures the gross metro product for each area.

“GMP is the equivalent of GDP (Gross Domestic Product) for a city,´ said Stephan Weiler, an economist for the Federal Reserve Bank of Kansas City. “The problem is that it’s a very difficult thing to account for.”

A former economics professor at Colorado State University, Weiler is familiar with Colorado’s economy. He said that while it is difficult to calculate GMP, Global Insight’s data is likely as accurate as any.

“GMP is calculated based on gross state product by sector, coupled with metro information by sector,´ said Sophie Parker, a Global Insight economist.

She could not go into detail about what the calculation entails because it is proprietary information.

What the GMP does show, is that despite a marked slowdown caused by the tech bust, the region was able to sustain high economic growth. Parker explained that GMP is affected by employment sectors by varying degrees.

For the state as a whole, the information and professional and business services sectors – which includes most workers in the technology industry – employed 3 percent and 14 percent of Colorado’s labor force respectively in 2005.

“Technology and communications providers and equipment manufacturers were forced to drastically cut costs in order to increase their chances of staying in business at the end of the technology/telecom boom, and the sectors’ annual growth in employment both declined for three straight years – 2001 to 2003,” Parker explained.

As a consequence, real GMP also slowed toward the end of the study period. For instance, GMP for the Fort Collins-Loveland metro area only grew by 4.3 percent from 2001 to 2002.

Employment and business data from the U.S. Census Bureau also reflects Northern Colorado’s economic growth. In 1994, Larimer and Weld counties accounted for 8.5 percent of the business establishments in the state and 7.8 percent of the employees. In 2004, the region accounted for 9 percent of all establishments and 8.4 percent of the total employees.

Individual industry outlooks vary

For Larry Burkhardt, president and CEO of Upstate Colorado Economic Development, getting data to support his efforts to pump up Weld County is a definite plus. He sees strength in several sectors.

“You’ve got to consider that the oil and gas industry is at or near the top right now,” Burkhardt said.

Early industry estimates put Colorado’s oil and gas industry at $8.2 billion in 2005. In 2002, the state’s oil and gas value was comparatively slim at $2.74 billion.

He also sees strength in the business services industry, such as insurance.

“There are companies within the MSA that are doing well with hiring,” he said. “We’re adding jobs on a steady basis.”

Still, Burkhardt is more realist than optimist.

“We’ve got challenges as well,” he said.

The agricultural industry is facing some battles. Greeley-based Swift and Co., which employs more than 2,000 locally, is dealing with a dependence on the international economic and political climate.

American meatpackers are currently banned from shipping beef to Japan, traditionally one of the prime export markets, due to that country’s concern over mad cow disease. Also, Hong Kong banned beef products from Swift’s Greeley plant in March, due to the discovery bone fragments found in a package of Swift beef.

Also, with water supply at disaster status and energy costs rising, farmers in Weld County – one of the nation’s largest agricultural counties – are likely to have a very difficult crop season.

Another area of worry, according to Burkhardt, is the real estate industry. With a flat market, rising interest rates and a surplus in certain segments, consumers could find themselves with less expendable income.

“We haven’t seen that play out yet in the sales tax numbers,” Burkhardt said.

Overall, he sees signs that the economy is vibrant with the trend continuing on a positive note, with some softening. But he’s quick to remind that he isn’t an economist.

Number good for the region

Positive indicators such as Greeley’s relative GMP growth are good for the region and for the economic development agencies. Burkhardt said he uses such data to demonstrate the vibrant economy in Weld County to site selectors and businesses.

“It serves my purpose well,” he explained.

Burkhardt isn’t the only one that uses economic indicators as an attractant. Developers not only use the data to gauge their next move, but also to attract tenants.

“We didn’t look at that specific data,´ said Chad McWhinney, CEO of McWhinney Enterprises, of the region’s GMP.

However, he said economic data helps to determine if an area is vibrant and growing, and therefore developable.

“We play close attention to the leading economic indicators,” he said.

Such information is useful when trying to attract businesses to settle into one of McWhinney Enterprises’ developments.

The growth data for Northern Colorado is an encouraging snapshot of the past 10 years, but the question is what will the future hold?

“Those are really high-growth figures,” Weiler said.

The Global Insights report puts Northern Colorado’s growth for 2005 and 2006 at a more modest pace. Fort Collins-Loveland’s GMP is expected to grow by 3.2 percent in 2006 after a rate of 3.5 percent in 2005. Greeley is expected to see a big slow down – from 5.3 percent growth in 2005 to 3.6 percent growth in 2006. But slowing growth should be expected.

“Those phases don’t tend to last that long,” Weiler said, adding that the upper Front Range economy is maturing and becoming more diversified.

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