Economic Forecast: 2010 likely better but not much

LOVELAND – Everybody attending today’s Northern Colorado Business Report‘s 12th annual Economic Forecast probably already knew that 2010 couldn’t possibly be as bad as 2009, but the real question was how much better might 2010 be?

Answer: Probably a little better, but not that much.

“It’s not going to get worse, but it’s not going to get better fast, either,´ said John Green, one of two economists from Northern Colorado who led off the event at the Embassy Suites in Loveland. “The last four years have each been worse than the year before, but I don’t see that happening in 2010. I believe it will be better.”

Green noted that the seven categories he uses to develop his quarterly regional economic reports for the Business Report — employment, construction, vehicle registration, new sales tax accounts, bankruptcies, single-family home permits and retail sales — were indicating a weak recovery from the nation’s deep recession that began in late 2007.

“The annual growth rate was very slightly positive in November, the first positive month since December 2007,” he said.

Green said he believed the recession in Northern Colorado probably ended in August, but he also cited some continuing negative statistics for the region. He said the number of new single-family home permits has been declining and the number of new vehicle registrations has leveled off with most buyers in a “replacement-only mode,” buying cars only when necessary.

Green said the number of bankruptcies and home foreclosures will continue to increase in 2010, as bad loans on lower-priced homes give way to higher-priced homes whose more affluent owners were able to keep going through the initial wave of foreclosures but now may be facing unemployment.

Green also predicted that higher interest rates in 2010 could result in a “double-dip,” or a second recession, as rates go up to help pay off government debt from spending in 2009.

Green had nothing but bad news for the long-suffering commercial real estate sector. “There’s just no hope in reviving the commercial construction sector until the economy improves significantly,” he said.

But on the positive side, Green said he expects annual month-over-month growth in the region in 2010 will be positive — although weak — “because 2009 was such a weak year.”

Green was joined in a panel discussion of the economy by Rhonda Corman, economic professor at the University of Northern Colorado; Tom Plant, director of the state Governor’s Energy Office; Kelly Peters, COO of the Rocky Mountain Innovation Initiative; Rich Shannon, district manager of Pinnacle Consulting Group; and Don Childears, president and CEO of the Colorado Bankers Association.

Childears offered little immediate hope for a loosening of the tight credit that’s been stifling growth in the area. “We’ve started a recovery, but it’s going to be long and slow — that’s the general theme,” he said.

Childears said that — to the likely surprise of many of the 420 who attended the event — demand for loans has been “down substantially except for residential mortgages.” He said fewer loans are being made because assets are down, incomes are down or unstable and new banking regulations are making it hard to make loans.

“Generally, the industry is well capitalized and will get through this with a few bumps but generally in good condition,” he said. “Your banker is trying every way they can to loan money because they do depend on that economic activity.”

Primary sponsors for the Economic Forecast included Embassy Suites Hotels, Kennedy and Coe LLC, the Better Business Bureau serving Northern Colorado and Wyoming, Palmer Flowers and Decorating Galley and DaVinci Sign Systems. 

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