Northwest Front Range economy strong, but headwinds exist

WESTMINSTER — The economy of the Northwest Front Range region — including Adams, Boulder, Broomfield and Jefferson counties — remains among the strongest in the state, but headwinds exist for the region and the state as a whole.

That was the message from Brian Lewandowski, associate director of the Business Research Division at the University of Colorado Boulder Leeds School of Business, delivered at an economic-development forum at The Westin Westminster, Tuesday.

Lewandowski spoke at the Economic Development Council of Colorado Regional Economic Development Forum for Region 3 (the Northwest Front Range). Region 3 of the EDCC includes Arvada, Boulder, Broomfield, Erie, Federal Heights, Lafayette, Longmont, Louisville, Niwot, Northglenn, southwest Adams County, Superior and Westminster.

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Lewandowski’s remarks were titled, “What makes the Northwest Front Range region unique?” He said he struggled to find a movie that he could use to describe the region, initially attempting to identify one such as Secretariat, Erin Brokovich or Rudy,  in which a big challenge has been overcome. But, he said, he realized that such an analogy was not accurate.

“It doesn’t really look like this area has had to reinvent itself,” he said. “It hasn’t had to overcome some big challenge.”

Lewandowski pointed to the region’s diverse economy, including high-tech employers, corporate headquarters, federal labs and research universities.

“This place is really unique,” he said.

The broader U.S. economy likely will record 2.8 percent growth in real gross domestic product in 2018, dropping to 2.6 percent in 2019, according to a consensus derived from 25 forecasting entities. That falls short of the 3 percent growth recorded in the second and third quarters of 2017. Fourth-quarter GDP growth came in just under 3 percent.

“We’re coming off the tax cuts and the big budget,” Lewandowski noted. “We’re still not expected to see really robust growth.”

“The U.S. is pretty much stuck in a slower growth cycle,” he added. GDP number for the first quarter of 2018 are expected  later this week.

Colorado continues to enjoy a strong economy, recording 2.4 percent employment growth in the first quarter, sixth-best in the nation.

The state ranks third nationwide in terms of job recovery since the Great Recession, with employment 15 percent above its pre-Recession peak. Only Utah and Texas rank ahead of Colorado.

Colorado’s strong economy can be seen in home-price growth, at about 10 percent year-over-year.

The state’s Increasing employment, rising home prices, increased wealth from the stock market and home prices, and higher wages help boost confidence and consumer spending, he said.

“That’s generally good for the economy,” he said.

Colorado has benefited from a net in-migration of jobs, as the region’s strong economy, natural setting, and public and private amenities lure new residents.

“Things really are better in Colorado,” Lewandowski said.

The Front Range overall, including the Denver area, Boulder, Larimer and Weld counties have led the state’s growth, Lewandowski noted.

“This has been the epicenter of growth,” he said, led by the Greeley MSA (Weld County).

The Northwest Front Range enjoys strong industry clusters, including aerospace, information technology, biosciences, health care and federal labs, he said. He noted the region’s highly educated workforce, patent activity that outpaces the nation and strong Small Business Innovation Research grants as evidence of a vibrant economy.

Among the four counties that Lewandowski studied, Adams County employment is concentrated in construction, wholesale trade, transportation and utilities, and government. Boulder County sees more manufacturing, information, and professional and technical services. Broomfield employment is concentrated in manufacturing, information, professional and technical services, and management of companies and enterprises. And Jefferson County is focused on construction and professional and technical services.

All of those factors have contributed to higher wages, low unemployment and high personal income in the region.

But headwinds exist both nationally and locally. The U.S. economy could be slowed by higher mortgage rates, and migration into Colorado is beginning to slow. Colorado’s population also is beginning to age, and the state’s real GDP growth — which for years has outpaced the nation — is beginning to converge with the U.S. norm.

“Now we’re seeing the pace of growth start to decrease in Colorado,” Lewandowski said.

Low unemployment, higher interest rates, lower migration and higher housing prices could further dampen the local economy.

Broomfield, Lewandowski noted, will get older by the most within the region, about 8 years added. Boulder, Adams and Jefferson also will get a little older.

But despite those constraints, labor-force participation has leveled and even begun to increase a little bit, Lewandowski said.

Lewandowski’s presentation kicked off an EDCC program that focused on “placemaking,” which seeks to capitalize on a local community’s assets, including natural amenities, in the planning and development process, while fostering input from key stakeholders and preventing gentrification.