Rich Wobbekind, economist from the University of Colorado Boulder, addresses the Northern Colorado Economic Forecast event Wednesday in Greeley. Chad Collins/BizWest

NoCo economy: Slower growth, no recession

GREELEY — Economic prognosticators expect 2020 to be a year of continued growth in the Northern Colorado economy, although growth won’t be as rapid as has been the case in recent years.

The bottom line: No recession on the horizon.

“It is difficult to see how we could go into a recession in the near term with the income growth and employment growth that we’re seeing,” said Rich Wobbekind, economist and associate dean at the University of Colorado Boulder Leeds School of Business.

And at CBRE, the commercial real estate firm, “We do not have a recession in the forecast. This is the first time in my time with the company that that’s been the case. And I hate to say it, but I don’t think the upcoming election matters as far as the economy is concerned,” said Pete Schippits, senior managing director for CBRE.

Presenters at the annual BizWest Economic Forecast, held Wednesday at the DoubleTree by Hilton in Greeley, displayed graph after graph that showed mostly upward rising trend lines, except in cases of unemployment, where they were level or declining further.

Wobbekind said Colorado is at 10th or 11th in the nation in job growth, with states such as Utah doing better and Wyoming performing worse. 

Real gross domestic product in the United States was at about 1.9 percent in the United States. In Northern Colorado, which Wobbekind defined as the Greeley and Fort Collins/Loveland metropolitan statistical areas, the GDP was about 7 percent. “I haven’t found a 7 percent anyplace else in Colorado,” he said.

Most of the U.S. economy is based upon consumption, and for 2020, he predicted that real disposable income would increase 2.1 percent and real personal consumption would increase 2.3 percent. Both were higher in 2019 at 3 percent and 2.5 percent, respectively.

Retail sales continue to grow at 2.7 percent, which is a slower pace than before, but still positive. The same is true of vehicle sales, he said.

Manufacturing, while still relatively robust in Northern Colorado, is quite likely in a recession nationwide, he said. But because manufacturing is a smaller piece of the overall economy than it once was, and the growing service sector is larger, manufacturing hasn’t had a major impact on the economy overall, he said.

Wobbekind worries about federal deficit spending, but sometimes thinks he’s the only one concerned about it. The deficit — federal spending exceeding revenues — increased to $984 billion for fiscal 2019 and is forecast to exceed $1.048 trillion in fiscal 2020. 

Interest rates are expected to trend up over the next 18 months, he said, although perhaps not in 2020. Mortgage rates may reach 5 percent by mid-2021.

Colorado inflation exceeds the federal inflation rate, which is a concern, Wobbekind said. Colorado inflation was 1.9 percent by the end of 2019, and U.S. inflation was 1.8 percent. Shelter and health-care cost increases drove the inflation rates.

Job growth in Northern Colorado continues strong, with the Greeley MSA leading the state. Jobs in Weld County increased 46 percent since January 2010, and Larimer County jobs increased 33.7 percent, Wobbekind’s charts showed. Health care and education added the most jobs over the past five years at 5,600, with leisure/hospitality adding 5,400 in the same period.

“There was some speculation that Weld would slow down because of energy, but that hasn’t happened,” he said. All employment categories except information industries showed employment growth.

Wages were also up in real terms in Colorado. Statewide, average wages were up 4.3 percent. Because inflation was lower than that, real wage gains were realized.

Agriculture in 2019 was stronger than predicted a year ago. Net farm income is projected to be $1.6 billion in 2020, which would exceed 2019 numbers.

Crude oil production is projected down for 2020. The state pumped 186 million barrels of crude oil in 2019 and expects to pump 175 million in 2020.

Within the real estate sector of the economy, Schippits said that Northern Colorado is outperforming Colorado Springs and Denver because of the relative affordability of the region. “One out of every four people moving to the state is choosing Northern Colorado,” Schippits said.

Multi-family rents remain high at about $1,250, he said. In the past eight years, rents have increased 57 percent. “We’re not overbuilding in this category. The only thing that will bring down rents is oversupply,” he said. 

Low vacancy rates in the office real estate category are lifting lease rates, and “there aren’t a lot of new products out there,” he said.

Shawn Osthoff, president of the family-owned Bank of Colorado, said population growth is lifting bank deposits throughout the region. Weld County has seen a 10 percent growth in bank deposits, he said. Larimer is also strong.

Banks are healthy, he said: No banks in Colorado are on the Federal Deposit Insurance Corp.’s problem list, and only 55 nationwide are on the list.

Osthoff said small businesses are negatively impacted by the growing presence of large national banks. He said 75 percent of deposits are controlled by out-of-state banks, compared with 60 percent 10 years ago.

Banks continue to struggle with federal regulations that hinder doing business with marijuana-based businesses, although a legislative fix is currently in the U.S. Senate. He also said federal rules governing doing business with hemp companies are being written and will smooth that growing area of the economy soon.

In the health-care sector, emphasis in 2020 will be on cost controls, said Kevin Unger, president and CEO of UCHealth North Region, which includes the UCHealth hospitals in Fort Collins, Loveland, Greeley and Longmont.

UCHealth is investing in behavioral health care with $150 million in budgeted spending and grant spending planned.

“Virtual health,” which includes treating patients remotely and monitoring patients in hospitals in a virtual way, will help to drive down costs and blunt the need to find limited numbers of nurses and other health-care providers.

In response to a question about where students and young people should focus their attention for jobs in the Northern Colorado economy, Amber Duchaine, business service representative with Employment Services of Weld County, said health care would be on the list to consider, given that jobs in that sector range from doctors to food service and housekeepers.

She displayed charts forecasting that the fastest-growing occupations in the next five years will be in health care (10 percent growth), material moving (10 percent), maintenance and repair (11 percent), and extraction industries (19 percent).

Because unemployment rates are so low — and therefore the readily available workforce for all industries is thin — she recommends that employers modify their hiring practices to focus more on skills and less on degrees. 

As Wobbekind said, “how can you take people who aren’t structurally the best fit for a job and retool them to work in those jobs. Tight labor requires you to find new ways to hire. And make sure you retain your people because it’s painful if you don’t.”

GREELEY — Economic prognosticators expect 2020 to be a year of continued growth in the Northern Colorado economy, although growth won’t be as rapid as has been the case in recent years.

The bottom line: No recession on the horizon.

“It is difficult to see how we could go into a recession in the near term with the income growth and employment growth that we’re seeing,” said Rich Wobbekind, economist and associate dean at the University of Colorado Boulder Leeds School of Business.

And at CBRE, the commercial real estate firm, “We do not have a recession in the forecast. This is the first time in my time with the company that that’s been the case. And I hate to say it, but I don’t think the upcoming election matters as far as the economy is concerned,” said Pete Schippits, senior managing director for CBRE.

Presenters at the annual BizWest Economic Forecast, held Wednesday at the DoubleTree by Hilton in Greeley, displayed graph after graph that showed mostly upward rising trend lines, except in cases of unemployment, where they were level or declining further.

Wobbekind said Colorado is at 10th or 11th in the nation in job growth, with states such as Utah doing better and Wyoming performing worse. 

Real gross domestic product in the United States was at about 1.9 percent in the United States. In Northern Colorado, which Wobbekind defined as the Greeley and Fort Collins/Loveland metropolitan statistical areas, the GDP was about 7 percent. “I haven’t found a 7 percent anyplace else in…