Just when we weren’t looking the jobs pot started to simmer

For the past three years, news coverage has focused almost exclusively on job losses, unemployment and volatile commodity prices. Their coverage made one wonder if the media hadn’t heard of the old wives’ tale, “A watched pot never boils.” As much as everyone wanted a speedy recovery, watching the pot hoping the water would boil, did not hasten the process.

Recently, discussions about our economic woes have been accompanied by news of unrest in Northern Africa, the triple crisis in Japan, the removal of Osama bin Laden from the most wanted terrorist list, and the University of Colorado’s return to dominance atop the college party circuit. With our attention diverted to these matters, it was almost like magic, the water in the pot began to boil.

To that point, the recalibrated Boulder Valley Index inched upward, from 114.3 to 114.7, the fourth consecutive quarter of small, but positive gains. Improvement in the index is driven by stronger retail sales, accommodative interest rates, increased payrolls and continued growth in U.S. output.

After a slow start in 2010, Boulder County retail trade sales posted a 7.3 percent gain over the prior year. This is slightly better than the state, 6.9 percent, but less than the double-digit growth experienced in Broomfield County. Retail sales are expected to increase at a solid, but lower rate in 2011.

Interest rates have remained low for an extended period. On one hand, low rates benefit individuals who want to refinance their homes or make major purchases; businesses needing money to expand or pay operating expenses also benefit. On the other hand, the low rates provide a challenge for retirees who had hoped to live off the interest from their savings or investment accounts.

On the job front, Boulder County employment has posted gains in eight of the last 15 months. First-quarter employment is about 1,200 workers ahead of the same period last year. On the downside, county employment remains about 10,000 workers below its 2001 peak.

All sectors make different contributions to the local economy. CU is important because it is the county’s largest employer. Despite reported cuts to higher education, first-quarter 2011 employment for Boulder County state education services is up by 300 over the same period last year. At the state level, the first-quarter increase is more than 2,000 workers.

Boulder Valley is the focal point for the state’s advanced technology cluster (its workers come from three sectors).

The number of manufacturing employees increased by 300 and the professional, technical and scientific sector added 600.

Locally, the information sector has been flat for the past two years, while it continues to shed jobs statewide. News on the street (Covidien, Microsoft, Google, MedPro Imaging, and UQM Technologies) suggests the advanced technology cluster is poised for a rebound.

At the state level, net jobs have been added for 10 of the past 15 months and first-quarter employment is up by about 15,600 workers. A group of sectors that employ about 60 percent of the employees increased payrolls by about 34,800. The top gainers in that group are tourism (leisure and hospitality), health care, mining, higher education and employment services.

On the opposite side of the ledger, a group of sectors that employ about 40 percent of wage and salary workers have reduced their payrolls by about 19,200. The top losers in that group are construction, finance, information, K-12 education and the federal government.

Hopefully you were distracted by recent headlines and missed the news that the advance estimate for real gross domestic product, or GDP, for first-quarter 2011 came it at 1.8 percent and the April consumer price index, or CPI, posted a gain of 3.2 percent, reflecting increases in energy (19 percent), gasoline (33.1 percent) and food (3.2 percent.)

The advance estimate is likely to be revised downward, but real GDP growth for the remainder of the year will be in the range of 2.5 percent to 2.9 percent. Though the economy is improving, consumer spending is not expected to show significant gains. Many economists feel that the current inflationary trends are short-lived, i.e. gasoline prices will decline.

U.S. companies have added 1.7 million workers since the first of 2010, when employment bottomed out near 129 million. Despite these gains, current payrolls remain nearly 7 million below the peak in 2008. Although 244,000 jobs were added in April, a slower, but solid pace is expected in the near-term.

Looking ahead to the second half of the year, the nation, Colorado and the Boulder Valley will continue to add jobs at a rate that is clearly less than robust. While there is good news in the advanced technology cluster, mining, tourism and health care, there are problems in sectors that employ 40 percent of the workers that will best be resolved by time.

So, will it help to “watch the pot to see if the water continues to boil?” You can if you want, but the economy won’t improve any quicker if you do.

Gary Horvath is the principal of Broomfield-based Business and Economic Research. Website is garyhorvath.com.

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