Overall recovery remains weak, but expansion is broadening

This summer marked the second anniversary of the end of the Great Recession. The occasion was commemorated with a downward revision in the first quarter gross domestic product to 0.4 percent, political posturing in the debt-ceiling debate that rivaled a WWE smackdown, and equity markets that bounced around like a Skyball on steroids.

Nationally, job creation has been positive, but insufficient to reduce the unemployment rate, and chatter about another recession has resurfaced. The Federal Reserve responded by announcing that low interest rates (and a stagnant economy) were going to be with us for a while. Clearly, this ain’t your mother’s economy.

With this as a backdrop, the Boulder Valley Index (BVI) dropped from 114.7 to 112.7. The decline came after three quarters of upward movement and is more likely a reflection of the uncertainty in the broader economy than a pending downturn.

On a positive note, an average of about 1,500 net jobs have been added in Boulder County in the first seven months of this year. As well, jobs are being added in all other regions, with the exception of Colorado Springs and El Paso County. By year-end, net job growth is likely to be in the range of 15,000 to 25,000 workers.

This is in sharp contrast to the 6,200 net jobs added in Colorado for the period 2001 through 2010. Three of the state’s largest metro areas (Denver, Colorado Springs and Boulder) collectively lost almost 30,000 net jobs during that period, while other metro areas and rural Colorado added about 35,000 workers.

At the state level, tourism and health care have led the recovery. These sectors are essential components of all 64 counties; however, they typically generate a limited number of primary jobs.

Other sectors adding smaller numbers of workers include the extractive industries, professional business services, wholesale trade and higher education. Only the latter sector has produced steady growth throughout the past decade, adding faculty and staff through both recessions.

There is also good news regarding Colorado’s high-tech cluster. The release of recent data shows that the MIPBS sectors (manufacturing, information, and professional business services), a reasonable proxy of that cluster, account for 28.8 percent of the state’s private-sector employment and 36 percent of its private-sector output. From the employment side of the equation, the state has added 1,800 net jobs over the first seven months. About two-thirds of those workers have been added in Boulder County.

As we have moved further away from the end of the recession, more data has become available that shows its impacts on the Colorado and Boulder County work forces. At this point, the data suggests that job losses were disproportionately greater in the lower-paying occupations, particularly in the industries that have higher-paying wages (manufacturing, professional business services, etc.). At the same time, there was an increase in the number of higher-paying occupations, especially in industries with higher average wages. In other words, productivity gains have occurred through increased automation or improved processes rather than increased labor. This in part, explains the lack of job creation.

On another front, data from the U.S. Census Bureau shows that the number of women in the Boulder County work force declined by 5 percent during the period 2007 Q1 to 2010 Q3. Meanwhile, the number of male employees dropped by 2 percent. Men made up 52 percent of the work force in 2010.

Also during this timeframe, the number of workers in the 14-24 age group (13.5 percent of 2010 total) declined by 3.6 percent, the 25-34 age group (23.3 percent) dropped by 2.7 percent, and the 35-54 age group (45.6 percent) plunged by 8.3 percent. Surprisingly, the 55+ age group (17.6 percent) was the only one to post job gains. These trends will likely have significant ramifications for the composition of future work forces.

Moving on to other topics

There is mixed news regarding the housing market. First-quarter year-over-year 2011 sales for Boulder County are down by 2.7 percent, as reported by the Federal Housing Finance Agency. By comparison, Colorado fell 6 percent, and the United States dropped 5.5 percent.

The Division of Housing reports that the rate of foreclosed homes for Broomfield County is .08 percent and .11 percent for Boulder County. By comparison, the rate for the state is .27 percent.

Data from the Colorado Department of Revenue shows that first-quarter retail trade sales for Boulder County are about 4.1 percent above the same period last year. By contrast, Broomfield’s first quarter retail sales are about 15 percent ahead of last year; however, growth in the 4 percent to 8 percent range is likely through the remainder of the year.

Clearly, this ain’t your mama’s local or national economy. Undoubtedly there are significant risks and rough times ahead; however as the year has passed, there has been an expansion in the base of companies adding workers. Both the number of sectors and geographical areas adding jobs has increased, and in some cases growth within those sectors and regions has increased. While the overall recovery remains weak, a broader base of expansion bodes well for Boulder and Colorado.

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

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