Economist: State’s economy to slow
The Associated Press
Aspen, CO Colorado
DENVER ” As worried consumers continue to balance housing and credit woes, Colorado will follow the nation into a recession next year although the effects should not be as severe as the dot-com bust downturn, an economist predicted Tuesday.
Much of what happens will depend on the confidence consumers have about housing values and rising mortgage payments, as well as foreclosures and bankruptcies, U.S. Bank regional economist Tucker Hart Adams said.
“For most of us, it’s going to be a year of slow growth and being a little more cautious and not being quite so happy about what’s happening to the price of our home and maybe not quite so happy about what’s happening to the value of our 401k,” she said.
Adams, a leading regional economist, released her forecast a day after the National Association for Business Economics predicted the nation’s economy will end 2007 with its lowest growth rate in five years and will remain sluggish in 2008.
More than 60 percent of the association’s forecasters who participated in the survey also said they were concerned the economy may fall into a recession because of the “subprime” mortgage market woes and potential declines in home values.
Adams, who long has sounded warning bells about the volatile Colorado housing industry, first predicted a recession a year ago, saying she believed it would occur in late 2007 or early 2008.
It could be comparable to the most recent recession in Colorado, Adams said, but added she does not believe the state will sustain two years of job losses as it did during the dot-com bust when thousands of high-tech jobs vanished.
“It certainly should not be as bad as what we saw in Colorado in the late ’80s when things were really tough because people were moving away to take jobs elsewhere,” she said.
Overall the number of Colorado jobs should be up 1.5 percent, or 35,000 jobs, by the end of 2007, and then up just one-third of that, at 0.5 percent or 11,500 jobs, in 2008, the economist said.
The hardest hit sector will be the housing industry and related businesses, from home construction to furniture sales.
Others that will continue to languish will be the manufacturing and high-tech sectors, according to her forecast. Bright spots include the energy boom in western Colorado, an ongoing demand for health-care professionals, corn production for ethanol and the growing military presence in Colorado Springs.
In other areas, she said housing permits should fall 7.1 percent in 2008, on top of 27 percent in the first six months of 2007 and 16.4 percent in 2006. Per capita personal income should climb 2.9 percent to $41,976, compared with a 4.1 percent increase estimated this year, and retail sales will increase 3.9 percent, compared with a 7.6 percent increase estimated this year.
Earlier this summer, University of Colorado economist Richard Wobbekind revised his forecast to indicate that job growth will be a bit slower than 1.9 percent in 2007.
The Aspen City Council directed staff to move forward with the Burlingame early childhood education center, but decided it needs more information on the affordable housing units that are part of the schematic design at a work session Monday.