Leisure and Hospitality - In many areas it is difficult to secure reliable data that reflect activity within the industry. For areas where data are available, such as casino revenues, ski lift tickets, park visits and DIA passengers, growth is expected for the upcoming months. This sector is expected to add 5,600 jobs in 2006, an increase of 2.3 percent. About 3,800 of these jobs will be added in food services.
Other Services - This supersector is comprised of private businesses that provide personal services such as auto repair shops, Laundromats and beauty salons. Because they fulfill many basic needs, growth often depends on population growth as much as it relies on the state of the economy. This supersector will experience higher growth rates than population in both 2005 and 2006, and will add 2,000 jobs in 2006.
Government - As the state's population has grown, so has the need for government services. As a result, all sectors of the government are expected to grow in 2006, with the exception of the federal government. About 100 federal jobs will be lost, while 1,200 state government and education jobs will be added. As has been the case in the past, the largest growth will occur at the local level where about 3,100 jobs will be added. Most of that growth will occur in the K-12 education sector. Total government growth will be 4,500 jobs.
International Trade - Colorado has not been able to sustain the record level of export growth that occurred in 2004. The glaring weak spot in 2005 was semiconductor exports. Overall, total exports will increase by 2.4 percent in 2005 and 3 percent in 2006. A stronger dollar may dampen foreign demand for U.S. goods and services. High oil prices, concerns in Asia and Europe about avian flu and an ongoing ban on beef exports to Japan and Korea will impact trade in the year to come.
Regional and Area Economic Forecast Highlights:
Across the West - Despite improved economic conditions in Colorado, the state is expected to be tied for sixth place in population growth out of 10 Western states. Similarly, it will finish in a tie for fourth place in terms of employment growth for 2006.
Northern Colorado - More than $1 billion in new capital construction projects over a two-year period will bring 2,000 new job opportunities to northern Colorado in 2006. A survey of the region's largest primary employers indicated that over the next three years they plan to expand their businesses by about 1.2 million square feet. Areas of strong development include the Centerra development in Loveland, the 2534 development in Johnstown and the Crossroads Business Park in Loveland.
La Plata County - The La Plata County economy is highly seasonal, with most tourism occurring during the summer months. A mitigating factor to this seasonality is Fort Lewis College. Per capita income has improved over the last few years, both in absolute terms and relative to the national average. In 2003, La Plata County ranked 21st out of 64 counties with per capita income of $29,807. Population growth in the county has been about 3 percent for the last eight years.
Pueblo County - Although the Pueblo economy has been volatile recently, this year's unemployment is down and will continue to improve in the months ahead. Job growth for the Pueblo area is expected to be 2.3 percent in the months ahead. About 1,000 jobs will be added for Xcel Energy's proposed Comanche power-generating facility. Population in the area is expected to grow at the same rate as the state, about 1.5 percent. Pueblo is a regional center for medical care and retail consumption, which serves as a stabilizing factor on the economy.
Southern Colorado (El Paso County) - Aggregate and specific economic evidence points to March-April 2003 as the turning point in El Paso County's economic recovery from a two-year downturn. The average unemployment rate for El Paso County dropped from about 5.6 percent in 2004 to 5.4 percent in 2005. A modest improvement is expected in 2006 as the rate will drop to 5.3 percent. Additional gains in employment are expected as the economy continues to strengthen, particularly among technology-based, primary employers and in the finance, health care, retail and construction fields.
National Economic Forecast Highlights:
Gross Domestic Product (GDP) - The GDP is expected to remain at 3.5 percent growth in 2006, a rate greater than the annualized average, 3.3 percent, from 1995 to 2004. The GDP deflator will
drop slightly, registering 2.4 percent in 2005 and 2.3 percent in 2006.
Consumption - Nationally, growth will be driven by a 3.2 percent increase in real personal consumption and an increase of 7.2 percent in retail sales. Light truck and auto sales, a major component of retail sales, will drop from 16.9 million to 16.6 million as a result of "spent-up" demand from creative financing programs from the last three years.
Investment - Real business investment is expected to decrease, but remain solid in 2006, at a rate of 5 percent, as replacement investment and expansionary investment drive growth. Industrial production rates will remain strong at 3.3 percent.
Government Spending - The federal deficit is expected to increase from $333 billion to $394 billion in 2006. Costs associated with assistance to the hurricane cleanup and the war in Iraq are factors that will drive the deficit higher.
Net Exports - The trade deficit took a sharp jump at the end of 2005 in reaction to higher prices for imported oil. The deficit will likely decline as oil prices drop; however, a strengthening dollar may decrease the demand for U.S. goods and services in foreign markets.
Prices - Concerns about inflation will continue to dictate the monetary policy decisions of the Federal Reserve Board. The change in the U.S. Consumer Price Index, or CPI, is expected to be 3.3 percent in 2005 and fall slightly to 3 percent in 2006. Inflation rates for Colorado are projected to be 1.7 percent for 2005 with an increase to 2.2 percent in 2006. The state CPI remains lower than the national rate because of artificially low prices for housing and automobiles. Producer prices, as measured by the Producer Price Index, are expected to register 2.7 percent in 2006 as energy prices stabilize or decrease slightly. Employment costs, which include average wage and salary levels, grew at a rate of 3.2 percent in 2005 and are forecast to rise to 3.6 percent in 2006.
