LONGMONT — We have heard before that the recession hit harder and deeper in Colorado, and now the proof is being borne out by the numbers.
From September 2003 to this September, Colorado’s unemployment rate dropped 1.1 percent to 4.4 percent, but it may take a while before the state works its way back up to pre-recession levels.
According to Rich Wobbekind, associate dean with the University of Colorado’s Leeds School of Business, it could be 2006 before the number of jobs in the state gets back to 2000 levels.
And Wobbekind told a Wednesday morning crowd of more than 200 at the Longmont Area Economic Council’s fifth annual Investor Series Breakfast at the Raintree Conference Center that another economic forecaster predicts it will be 2007 for jobs to return to pre-recession levels. This is in contrast to other surrounding Western states, which have already seen their job numbers go back up to the 2000 level.
It fact, he said, it was March or April of this year when the first positive year-over-year job totals were seen.
“Year after year, we’ve been losing jobs,” Wobbekind said.
Job growth in the state for this year should be about .08 percent, or about 10,000 jobs. For 2005, Wobbekind predicts job growth of 2 percent to 21/2 percent, or 40,000 to 45,000 jobs.
As far as the unemployment rate goes, Wobbekind said he doubted it would drop much at all over the next year, given that many people have left the work force completely over the past few years.
The unemployment rate is calculated using the number of people who are able to work and actively seeking work. As jobs become more plentiful and wages go up, he said, more of these exiles are likely to jump back into the work force, keeping the number relatively steady.
While per-capita income in Colorado has remained flat the past three years, the state’s average income still outpaces the national average: $34,400 compared with $32,700. The state did drop a notch in this category, however, from seventh- to eighth-highest average in the country.
Boulder County has been outpacing the state in wage growth. While this year’s totals have yet to be tabulated, wages in the county grew 3.4 percent in 2003.
Wobbekind suggests that it’s the business and professional services category that is helping lead Boulder County’s economic recovery. This category — including workers in the legal, engineering and architectural categories and computer services workers at places like IBM — is one of the few in which employment has been moving upward in 2004.
Nationally, Wobbekind predicts a respectable gross domestic product growth of 4 percent this year, tapering off to 31/2 percent in 2005. National job growth next year is expected to mirror Colorado’s 2 percent to 21/2 percent.
Overall, Wobbekind’s outlook could be characterized as guardedly optimistic, but he saved his most negative comments of the morning for the subject of deficits.
Never a fan of deficits, he lamented that “by 2010, without Social Security reform, you can see the numbers become pretty horrible. So this has now become a short-term problem as opposed to a long-term problem,” he said.
The nation’s trade deficit is also a concern, Wobbekind said. The economist warned that this deficit — the Commerce Department said the trade deficit shrank to $51.6 billion in September, a 3.7 percent drop from August — could lead the Federal Reserve to start raising interest rates faster than it would like to, leading to other debilitating effects on recovery.
Indeed, the Fed’s Open Market Committee raised rates one-quarter percent Wednesday, bringing the federal funds rate — the interest that banks charge each other for overnight loans — to 2 percent. It was the Fed’s fourth rate increase this year.
Wobbekind noted that the “twin deficits” — trade and the overall U.S. budget deficit — together have now topped $1 trillion.
“We’re not at 10 percent (of gross domestic product), but we’re getting close,” he said.
“By the way, just a side comment: We don’t make it into the (European Union) under these standards — but I don’t know that we’re applying.”
Tony Kindelspire can be reached at 303-776-2244, Ext. 291, or by e-mail at firstname.lastname@example.org.