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9/3/2003

Economist cautiously upbeat on recovery

By Pam Mellskog
The Daily Times-Call

DENVER — About 3.2 million jobs have been lost since the nation slipped into a recession in March 2001, according to Tucker Hart Adams, chief economist for US Bank’s mountain region.

And though it officially ended later that year in

November, job-related issues continue hampering economic recovery nationally and statewide.

“This has been the weakest recovery in modern history ... (be-

cause) it has been a jobless recovery,” Adams explained. Yet, the economist described herself as “cautiously optimistic” during her 2004 economic forecast Wednesday morning at the Denver Marriott City Center.

Before a 350-member, invitation-only crowd, she acknowledged that Colorado’s dependence on technology and tourism made it more vulnerable to the recession and more sluggish to recover.

She predicted that by 2004, the state would generate a modest 37,000 jobs, which would chip away at the current 5.7 percent unemployment rate.

Stagnant or negative growth in other key categories also could pop, if only by a little, she added.

Personal income, for instance, could exceed the local inflation rate this year, according to Adams, and rise to $34,710 per capita. In 2004, inflation adjustments will level that 2.5 percent increase, although it will take until 2005 for Coloradans to recognize it in an improved standard of living, she continued.

That creates a clear cause-and-effect dynamic in the retail sales category, she said. Growth there will average 4.6 percent in 2004, with Denver-Boulder inflation creeping along with the national statistics for 2.2 percent and 2.5 percent recovery rate in 2003 and 2004 respectively.

With a 17.1 percent drop in Colorado housing permits in 2003, the construction industry took it on the chin, with multifamily construction most hard hit, Adams explained. But she said she expects that nonresidential construction will even-out in 2004 — despite its remarkable 23.1 percent plunge in 2003.

Despite these dramatic Colorado particulars, Adams said the state has by and large followed the national business cycle.

“As the nation goes, so goes the Colorado economy,” she said.

In both cases, she predicated slow but steady recovery — especially given the government stimulus efforts since September 11, 2001.

Money allocated to the war effort, homeland security and tax cuts will total a $500 billion deficit projection over the next couple of years, she said.

However, she pooh-poohed alarmist talk about that figure because it makes economic growth a more hopeful prospect.

“When consumer and business investment is weak, it is very appropriate for the government to step up,” she said. “(That deficit) is not something we need to worry about in 2004. Do worry about a major terrorist attack centered in the U.S. or a blowup in the Middle East. (If that happens), all bets are off for growth and inflation.”

Pam Mellskog can be reached at 303-776-2244, Ext. 224, or by e-mail at pmellskog@times-call.com.