Colorado's Job Growth, Economic Momentum to Continue in 2013
A group of leading economists anticipates another positive year for Colorado’s economy in 2013. CU Boulder economist Richard Wobbekind presents the details at the 48th annual Colorado Business Economic Outlook Monday afternoon.
Wobbekind says despite the relatively anemic national economy, Colorado’s outlook for next year looks good. He expects Colorado to be among the top ten states for growth - possibly in the top five.
The forecast calls for about 42,000 jobs to be added next year - roughly on par with this year's 45,000 positions added.
The strongest areas include education and health services, construction, professional and business services, and tourism.
The one area not expected to grow in 2013 is the information sector, which includes telecommunications and publishing.
Erin O’Toole: Richard – let’s start with what we all want to know: What’s in the economic forecast for Colorado next year?
Richard Wobbekind: Well, the outlook for Colorado looks pretty bright in 2013, even in the context of what we believe to be a pretty slow national economy. We see job growth across a wide variety of sectors and the unemployment rate falling throughout the year, so we’re pretty optimistic on how well the state is doing.
O’Toole: Last year the expectation was for, I think it was “slow and steady growth” with about 23,000 jobs added. As 2012 now comes to a close, looking back - how did your predictions compare to the reality?
Wobbekind: Actually the slow and steady growth became not so slow but very steady growth throughout the year, and it looks like we’re going to end the year with more like 45,000 or more jobs created in 2012. We had a very strong spurt of growth through the middle part of the year.
When we did our forecast in December (2011) we had a 23,000 number; mid-year when we updated it we had a 35,000 number. And that growth has continued even with the national economy GDP numbers not being all that strong. So we’ve been very pleased with the outcome in the Colorado economy this year.
O’Toole: Right. Now as with last year, there are factors, looking ahead to 2013, that are well outside the state that could have a very real impact Colorado’s economic growth. What are some of these factors that might come into play next year – and actually, I’m wondering if they’ve even changed from last year?
Wobbekind: Well, the biggest single one is the fiscal cliff. Of course the concept of the budget deficit was there a year ago, but now that factor has really been exacerbated by the fact that we hit this deadline at the end of the year, where the fiscal cliff actually occurs. And should there be no resolution of the fiscal cliff, the national economy will slow significantly or perhaps even go into a recession in 2013. Clearly that would slow the growth rate in Colorado significantly as well.
So this is the number one factor, but there are other factors out there. There’s a political agreement on the refinancing of the debt ceiling, which comes up in March. And beyond that we still have the whole backdrop of the European debt crisis, and how that has kept worldwide economic growth subdued – not just growth in the U.S. but growth in China, for example has been at lower levels than it has been in the recent past or that we’ve been accustomed to.
So all of those factors clearly play into what we expect for Colorado’s growth next year. And should they be more severe than we’re anticipating, that would dampen the growth forecast that we’re giving right now.
But we do anticipate resolution to the fiscal cliff, and probably sooner rather than later – meaning in the remainder of this month. And beyond that, we do expect some sort of agreement on the debt ceiling in March. But those pieces of uncertainty are actually part of the reason why the U.S. economy has a slower growth path the first half of the year, and then picks up and is quite a bit better growth in the third and fourth quarters.
O’Toole: So getting back to Colorado, expectations for about 42,000 jobs added. What are the sectors where you’re expecting to see the strongest job growth?
Wobbekind: So one of the things that’s been really positive this year, and we believe will be really positive in 2013, is that the job growth is really very broad-based. There’s only one sector that is actually losing jobs in 2012 and 2013, and that is the information sector.
A wide variety of sectors are adding jobs, and significant job growth, we believe, is going to occur in the education and health services area; the professional business and scientific area; the construction area, we believe is going to add around 6,300 jobs; trade, transportation and utilities – 5,600 jobs; and the leisure and hospitality, which is the tourism sector, essentially, another 5,000 jobs in that area.
O’Toole: How do you expect Colorado to do next year compared to other states?
Wobbekind: The numbers that we’re forecasting for next year for Colorado are a little slower than what we believe actually occurred in 2012, so some people may look at that and say, ‘That doesn’t sound so good.’ But actually we think Colorado could wind up in the top five states in the country, relatively, in terms of job growth. We just anticipate the national economy being a little bit slower due to some of the resolution of the fiscal cliff, and that’s going to dampen job growth nationally next year a little bit.
But again, Colorado will be, in our opinion, a shining star.