Northern Colorado's Economy Looks To Remain Strong In 2015, But...

Jan 22, 2015

Speakers at the 2015 BizWest Economic Forecast said the northern regional economy looks to remain strong going deeper into the year. However - and there's always a however - the drop in oil prices and its affect on Weld County's oil and gas industry leaves a particular uncertainty about resiliency.

Dr. Martin Shields, the director of the Regional Economics Institute at Colorado State University, said Northern Colorado has recovered nicely since the great recession.

"Getting a tremendous reduction in the amount of money that they spend on gasoline for their vehicles has been a substantial pay raise for households essentially," said Shields. "Between the tightening in the labor market and lower gas prices, Northern Colorado households seem to be doing OK."

While Shields can forecast steady growth in Larimer County's economy going into 2015 - including the addition of around 4,000 jobs in construction, retail and healthcare sectors - his crystal ball is much more clouded when it comes to Weld County.

"In Larimer, it's a pretty easy story. It's a same old, same old kind of thing," Shields said. "But's it's a little bit more challenging to make a forecast because of the importance that the oil industry has had in the rebound of Weld County's economy."

As of this writing, the price of oil hovers around $47 a barrel. Depending on how long the price remains low, Shields believes the industry in Northern Colorado will begin to react.

"One of the questions we're going to have to think about is when does oil production no longer become profitable for producers of North American shale? And there are some estimates that say that range is anywhere between $50 and $65 a barrel," Shields said. "For the region, most of the jobs are created in the exploration and the drilling process and well installation, and there are a lot of projects underway."

He added that at $45 to $50 a barrel, the profitability forecasts look very different then when oil was over $100 a barrel, which could stymie new oil and gas projects.

While Shield's forecast held a lot of uncertainty, a presentation by Michael Ehler with Realtec said the oil and gas slowdown is simply a blip on Northern Colorado's economic radar. For Ehler, real estate will continue to strengthen across the region with high demand and short supply fueled by other strong sectors including construction and retail.

Dr. Jandel Allen-Davis, vice president for government and external relations for Kaiser Permanente, said the region's healthcare sector remains strong and has seen a lot of activity, especially through Connect for Health Colorado, the state's public healthcare exchange.

"Across the U.S. last year [2014], about 8 million Americans did enroll for coverage [through public exchanges]. Here in Colorado we had about 121,000 folks," said Allen-Davis. "In terms of this year, the numbers are just trickling out.  It's still too early to really nail down what's there. The early numbers for Weld County look like so far 5,000 folks have re-enrolled or newly enrolled."

Allen-Davis said the large number of Coloradans enrolling in Medicaid across the region remains important to business owners and companies.  She notes that currently around 20 percent, or over 1.1 million Coloradans, are covered by Medicaid.

"For the business community, the good news is that we're seeing the uninsured rates fall which is terrific because we do pay taxes for that, the hidden tax, called premiums," Allen-Davis said. "That goes to cover the uninsured, so it's nice to see [the uninsured rate] fall from 17 to 11 percent, and it certainly will have impacts both long and short term for business owners."

While Allen-Davis is pro-business and pro-competition, she said the current climate of expanding and building new hospitals and stand alone emergency centers across Northern Colorado could become a concern in 2015.

"At the same time we're working to prevent people needing hospitals by elevating their level of health, we're building hospitals that drive competition. And that may or may not meet a real community need."

She added the discussion about where hospitals are constructed, and the numbers needed, might have to be examined not only in Northern Colorado but across the state.