The tight labor market and fluctuations in the high-tech industry will affect Colorado's economy in 2001 and slow the rate of growth, according to CU-Boulder economist Richard Wobbekind.
"The state economy will experience slower growth in 2001," said Wobbekind, director of the Business Research Division. "This is due to the tight labor market, transitions in the high-tech industry and the slower national economy."
Wobbekind's annual economic forecast was delivered at Denver's Brown Palace Hotel on Dec. 11 at 1:15 p.m.
Colorado's unemployment rate is less than 3 percent; the national rate is 4.2 percent. "We don't have enough people to fill the jobs we're creating," Wobbekind said. "We are well below a comfortable rate of unemployment."
The volatility of Internet companies also will affect Colorado's economy. The state is frequently listed as a top-5 state for New Economy jobs. "Layoffs will occur and people will be changing jobs," Wobbekind said. "But these people are highly employable and their skills are transferable."
Growth in the high-tech industry is expected to continue for three to five years. "Companies have ambitious hiring plans and are investing billions of dollars," Wobbekind said. "The location of companies such as Sun Microsystems and Level 3 in Colorado puts pressure on other national competitors to have a presence in the state."
After the forecast, Larry Jones, president and CEO of MessageMedia, will give the keynote address at 2:40 p.m. titled, "The Internet Is Transforming Our Economy聟 Are You Ready?"
Sector-specific highlights include:
o Employment - Employment and population growth rates will continue to outpace national growth rates. All sectors of the economy will experience growth in 2001. The 61,800 new jobs anticipated for 2001 represent an increase of 2.8 percent.
o Agriculture - Worldwide competition from more efficient agricultural areas such as South America are affecting this sector. Crops are suffering from the summer's drought, but the cattle industry will be stronger in 2001.
o Oil, Gas, and Mining - Production of natural gas in Colorado is projected to reach all-time highs in 2000 and 2001, fueled by record-high prices and increased demand. High oil prices should slow Colorado's steady decline in oil production and employment. Coal production in 2000 is expected to be slightly less than 1999's record level.
o Construction - Despite a leveling of value in the construction industry during 2000, construction employment has soared. Seasonal influences are less pronounced as employers keep their workers on the payroll year-round to avoid having to compete for workers in today's tight labor market.
o Manufacturing - This sector represents about 9.7 percent of Colorado's employment base. Led by strength in the durable goods sectors, manufacturing employment will climb in 2001. The growth in durable goods is lower than posted in the past because of labor force constraints. However, manufacturers are discovering methods for expanding their operations without increasing their employment base by emphasizing productivity and worker training programs, and by conducting more business on the Internet.
o Transportation, Communications, and Public Utilities - Mergers, relocations and restructuring continue to change this sector. After robust growth in 1999, many of these firms showed lower job increases in 2000. Employment is estimated to be up 2.5 percent from 1999. In 2001, the telecommunications and airline sectors should provide growth and stability to the sector. Gains will be limited, however, by continued turmoil in the public utility and railroad and trucking industries.
o Finance, Insurance, and Real Estate - This sector contributed 7.2 percent of employment growth to the state over the last decade and is expected to add 2,900 new jobs in 2001. Employment may be affected by a slowdown in the stock market, interest rate increases that cause construction decreases and minimal growth in commercial banking and credit unions as a result of new technology and merger and acquisition activity.
o Wholesale Trade and Retail Trade - In Colorado, consumer spending has grown faster than income over the past several years with subsequent robust retail sales growth. While consumer confidence and other economic indicators are quite strong, other factors, such as increased energy costs and an ambivalent stock market, will bring about a slowing in the increase of retail spending (and corresponding wholesale activity) for 2001. The forecast for retail sales growth is 7.5 percent.
o Services - The state's growth in 2001 will be dominated by the Services sector, which is expected to increase by 5 percent, adding 34,100 jobs and accounting for about 55 percent of the state's job growth.
o Tourism, Outdoor Recreation, and Conventions - In 2000, Mother Nature dealt the Colorado tourism industry several cruel blows as drought made for a weak ski season and fires caused serious declines in national park visits. The forecast for national tourism is optimistic. Factors driving the forecast are the strong national economy, real disposable income growth, strong consumer confidence, the enormous number of baby boomers moving into their peak earning years and increased international visits. These same factors, plus the new Colorado Tourism Office funding, should contribute to growth in the state's tourism economy in 2001.
o Government - Employment in the government sector will continue to grow at a slower pace than statewide nonagricultural employment. One exception is the U.S. Postal Service, where employment will increase as the Colorado population continues to grow. State government employment growth will remain static in 2000 and then increase in 2001 with the opening of new state prisons. Population growth will drive growth in education.
o International Trade - Colorado exports have continued their long-term growth trend, a 7.8 percent increase over last year. The growth of international trade is based on strong markets in Japan, Mexico, Canada and the EU, with opportunities for growth in trade to China.
The forum concludes with panel sessions at 3:15 p.m. The following lists session topics and their respective moderators.
o Making the Human Capital Investment in Technology Growth: Strategies from Industry, Government and Education - Karen Eye, University of Colorado Business Advancement Center.
o Where Can All the Workers Live? - Patty Silverstein, Development Research Partners.
o China: Market Opportunities Bolstered by Risk Mitigation - Laurel Alpert, Colorado International Trade Office.
o The Economic Impact of Energy Costs on the Colorado Economy - John Tobin, Energy Literacy Project.