Colorado’s economy should hold steady in 2006 despite headwinds from rising interest rates and higher energy costs, economist Jeff Thredgold told 500 people Thursday at Vectra Bank’s 13th Annual Economic Forecast Breakfast.
“Colorado’s economy is clearly doing better,” said Thredgold, a corporate economist with the bank.
Colorado ranks 14th in the nation for job growth, respectable until compared with Nevada, Arizona, Utah and Idaho. Those states led the nation, in that order. Even wind-blown Wyoming, in eighth place, outpaced Colorado.
Colorado employers will create between 40,000 and 50,000 jobs this year, Thredgold predicted, on par with last year’s performance.
But with a 5 percent unemployment rate, Colorado has more slack in its labor markets than faster-growing neighbors such as Nevada and Utah, which have rates below 4 percent.
Colorado also has skirted the big run- up in home prices seen nationally over the past five years, making it more competitive for companies considering relocation, added Patricia Silverstein, an economist with Development Research Partners in Littleton.
Existing-home prices in Colorado have risen 29.3 percent during the past five years, far below the 112 percent gain seen in California and the 99 percent average gains homeowners in Florida and Nevada have experienced, Thredgold said.
“On a relative basis, Colorado real-estate prices are cheap,” he said.
A real-estate bubble exists on the coasts and in the Southwest, said Thredgold, but he predicted it will deflate slowly.
Long-term mortgage rates the past three years have averaged around 5.8 percent and only recently moved above 6 percent.
Silverstein expects the housing market for Denver to remain soft, with the number of homes sold falling to 51,400 this year, down from 53,000 in 2005. She expects metro foreclosures to continue to rise slightly to 15,000, up from 14,500 last year.
A softening real-estate market should work in favor of stock markets, said Thredgold, who predicted that the Dow Jones industrial average, which closed at 10,880.71 on Thursday, will reach 12,000 by year-end.
“Money will go back from real estate to stocks,” Thredgold said.
Staff writer Aldo Svaldi can be reached at 303-820-1410 or asvaldi@denverpost.com.
