Colorado shouldn’t slip into a recession next year even if the rest of the country does, predicted Richard Wobbekind, an economist with the University of Colorado at Boulder’s Leeds School of Business.
“Continued, moderate growth is on tap for the state. Colorado will definitely not enter a recession,” Wobbekind told an audience gathered Monday at the Grand Hyatt Hotel in Denver for the 2008 Colorado Business Economic Outlook.
Colorado should add 43,300 jobs next year, he said, representing a 1.9 percent increase that would outpace the 1.1 percent rate of job growth forecast for the United States as a whole.
The state’s unemployment rate will rise to 4.2 percent in 2008, according to the forecast, up from 3.7 percent in October, as population growth outpaces job growth.
Colorado will gain 103,800 new residents next year, including 62,500 net new migrants, pushing the state population above 5 million for the first time.
More than 100 economists, academicians and business leaders contributed to the 2008 Outlook, which Wobbekind described as the most difficult to put together among the report’s 43 annual editions.
A slump in housing construction, rampant foreclosures along the Front Range and tighter credit markets have clouded the future.
Colorado, however, should be able to shake off the downturn better than other states because of strong activity in oil and gas, and mining.
“We may get to skip this (recession),” said Tim Sheesley, an economist with Xcel Energy.
Natural resources and mining activity will create 5,000 jobs, giving that sector a 20 percent rate of job growth.
That activity in turn should help professional and business services, a broad category that covers jobs as diverse as engineers and receptionists, create 15,500 jobs next year.
Education and health-care services are expected to add 8,000 jobs, making it another source of strength next year.
The housing downturn will limit growth in financial services, which covers most real-estate and mortgage-lending jobs. That sector is expected to add only 400 jobs.
Manufacturing will suffer the largest losses, with 4,000 jobs eliminated next year.
Retiring U.S. Bank regional economist Tucker Hart Adams, who has called for a recession in the near future, held by her forecast.
“I just don’t think the American consumer can continue to spend more than he earns,” Adams said. “That is exactly what will cause the recession.”
Job losses in construction will be more severe than the 1,000 predicted in the 2008 Outlook, she said.
Single-family housing permits are expected to fall 34 percent this year after a 24 percent decline in 2006, according to the Outlook. Permits, after hitting a 20-year high in 2005, are running at half of 2005’s level.
The value of all construction in the state, however, is expected to rise to $12.5 billion, up from $12 billion this year but down from the peak of $15 billion in 2006.
That’s because commercial and infrastructure development are picking up the slack of declining home construction.
Another area of concern noted by Wobbekind was a sharp decline this year in the value of technology products exported from the state.
Manufacturers have moved high-value production either offshore or to plants in other states, causing exports from the state to decline despite a weaker dollar.
Among some of the other predictions from the survey:
Inflation in the metro area will tick down to 2.7 percent, compared with 2007’s estimated rate of 2.9 percent.
Farm revenues will decline slightly after a bumper year in 2007 but will remain robust at $6.84 billion.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
