Colorado recession forecast: fair
The Denver Post
Already more than a year old, the U.S. recession could run another six to 12 months but spare Colorado its full wrath, according to economic forecasts presented Wednesday morning.
“This is a little bit like having the coolest seat in hell,” joked Tom Clark, executive vice president of the Metro Denver Economic Development Corp., about Colorado doing better than other states in the worst downturn since the 1930s.
Although many economists expect a national recovery to emerge by the third quarter, VectraBank Colorado economist Jeff Thredgold said he leans toward a recovery starting in the fourth quarter.
“We are going through a deleveraging of a financial house of cards built up over 10 years,” he said.
Financial firms have written off $1 trillion in losses tied to mortgage-backed securities, and Thredgold said another $1 trillion in write-offs is still expected.
But governments and central banks have injected a massive amount of stimulus, and that will lift the economy at some point, he said.
Patricia Silverstein, an economist with Development Research Partners in Littleton, expects Colorado to see flat retail sales and negative job growth of 0.4 percent this year, compared with a decline of 3.5 percent in U.S. retail sales and a 1.1 percent decline in jobs nationally.
Colorado has lost jobs on an annual basis only seven times since 1940 ” three this decade, she said.
Thredgold, Clark and Silverstein spoke at VectraBank’s 16th annual Economic Forecast Breakfast at the Denver Performing Arts Complex’s Donald R. Seawell Grand Ballroom.
“2009 will be hard, and the recovery will be slow in 2010 and 2011,” said Martin Shields, a regional economist with Colorado State University who gave a separate forecast Wednesday morning to the South Metro Chamber of Commerce.
Colorado boasted the fifth-best rate of job growth in the U.S. last year, despite having a mix of industries that overlaps closely with the nation as a whole, Shields said.
But Colorado isn’t overly concentrated in the sectors being hit hardest by this downturn ” financial services and durable-goods manufacturing.
Also, Colorado didn’t experience the big run-up in home prices seen in states such as California, Arizona and Nevada, leaving it less vulnerable.
Silverstein expects metro-Denver median home values to increase 1 percent this year, making the metro housing market one of the first in the nation to recover.
Aldo Svaldi: 303-954-1410 or email@example.com