Colorado ski country doing ‘pretty good’ in economic terms
Speaker lays out facts, figures and possible problems
Richard Wobbekind has spent a career studying Colorado’s business environment and economy. The situation right now is actually “pretty good,” in his view.
Wobbekind, the Senior Economist and Associate Dean for Business and Government Relations at the University of Colorado’s Leeds School of Business, gave a presentation Tuesday in Edwards about the state of the economy in Colorado and its ski counties. The presentation was hosted by the Vail Symposium and Vail Valley Partnership.
In a jam-packed presentation, Wobbekind provided the audience with information that indicates the national, state and resort economies are “firmly in recovery mode.” There are caveats, of course.
Employment nationally is still down roughly 2 million jobs.
That seems to be part of an “uber-impressive” recovery from the 2020 recession caused in large part by the COVID-19 pandemic. Wobbekind noted it took six years to recover from the recession that began in 2008. As of the end of the second quarter of 2021, the nation’s gross domestic product had exceeded the figure recorded at the end of 2019.
But, he cautioned, that level of economic performance isn’t sustainable without people returning to the workforce. Current figures show the nation’s labor force participation rate is still about 1% less than it was before the pandemic began.
Wobbekind noted that “people wanted to get back in the workforce” as jobs recovered after the 2008 recession. That isn’t as true now.
Worried about inflation
The current rapid rate of inflation is another area of concern.
Wobbekind said he expects consumer buying will remain strong even as prices rise. Employee compensation is higher than it’s ever been, he said, adding that household wealth is growing, thanks to rising home values and large increases in the nation’s financial markets.
But increasing wealth and attitudes don’t match right now. The Conference Board’s measure of consumer confidence is hovering around 100 in the mountain region right now. That’s pretty good, although still far below levels seen in 2018.
Consumer sentiment, as measured by the University of Michigan, has been on a downward slide since roughly 2018.
Wobbekind noted that the consumer sentiment survey puts “much more” weight on inflation.
Similarly, National Federal of Independent Business surveys about business conditions and optimism are both on downward slides.
The drop in the conditions survey is due largely to the need to pay increased wages and difficulty in hiring.
Despite that, the nation saw record retail sales in February.
Colorado’s ‘doing well’
Moving to Colorado conditions, Wobbekind noted that the state is “doing well” in a number of categories.
Population growth has slowed to the lowest rate since 1990.
While the state is essentially at full employment, there are more jobs than people to fill them. Colorado isn’t the only state in that situation, but also has one of the nation’s higher rates of people leaving their current jobs.
Responding to an audience question, Wobbekind said he doesn’t expect the mountain region’s current run-up in real estate prices to last much more than another year. But, he added, he’s far more concerned about the region’s working class.
“The economy only works” when workers live near their jobs. Forcing people farther and farther from resort workplaces only encourages those people to find work closer to home, he said.
“Child care, health care and housing are essential to keeping a system in place,” he said.
Responding to another question, this one about inflation, Wobbekind said the current situation combines supply chain inflation with increases in the money supply and too much cash chasing too few goods. All those factors could lead to a wage-price inflation spiral, something Wobbekind said he and other economists are “nervous” about.
While the U.S. Federal Reserve is tasked with keeping both inflation and unemployment low, the agency’s current focus is on inflation. With several interest rate increases anticipated this year, only time will tell if that action can slow the current trend.
300%: Eagle County’s labor and hospitality industry employment portion of the economy compared with the national average.
200%: Eagle County’s construction industry employment portion of the economy compared with the national average.
25%: Increase in Aspen taxable sales from 2019 to 2021.
15% Increase in Vail taxable sales from 2019 to 2021.
Source: University of Colorado Boulder Business Research Division