Vail Valley: Report predicts economic growth, with inflation looming
Vail, CO, Colorado
DENVER – For the 15th straight month, the overall index for the mountain states region, a leading economic indicator for the three-state area of Colorado, Utah and Wyoming, advanced above growth neutral 50.0. According the Goss Institute for Economic Research, a survey of supply managers indicates the region will experience expanding economic conditions in the months ahead.
“Regional firms with close ties to mining and durable goods manufacturing continue to report healthy and improving economic conditions,” Ernie Goss of the institute said. “The weak dollar and the expanding global economy will push regional growth for the first half of 2011 well above the same period for 2010.”
The Goss Institute conducts the monthly survey for supply management institutes in the three states comprising the mountain states region. Goss also directs Creighton University’s Economic Forecasting Group and is the Jack A. MacAllister Chair in Regional Economics.
Here’s a look at some of the study’s findings:
Employment: The December employment index slipped to 56.4 from November’s 57.2. “Even as economic growth in 2010 bounced higher, firms expanded their output by productivity gains and increases in hours worked for current employees. In order to expand output further, firms will begin to expand employment more robustly in the first half of 2011. I expect job growth to approach an annualized rate of 1.5 percent for the first half of the year with manufacturing and mining tied to international markets leading the way,” said Goss.
Wholesale Prices: The regional price gauge expanded to an inflationary 71.2 from 67.8 in November. “While rapid growth in the supply managers’ inflation gauge has yet to show up in consumer prices, I forecast that to change significantly in 2011,” Goss said. “Likewise, I expect long term interest rates to grow rapidly in the first half of 2011 to compensate investors for rising inflation.”
Business Confidence: Looking ahead six months, economic optimism, captured by the confidence index, advanced to 64.8 from November’s 62.9. “While the overall U.S. economy remains weak as gauged by unemployment rates, individual firms in the Mountain States region are experiencing solid improvements in business conditions. This has translated into a strong economic outlook in terms of sales but without accompanying rapid job creation thus far,” Goss said.
Colorado indicators: The state’s leading economic indicator, based on a monthly survey of supply managers in the state, bounced higher for December. The December overall index, termed the Business Conditions Index, increased to 58.1 from November’s 53.7.
“In terms of job growth, 2010 was not a good year for Colorado with the state’s employment level growing at approximately one-fourth the pace of the U.S.,” Goss said. “Recent surveys point to improving economic conditions for the first half of 2011 with industries with close ties to energy and agriculture pushing overall state growth higher.”