Colorado Economy Expected to Show Modest Growth in 2004

An expanding national economy, led by increased business spending and improving equity markets, has prompted improved economic conditions in Colorado and laid the foundation for modest growth in 2004, according to CU-Boulder economist Richard Wobbekind.

Wobbekind's announcement was part of the 39th annual Business Economic Outlook Forum hosted Dec. 15 by the University of Colorado at Boulder's Leeds School of Business.

While the economic recovery has been largely a "jobless recovery" for many areas of the country, including Colorado, 2004 is expected to see some job growth.

"We expect an increase in employment of 1.5 percent in 2004," said Wobbekind, director of the Business Research Division at the Leeds School of Business. "Growth will be led by renewed demand for professional and business services, the ongoing need for health care and a return of tourism-related industries."

Wobbekind said that each area is growing for different reasons.

"Pent-up demand and increased confidence in the economy will increase the need for such services as engineering, computer systems design and other professional or technical business services," Wobbekind said. Almost 12,000 jobs are expected to be added to the professional and business services sector in 2004.

Health care employment, which grew at an annual compound rate of 3.5 percent between 1993 and 2002 and was one of the few sectors to grow during the recent downturn, will continue its growth in 2004. "Nationally, there is a critical need for health care workers, particularly nurses," Wobbekind said. "Even though five new hospitals have been built in the metro area, employment continues to be limited by the supply of quality labor." Health care employment is expected to increase by 3,500 jobs in 2003 and 6,900 jobs in 2004.

In line with the improving national economy, Wobbekind said that about 8,200 jobs are expected to be added in the leisure and hospitality sector, the foundation of the tourism industry. In total, Colorado is expected to gain 32,300 jobs in 2004, breaking a span of two consecutive years of job losses in the state.

Colorado lost 41,700 jobs in 2002 and is expected to lose 34,600 jobs in 2003. Since 1939, when the Bureau of Labor Statistics began tracking employment data, Colorado had never experienced job losses in two consecutive years.

Between 2000 and 2003, the manufacturing sector lost 38,000 jobs, professional business services lost 29,500 jobs and 19,700 jobs were lost in the information sector.

"It has been especially difficult to lose jobs in these areas because average wages for these sectors are much higher than the overall average wage," Wobbekind said. "The good news is that we will be seeing a strong recovery in professional and business jobs, as well as more modest recovery in information and telecommunications."

Also on a positive note, retail trade sales are expected to again grow at a rate greater than inflation. "The last three years have been challenging for retailers. In parts of the state the retail market is saturated and in many cases heavy discounting has been necessary for stores to remain competitive," Wobbekind said.

Wobbekind's presentation at the Business Economic Outlook Forum was followed by a Q-and-A session featuring some of the state's top economists and keynote speaker Larissa Herda, chairman and CEO of Time Warner Telecom.

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