Colorado's economy will slow down in the second half of 2008, but overall job growth will still remain positive for the year, according to Richard Wobbekind, an economist with the University of Colorado at Boulder's Leeds School of Business.
While several factors trouble him, such as high energy prices, inflation and continued credit trouble from the national housing bust, Wobbekind said he remains optimistic about the Colorado economy for the second half of the year.
"We're seeing some slowing of the economy now, but we are still doing far better than the national economy," Wobbekind said. "We went into the year predicting an employment growth rate for the state of about 1.9 percent, and now we're thinking 1.5 percent."
Wobbekind, who gives the Leeds School's annual Business Economic Outlook forecast each December, recently met with his research team from the school's Business Research Division and the forecast steering committee members, who represent the state's major economic sectors, for a midyear update on Colorado's economy.
"With the national economic picture still incredibly unstable, there is a lot of uncertainty going into the second half of the year," Wobbekind said. "However, our economy hasn't been drastically shaken yet by national events, and we still feel the impacts on Colorado's economy will be more incremental if there is a national downturn."
The natural resources and mining sector in Colorado has continued to be very strong through the first half of 2008, and its strength has helped spawn growth in other sectors like professional and business services, educational and health services and construction, he said.
"We have job growth tied directly to the energy industry, but we also are seeing growth in the support areas like accounting, engineering and construction. There is also strong growth in the health care and hospitality industries," Wobbekind said.
Nationally, high energy prices have brought renewable energy to the forefront, which in the long term will benefit Colorado, according to Wobbekind.
"Colorado is in a very good position when it comes to renewable energy and renewable energy research, in fact we are one of the leading states in this area, and it should be a real strength for our economy as the demand for these types of technologies grow," he said.
The agriculture industry continues to be strong but high fuel and fertilizer prices will affect the bottom line. Wobbekind believes that the flooding in the Midwest most likely will help the agriculture industry in Colorado.
The Democratic National Convention and several other large conventions being held in Denver over the summer will benefit the leisure and hospitality sector, which is especially timely this year.
"Having these large groups visit the state will help offset some of the vacationers we may lose due to the high cost of travel," Wobbekind said.
On the negative side, the early data for the construction, manufacturing, information and financial activities sectors show job losses.
"The worrisome aspect here is if we begin to see job losses tied to the credit crunch become more pervasive in the rest of the economy, such as really cutting into the professional and business services sector," Wobbekind said. "So far we haven't seen that here."
To listen to Wobbekind talk about the Colorado economy for the remainder of 2008, visit the CU-Boulder News Services Web page at www.colorado.edu/news/broadcast.