For 50 years, CU-Boulder business analysts have produced a widely anticipated Colorado economic forecast. Lately, what they see looks a lot like the flourishing 1990s.
In booms, busts and tranquil times, Richard Wobbekind (PhDEcon’84) crisscrosses Colorado talking with people eager to know whether to prepare for prosperity or privation.
When times are hard, he says, he’s in greatest demand.
“No one really wants to hear it,” says the CU-Boulder economist, who leads the business research division of the Leeds School of Business. “But they want you to give them a glimmer of hope.”
These days, fewer people need reassurance: Colorado is booming.
“I put together a ‘concerns’ slide, because everybody was saying, ‘You’re so rosy,’” says Wobbekind, who oversaw his first issue of the Colorado Business Economic Outlook in 1988-89, as the state was emerging from a period of sharp economic contraction amid national affluence. (The very first issue appeared in December 1965.)
A few numbers suggest Colorado’s enviable circumstances. In 2013, the Centennial State ranked fourth among all states for employment growth — up 68,100 jobs from 2012, or 2.9 percent, compared with an increase of 1.7 percent for the nation. Only North Dakota, Utah and California grew jobs faster. For 2014, Leeds forecasters anticipate similar Colorado job growth.
The state’s overall 2013 economic growth of 3.8 percent (total value of goods and services) was almost double the nation’s and placed Colorado sixth among all states. (Four of the top five were also in the west: North Dakota, Wyoming, Oklahoma and Idaho grew faster, according to federal statistics, along with West Virginia.) Forecasters anticipate that Colorado’s economy will rank among the fastest growers for 2014 also.
By now, the state has regained the jobs lost during the 2007-09 recession and added more. Some analysts are now contemplating the possibility of acute labor shortages in some industries, including construction. In Boulder, tech firms compete fiercely for software engineers.
Barring a sudden reversal of fortune, they say the state should see continued job growth and remain one of the fastest-growing labor markets in the country.
This fall, as Wobbekind and his research team prepared the 50th annual Colorado Business Economic Outlook, they expected a strong finish for 2014 and a bright 2015. Barring a sudden reversal of fortune, they say the state should see continued job growth and remain one of the fastest-growing labor markets in the country.“This will be heyday kinds of numbers again,” says Wobbekind.
To be sure, not all parts of Colorado and all Coloradans enjoy the current prosperity equally. In general, Denver and regions north and east are thriving, according to Leeds researcher Brian Lewandowski (MBA’07), while growth to the south and west has been slow, flat or worse. State unemployment is lower than the nation’s — 4.7 percent vs. 5.9 percent as of September — but well above Colorado’s all-time low of 2.6 percent, reached in early 2000. Still, Colorado unemployment is at its lowest rate in more than six years.
In short, the recession of 2007-2009, the worst in the United States since the 1930s, is now more of a painful memory in the state than a lived reality.
As Wobbekind sees it, the flourishing 1990s — which saw the opening of Denver International Airport, the arrival of the Colorado Rockies and Major League Baseball, massive population growth, a surging telecommunications industry and enthusiastic business investment — might be “the only other parallel in Colorado history.”
New oil era
Perhaps no part of Colorado is prospering more than Weld County, northeast of Boulder, where an oil and gas boom has produced nation-leading job growth and economic opportunities for businesses elsewhere in the state.
An area of about 270,000 people and more land than Delaware and Rhode Island combined, Weld sits above a part of the Denver-Julesburg geologic formation and its large oil and gas deposits. The natural resources have always been there; increased use of hydraulic fracturing methods, or fracking, and horizontal drilling have provided better access. In 2013, Colorado produced more oil than any year in its history — more than 64 million barrels — most of it in Weld.
“What’s going gangbusters — it’s clearly fossil fuel extraction,” says Wobbekind, who is executive director of Leeds’ Business Research Division and a senior associate dean at the school. “That’s the difference between us being an average-growth state and in the top five, where we are now. We’ve got balance, but also growth. It’s the energy growth that’s the difference.”
All that oil extraction requires lots of labor. Workers — roustabouts and welders, engineers, geologists and others — have flooded in. In 2013, Weld’s 6 percent employment growth led all large counties in the U.S. And oil and gas industry jobs pay well: $104,626 on average for Colorado workers involved in finding, producing, moving and marketing the product, according to a 2014 Leeds report.
Oil production requires many ancillary services also, benefitting construction and real estate firms, architects, lawyers, bankers and many others.
Colorado has seen energy booms before, of course — and devastating busts, as in the mid-1980s, when the industry workforce fell by half after a dramatic expansion during the 1970s. The difference today, Wobbekind says, is a more diverse state economy that benefits from energy expansion but is less dependent on it due to expanded sectors in technology, tourism and information, for example.
What’s going gangbusters — it’s clearly fossil fuel extraction... but this time, it's a lot more than an energy boom.
At the moment, Colorado’s backbone industries are on solid footing, and Leeds forecasters anticipate continued job growth in nearly all.
Says Wobbekind, “It’s a lot more than an energy boom.”
In Boulder County, for example, high-tech is on fire.
“Boulder has a lot of intelligent folks around,” says Jud Valeski (CompSciAp’96), who in 2008 co-founded a social media data provider called Gnip, which was acquired by Twitter in April. “And tech thrives on that.”
Activity in an already healthy computer software industry has intensified, complementing established technology-related firms in aerospace, telecommunications and computer hardware. Meanwhile, the local pool of deep-pocketed investors ready to finance start-ups and existing firms’ growth has expanded, Valeski says.
Tech firms far beyond their start-up stages are planting flags in Boulder: Microsoft, Google and Twitter all have Boulder offices, employing hundreds of workers, he notes. Music service Pandora is hiring software engineers for a Boulder office.
“They’re placing big bets in the area,” Valeski says.
The lifeblood of tech firms is intellectual capital. While Valeski was at Gnip, he says, the firm was able to find most of its talent in Colorado. But successful recruiting required “fighting tooth and nail” given abundant local options for tech workers.
CU-Boulder plays an important role in Colorado’s tech ecosystem. Valeski, who grew up in Boulder and still lives here, views the university’s recent addition of a B.A. degree in computer science as a move that will yield the broad-thinking workers and entrepreneurs necessary in the 21st-century high-tech economy. The B.A. program has opened the computer science major to students outside engineering and led to a steep rise in enrollments. (See related story)
“The people that come out are going to be much better prepared for working in and starting [tech companies],” Valeski says.
(Valeski himself majored in a computer science applications, a discontinued major that also allowed students to develop technical skills through the engineering school while nurturing liberal arts interests, in his case, political science.)
CU deliberately fosters enterprise through the business school’s Deming Center for Entrepreneurship and the law school’s Silicon Flatirons program, both of which support emerging companies, and through the system-wide CU technology transfer office, which helps commercialize research discoveries. In summer 2014 Forbes magazine ranked CU-Boulder among the nation’s top 20 most entrepreneurial universities.
Students are hardly waiting for instructions.
In early 2014 a pair of undergraduates and a recent MBA graduate opened Spark Boulder, a 5,400-square foot, non-profit co-working space and business incubator on University Hill. To date, scores of budding enterprises have occupied space there, according to co-founder and managing director Fletcher Richman (ElEngrCompSci’14). In October, resident operations were engaged in software, sports, ski apparel, health care delivery, plastics development, art distribution and other industries.
“One of the big values we create is the ability for [people from] all these different backgrounds to meet each other,” says Richman, who, in addition to managing Spark Boulder, works for PivotDesk, a Boulder-based startup that facilitates office sharing and provides small-business services.
The Colorado entrepreneurs with the highest profile outside the state in 2014 may be the ones in its newest industry, recreational marijuana.
Through August, the industry had produced more than $45 million in state taxes, licenses and fees, and spawned hundreds of new businesses.
But despite marijuana entrepreneurs’ vigor and global curiosity about how they are changing Colorado society and economics, recreational marijuana sales have so far affected the economy modestly, according to Leeds research.
And if other jurisdictions follow Colorado’s lead, as Washington State has and others are considering, competition will likely cap growth.
“As a percentage of the total economy,” says Lewandowski, “the industry remains relatively small.”
Somewhat larger lately is the list of big-picture concerns that could check Colorado’s growth, among them high local housing prices, falling global oil prices, slowing growth in China and the Ebola crisis.
“What do you do in the strong years?” Wobbekind says. “Make sure you’re ready for the lean years when they come.”
Photography courtesy RJ Sangosti/Denver Post