Colorado's economy will see a slowdown in growth in 1999, according to ¶¶ÒõÂÃÐÐÉä-Boulder economist Rich Wobbekind.
Wobbekind, director of the Business Research Division at the College of Business and Administration, will present the findings of his 1999 economic outlook at 1:15 p.m. Monday, Dec. 7, in the grand ballroom of Denver's Brown Palace Hotel.
Sam Addoms, president of Frontier Airlines, will give the keynote address.
"I'm going to say that we should be cautiously optimistic about the state of our economy in 1999," Wobbekind said.
His detailed economic report indicates the manufacturing sector of the state's economy is of great concern. "Manufacturing hasn't seen the full fallout of the Asian economic crisis yet," Wobbekind said. His team of researchers surveyed manufacturing firms and found that most firms did not perform up to their expectations in 1998 and that they are tentative when forecasting 1999. "They didn't forsee the impact of the Asian Flu. In fact, many unexpected events transpired this year," he said.
This year's report, the 34th, was the most difficult for Wobbekind to predict.
"I'd say of all the forecasts we've done, this one has the most room for variance because of the economic problems in Latin America and Asia," Wobbekind said. "More importantly, there is far greater downside risk to this forecast."
Despite his concern about negative impacts from abroad, Wobbekind said the state will experience a 2.8 percent job growth rate. Most of that growth will occur in the retail and service industries.
Colorado will continue to see a slight growth in population in 1999, and Wobbekind said the state's unemployment rate would rise slightly because of it. "This doesn't mean we're going to see much relief from the tight labor market though," he said.
If Colorado does experience a slowdown more drastic than the one predicted, Wobbekind said businesses that have been lax in customer service will feel the negative effects first. "Employers don't have an ample pool of job applicants right now, and frankly some areas – like the food service and retail areas – have had to take on a lower quality of employee in order to survive. But the first things customers will do if a slowdown occurs will be to stop patronizing businesses that give bad service," he said.
However, the ¶¶ÒõÂÃÐÐÉä-Boulder economist is not predicting doomsday. In fact, he said the Asian economic crisis helps U.S. consumers in the short run. "Overall, the impact on Joe and Jane Colorado is positive. We've seen a lot of pushing down of the cost of inputs to the production process, and lower prices for natural resources such as oil and gas, so a lot of consumers have been benefiting from the crisis by getting cheaper products," Wobbekind said.
Other notables, by industry:
o Colorado's agriculture industry had a hard year in 1998, and Wobbekind doesn't see it getting much better in '99. "Prices of wheat and corn are so low, supply is very high across the globe, and I think without the government bailout of farms, some Colorado farmers would have been in serious trouble."
o The construction industry will experience growth in '99. Wobbekind said he won't be surprised if Colorado non-building construction approaches the level it did during the DIA building boom.
o Small Colorado ski areas saw a significant increase in the number of skier visits in 1998, and Colorado ski resorts will do well in '99. "We have about 5 percent of the ski areas in the United States and about 20 percent of the skiers, so we're doing quite well in the overall composition of the ski industry."
o Colorado continues to suffer from the lack of state-supported tourism promotion. "The bottom line is that tourism is slowing and it's such a critical part of our economy that we're really concerned about it," Wobbekind said. He cited Durango as a specific example of a town that has suffered from the lack of promotion.
o State oil companies are in a decline, evidenced by Amoco announcing it will move its headquarters out of Denver – but natural gas companies are performing far better.
Each year, Wobbekind compiles a team of leading economists and business executives to participate in the economic forecasting procedure. This year, significant presenters include Patricia Silverstein, Development Research Partners; Sam Cassidy, Colorado Association of Commerce and Industry; Nancy McCallin, Colorado Legislative Council; Jeff Romine, Denver Regional Council of Governments; and Tim Sheesley, New Centuries Energies.