Recession over in Colorado, economist tells legislators
The recession in Colorado is over, but the recovery is just beginning, the Legislature’s chief economist declared Friday.
Natalie Mullis told state legislators in Denver that while all signs indicate the worst recession to hit the state since the Great Depression has ended, the recovery, particularly in jobs, will take years longer.
“There are a lot of glimmers of light,” she said. “We’ve had over the last year, a free-fall in consumer spending (and) it looks like that free-fall is over. So, it looks like the recession is over, and the recovery is beginning. However, the end of the recession does not mean the end of difficult times.”
Mullis said the last time the state had a recession earlier this decade, it took five years for jobs to reach pre-recession levels. This time, the state lost about 5 percent of its job base, and she’s predicting that won’t return until well into the next decade.
Part of the reason behind that, she said, was the credit market.
“The recovery is going to be constrained primarily because the credit markets are constrained,” Mullis said. “The banks, while they are shoring up their bank balances, still have to deal with problem loans. They still are facing additional burdens related to the recession’s impact on the commercial, industrial and retail real estate markets. It’s going to take several years for the credit market to loosen.”
In a 93-page revenue forecast, Mullis said the Western Slope will have a harder time in its recovery because it is too closely tied to the oil and gas industry, which won’t begin to see real recovery until natural gas prices rebound.
Unemployment rates in the region fell to 6.8 percent in October, more than double what they were a year earlier, she said.
“Mesa and Garfield counties, in particular, have been significantly affected by the decline in the natural gas industry,” according to Mullis’ report. “During the first week of December, a total of 34 rigs were operating in Colorado, down from 109 rigs at the same time last year. In Mesa County, not a single natural gas rig was operating during that period, down from nine that were operating at that time last year.”
The report said consumer spending in the western region of the state dropped nearly 21 percent in the first nine months of the year, with some counties in the region seeing greater drops.
Mullis said residential construction in Mesa County had dropped 47.7 percent in the first 10 months of the year, and the number of foreclosures was up to 165 in October, compared to 44 in October 2008.
Mullis did point to some good news for Grand Junction, including a proposed new Colorado National Guard armory that is to have 130 jobs, a new U.S. Census Bureau office that is to hire up to 1,000 temporary workers for the 20-county region, and Cabela’s announcement it would open a 75,000-square-foot outfitter’s store in town.
Sen. Josh Penry, R-Grand Junction, said that while the overall picture may be looking up, the state, and particularly the Western Slope, still faces a difficult recovery.
“There’s been a lot of rosy scenarios coming from some in the Capitol, but the reality is we’ve got some difficult months in front of us,” he said. “I look at this community on the Western Slope, and most indications are we’re in for a long 2010.”