Mesa County posts strong second quarter economic numbers
Mesa County’s economy is looking strong with a declining unemployment rate, steady workforce in growing industries and a strong real estate market, according to a study released by the business department at Colorado Mesa University.
The second quarter of 2017 saw Mesa County post an unemployment rate of 3.4 percent, down significantly from the end of the same quarter in 2016, when the rate was at 5.7 percent. The county still trails the statewide average of 2.3 percent, but has gained significantly on that average and is a full point below the national average of 4.4 percent. These numbers come in spite of a continuing decline in employment in the oil and gas industry as numbers remain far below what they were in 2008.
“I think it’s a real success story that we’ve been hit that hard in one of our biggest industries and we still have all these economic indicators,” said Nathan Perry, associate economics professor at CMU. “I think it’s amazing. I think if natural gas prices pick up in these good economic times, that can really push that industry forward and push our economy forward.”
Perry gathered the information for the study and released it as a service to the community and business leaders.
CMU had previously put out quarterly reports, but hadn’t done so in some time.
“I tried to make it useful to the community, the governments, the local businesses, the chambers. This is the first go at it,” he said.
In addition to a decrease in unemployment, Perry noted that the labor force has increased from the first quarter of 2017, although it has seen a slight dip from this time last year. However, the number of employed people has increased and the number of unemployed has dipped.
Perry said these numbers can sometimes be more telling than the unemployment rate as it doesn’t account for people who leave the area in search of new jobs.
As of the second quarter, the Mesa County labor force consists of 69,241 employed and 2,395 unemployed people.
Curtis Englehart, director of the Mesa County Workforce Center, said the workforce numbers are especially encouraging and job orders with the center for permanent positions are up as much as 60 percent.
“Our labor force is continuing to increase month over month,” Englehart said. “It’s still lower than years past, but with the low unemployment rate and stabilizing labor force, those are two of the things we look for.”
Englehart added that Colorado has the lowest unemployment rate in the nation and that is also very encouraging to see that Mesa County’s unemployment rate, which was at nearly 6 percent in the second quarter of 2016, has dropped so much.
“I think we’re finally seeing those signs of an improving economy start to come over to Mesa County,” he said.
REAL ESTATE SALES STILL ON RISE
CMU’s economic update showed a strong real estate market with more residential listings, a higher median sales price, fewer foreclosures and listed homes staying on the market for about 10 days fewer than this time last year.
Perry noted that this is indicative of a strong seller’s market. And while the market is not seeing the boom that areas like Denver and the surrounding metro area are, Perry says it’s really not fair to compare Mesa County to Denver.
“The Front Range growth is really high. It’s not a fair comparison. If you look at the national average, we’re in good shape,” he said.
The second quarter of 2017 saw 1,830 residential listings, compared to 1,630 the previous year. The average time on the market was just 60 days, versus 70 in 2016, and foreclosures saw a 30 percent drop. The median home price rose to $218,000 from $205,000 a year ago.
The drop in foreclosures is especially a good sign, according to Perry, and serves as yet another indicator that the economy is going in a good direction.
“Foreclosure rates are really low,” he said. “A lot of people were underwater in their homes after the recession hit. Really, in the last 10 years, we’re at the lowest rate we’ve been. It’s a very positive step.”
According to Kevin Bray, research and development coordinator with Bray Real Estate, there is still a shortage of inventory on the housing market. This is evident with an increase in building permits, which Bray expects to continue.
He also noted that the interest rates on both 15- and 30-year mortgages have remained fairly steady, which is important because wages have remained stagnant, even with more employed residents.
Rates on 30-year mortgages climbed to an average of 4 percent, up from 3.6 percent in the second quarter of 2016. The 15-year rate rose to 3.2 percent from 2.9 percent.
“It’s significant that we’ve remained low because that hasn’t transferred to wage recovery, but we’ll start to see evidence of that in the third quarter I think,” Bray said.
SALES TAX REVENUE INCREASING
Mesa County and the city of Grand Junction have seen an increase in sales and use taxes collected this year after a bit of a slow start to the first quarter of 2017.
Sales tax is collected in Grand Junction on retail items, excluding basic survival items such as food. Perry attributes the rise in tax collected on a more comfortable consumer, who is able to spend a little more in the community.
“It shows that people are willing to spend, it shows consumer confidence is high, it shows that people have disposable income,” he said.
Grand Junction Finance Operations Manager Jodi Romero said she’ll look for trends when planning out a budget for the next year. Sales and use tax revenue makes up the city’s general fund, which pays for public safety, parks and recreation, public works and the basic running of the government.
She’s mostly conservative with her estimates, but the more of these taxes that come in, the more people can expect to see projects such as road improvements the following year.
“We will continue to have a listing of capital projects that far exceeds resources,” she said. “We’ve been cautious in managing that, but we’re still a growing community when it comes to development.”
Romero believes the city is going to continue to grow, barring unforeseen circumstances that would hurt the nation’s economy overall. She has also noticed a different feel around town recently.
“It feels a lot different, and living through the recession, this feeling is different, but there’s also hard data to back it up,” she said. “We’re not all the way there yet, but there’s so many positive signs that you can’t deny it. And it’s backed up by information.”
APPROACHING PEAK PERFORMANCE
With these positive signs, Perry believes the county is approaching peak economic performance. But he doesn’t want people to think that means there could be a downturn coming soon. He currently doesn’t see any signs of the economy slowing down.
“All signs point to nearing peak economic performance. That’s not an ominous signal,” he said. “We can stay at peak economic performance, historically, for two to four years.”
History also leads economists to predict that there will be another downturn at some point in the future, but it doesn’t necessarily mean that it will be like the most recent recession. Perry said there are more mild recessions, and we might just be due for something less drastic.
But before that downturn returns, there is still plenty of room for growth.
“In this expansion, wages have stayed stagnant and commodity prices are still relatively low. That leads a lot of economists to believe we have more room before that peak,” Perry said. “That’s a positive sign for continued growth.”