CU Boulder report: State economy on pace to keep growing in 2019

The Colorado economy will continue to grow next year, but the pace might slow a tad. That’s the message from the 2019 Colorado Business Economic Outlook Forecast released today.

The report, in its 54th year, is compiled by the Business Research Division of Leeds School of Business at the University of Colorado.

Despite slower growth, Colorado will still be in the top 10 states next year for employment growth. Wages in the state also are expected to increase above the national average, said Richard L. Wobbekind, executive director of the Leeds Business Research Division.

The state is expected to draw about 50,000 new people to the state in 2019.

While there will be continued job growth, some industries could face a shortage of labor, particularly construction, Wobbekind said. Job growth is expected to be slowest since 2011, but the state will still add 53,200 workers in 2019, growth of 2 percent.

Boulder County’s educated workforce, strong entrepreneurial environment and continued infusion of venture capital will help keep the local economy robust, said Clif Harald, executive director of the Boulder Economic Council, the economic development arm of the Boulder Chamber.

“There’re no real threat to continued economic growth. But there could be macro economic challenges,” he said, adding it’s hard to predict how challenges from globalization, immigration and automation, will play out locally, he added.

Strongest sectors

In 2019, three private-sector industries — professional and business services; trade, transportation and utilities; and leisure and hospitality are projected to add the most jobs, according the forecast.

“(Trade, transportation and utilities) employment is anticipated to increase by 1.8 percent to 479,200 jobs in 2019, with trade (retail and wholesale) contributing the majority of industry growth. Retail sales point to continued growth of 5.3 percent in 2019,” the report states.

Tourism-related employment in Colorado will grow for the 10th consecutive year, according to the report.

Retail job growth in Boulder County has stayed flat, said Brian Lewandowski, associate director of the Leeds Business Research Division. It’s expected to remain the same, he added.

Carmen Sample, co-owner of multiple businesses in Longmont and other parts of Colorado, said that lack of growth in the sector mirrors her outlook for sales at physical locations.

“We’re not expecting a grand increase in sales at brick-and-mortar locations,” she said, adding that she anticipates a growth of 20 to 25 percent in online sales.

It’s hard to get people into a physical store, she said, and with competition from online behemoths such as Amazon, it’s hard to keep up with price wars. “It’s hard to manage the margins.”

But she remains positive about 2019 and has budgeted more money for marketing her retail businesses, which include jewelry and gift shop Crystal Joys.

In the past few years, as a small business owner with about 550 employees, she has experienced pressure to increase wages, particularly in her community health care business, Sample Supports. There is a lot of competition in health care for workers, who make wages up to $20 an hour, she said.

Diverse local economy

The Boulder area’s ability to attract venture capital creates a positive impact locally and also brings more people to the area for its high quality of life, Lewandowski said, adding he doesn’t think expensive housing affects net in-migration.

“No one is moving here for a low wage job,” he said.

In addition to being home to startups and early stage companies, Boulder County also is a burgeoning location for major aerospace, biotech, cleantech, information tech, and natural and organic product enterprises that provide high paying jobs, said Harald of the Boulder Economic Council.

The presence of different sectors helps diversify the local economy, he said. Yet, the high cost of living in Boulder can keep millennial cohorts away, he added.

Construction to grow, housing will slow

The 2019 forecast suggests the supply of new homes will slow, with new single-family permits increasing 4.9 percent and new multifamily construction falling 7.1 percent statewide. “Employment in construction will increase 2.9 percent, or 5,000 jobs, to a total of 176,800,” the report states.

Steven South, president of LSE Builders Group in Longmont, has several projects lined up, including a huge remodeling in downtown Longmont to create mixed-use space in a building the company owns, and construction of a multi-family home near Longs Peak Avenue and Martin Street on the land his company recently purchased in Longmont.

“Business has been good,” South said. “We like to keep six months of overhead expense in cash reserve at all times.”

However, he said construction costs are going up because of an increase in the cost of supplies. He also is concerned about a potential shortage of workers. Not many in the 18-to-40 age group want to work with their hands anymore, South said. Yet, given the basic resilience of the Boulder area economy, he expects growth in the coming year.

Variety of forces at work

Another sector in the state that is expected to grow though modestly — with about 6,500 jobs in 2019 — is education and health services. “Increased access to health insurance and a growing, aging population will continue to lead to more health care jobs in the state,” the forecast states.

However, in the non-government health care sector, average annual wages are lower than the state’s average wage of about $57,000, Lewandowski said.

Meanwhile, other sectors might be influenced by national and international level forces.

A drop in global oil prices could impact the value of Colorado oil production, he said. At $50 a barrel, it could slow down drilling in the state, Lewandowski said.

“Overall, the value of Colorado’s natural resources are projected to increase 1.7 percent in 2019 to over $18 billion. Industry employment is expected to post an increase of 4.8 percent in 2019,” according to the forecast.

And federal trade and tariffs policies and a strong dollar could affect agriculture, manufacturing and international trade.

Pratik Joshi: 303-684-5310, pjoshi@dailycamera.com