Grand Junction Daily Sentinel Newspaper-September 12, 2007
By Wyatt Haupt, Jr.


With the exception of Grand Junction, Colorado will follow the U.S. economy into a recession next year, according to an annual forecast released Tuesday.

That outlook comes from Tucker Hart Adams, chief economist of U.S. Bank's Rocky Mountain Region, who wrote the forecast titled "Delicate Balance."

Adams forecast employment growth in Colorado will ease to a reading of 0.5 percent, or 11,500 jobs in 2008, after expanding at a clip of 1.5 percent, or 35,000 jobs, in 2007.

She estimated the state's unemployment rate will increase, "as the recession deepens," to 4.8 percent, or one full percentage point from the July 2007 reading of 3.8 percent, as estimated by the state's labor department.

Additionally, she wrote, the "lack of growth in real (inflation adjusted) income, along with rising mortgage payments" will cause people to reduce spending.

She forecast total retail sales will increase 3.9 percent in 2008, or well below the 7.6 percent rate in 2007.

Adams, who also heads The Adams Group Inc. of Colorado Springs, said Tuesday in a telephone interview that because the state hasn't experienced the "speculative" run-up in housing prices seen in other parts of the country, the recession won't be as deep in Colorado.

"For the Front Range, where you have 80 percent of the population, housing prices have not been increasing at double-digit rates in the (last) few years…not like Las Vegas, Phoenix or Miami," she said.

That, Adams added, should help soften the recessionary blow in the state. Her thinking is: Because home prices have gone up faster in areas such as Las Vegas and Phoenix, a slowing economy will more quickly pull them back down.

She said the west end of the state, Grand Junction and Mesa County in particular, has benefited mightily from a vibrant natural resources sector, and that will be unlikely to change next year.

"What Grand Junction has that is unique is something driving job growth: the energy industry," Adams said.

That creates spin-off jobs, such as "people running a service station" or other positions that serve the area's growing population.

"You've just got this one positive thing going for you," Adams said.

But she cautioned there is one economic bullet the Western Slope will not be able to dodge in 2008.

"People over there with variable rate mortgages, they will adjust, and their payments will go up," Adams said. "Consequently, there will be people who have gotten themselves heavily into debt...Credit card bills and things like that are no different in Grand Junction."

(c) 2007 Cox Newspapers, Inc. - The Daily Sentinel

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