2013 Economic Forecast for Metro Denver
2013 Forecast - Key Indicators
|METRO DENVER||2012 (e) ||2013 (f)
|Retail Trade Sales
|New Residential Units
The Metro Denver Economic Development Corporation (Metro Denver EDC) and the Denver Metro Chamber of Commerce presented the 2013 Metro Denver Economic Forecast on Jan. 30, 2013, at Vectra Bank's 20th Annual Economic Forecast Breakfast at the Denver Center for the Performing Arts.
According to the Metro Denver EDC's Chief Economist Patty Silverstein, the seven-county region will achieve full economic recovery in 2013-meaning that all jobs lost during the recent recession will be regained-and Metro Denver will begin a new growth path.
"Employment growth in the region is projected to exceed that of the state and nation. Several sectors in the area should perform well, including education and health services, professional and business services, and natural resources, mining, and construction," explained Silverstein. "Unemployment in Metro Denver will decline, but as is the case with the state and nation, it will stay elevated through at least 2013."
Job growth in Metro Denver accelerated during 2012, and the year finished with stronger-than-expected employment expansion, adding 34,500 jobs. Overall, employment increased 2.5 percent from 2011 to 2012 (compared to a forecasted rate of 1.1 percent). Silverstein forecasts job growth in 2013 to be 2 percent.
"Metro Denver will outperform the nation as a whole during 2013," said Silverstein. "Hiring announcements continue to dominate the area's news and the number of healthcare and financial services expansions are particularly noticeable."
The attraction of the area continues to draw new residents through migration, which supports important aspects of the economy, including residential real estate. Silverstein anticipates the region's population to grow by 1.4 percent in 2013, which is much higher than the projected U.S. rate of 1 percent.
The combination of high demand and low inventory may lead to a supply imbalance in Metro Denver's residential real estate market. Existing home sales will continue to grow, but at a slower rate forecasted at 4.8 percent in 2013, compared to 17.5 percent in 2012.
The 2013 Economic Forecast reviews the events of the past several years and examines emerging trends. The forecast includes national-level information and includes forecast for statewide indicators as well.
The forecast for Metro Denver includes the seven counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson. Economic indicators analyzed include: population, net migration, employment growth, non-agricultural employment, unemployment, retail sales growth, and new residential units.
Notable indicators from this year's forecast report include:
- The United States endured a challenging political year, with elections and policy decisions overshadowing much of 2012. The negotiations over the "fiscal cliff" kept businesses and consumers awaiting a resolution and wondering if spending cuts and tax hikes would take effect. Some economists predicted that failure to stop some or all of the fiscal tightening measures would lead to another recession. Consumer confidence noticeably dipped, and businesses put off hiring and investment. In addition to problems in the United States, global economic woes remain as risk to recovery. The euro zone crisis is forecast to keep the area in a mild recession through 2013, but European policymakers are taking moves to mitigate problems and help ensure they do not occur again.
- While political leaders did reach a partial fiscal cliff deal, many decisions remain. Tax cuts for most Americans were reinstated, helping to boost optimism and assuage some economic worries of consumers. Analysts believe the worst of the foreclosure crisis is behind us, and the residential real estate market has been improving. Sales of homes are increasing, as are prices. While growth in the job market is expected, it will not be enough to decrease unemployment significantly.
- Overall, the United States will continue to make steady progress towards a full recovery. Still high unemployment will continue to make wage growth difficult, but gradual gains in income via other sources should improve consumers' financial situations. Household spending is still strong, borrowing costs are at all-time lows, and business investment is picking up.
- Economists believe that Colorado will remain as a top 10 performing economy in 2013. Employment gains in 2012 outpaced the nation and should do the same in 2013. While unemployment continues to be elevated in the state, it will remain slightly below the national average. Job gains will be broadly based across all sectors with three exceptions: transportation, warehousing, and utilities; information; and the federal government.
- Colorado was the seventh-fastest growing state in terms of population between July 2011 and July 2012. In addition to higher-than-average economic performance, the state's unique assets-a good quality of life, low business costs, educated workforce, and others-will continue to attract new companies and residents. Colorado's growing population will help keep the residential real estate market healthy, as demand increases for houses and apartments.
- Construction will also benefit from the influx of new households as new residents will take advantage of low interest rates and seek loans for new houses. As the overall economic recovery continues at a slow, steady pace, Colorado can expect to achieve improvements in most economic indicators in 2013.
Metro Denver Economy
- The Metro Denver residential real estate market will continue to outperform the nation with decreasing foreclosures, increasing home prices, and strong new construction activity. The region continues to be a highly attractive place to live and do business, as evidenced by existing company expansions and the attraction of several major new corporate players.
- There are several positive signs for the retail industry. Retail sales in Metro Denver increased nearly 8 percent through the third quarter of 2012 compared to last year's numbers, pointing to higher demand for retail services and the potential for expansion in the retail market. Additionally, work on FasTracks and the Union Station redevelopment is spurring construction and retail activity along the rail lines. Easier transportation access will bring more consumers to shops, more jobs, and increased spending potential.
- Several infrastructure projects in the Metro Denver area are helping to ensure steady construction employment. The Colorado Department of Transportation is increasing spending by $100 million in 2013 to add to the base of $400 million that was spent on projects in 2011. The Regional Transportation District (RTD) is expected to spend nearly $2 billion in 2012 and 2013 on FasTracks projects which will connect the Metro Denver region with 140 miles of new light rail, commuter rail, and bus rapid transit, with four rail lines opening in 2016. As the region continues to make these important investments, economic progress will continue in Metro Denver at a steady pace.
A full report is available to Metro Denver EDC investors.