May 2010
Consumer spending driving Metro Denver’s economic comeback
After numerous months of reserved spending, consumers are increasingly opening up their pocket books, according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for May 2010.
According to the U.S. Bureau of Economic Analysis, household spending drove roughly 80 percent of the estimated first quarter growth in gross domestic product. Consumer confidence measures – while still below levels seen in a healthy economy – have improved, and a March gain in U.S. retail sales exceeded expectations.
Some of the robust year-over-year gains recently reported for retail metrics reflect the weakness of retail last spring, but many economists agree that the gains also show consumers’ desire to start spending again.
"This mentality, however, could prove fickle unless hiring accelerates enough to reduce unemployment and boost incomes," stated Patricia Silverstein, chief economist for the Metro Denver EDC and president of Development Research Partners.
Metro Denver employers added 6,700 jobs between February and March. Like gains from prior months, though, the March gain was smaller than expected for this time of year. Revised unemployment figures show Metro Denver’s unemployment rate measured 8.2 percent in March and in the prior two months.
However, the average weekly number of unemployment insurance claims filed in Metro Denver declined between February and March. The March average was the lowest reported for any month since October 2008, and the average number of Metro Denver claims for the first quarter fell 21.7 percent below the average for the first quarter of 2009.
"In addition to retail sales and decreased unemployment claims, other fundamentals point to the fact that the economic is progressing. Consumers are increasingly buying houses as well as traveling," said Silverstein.
The number of homes sold in Metro Denver nearly doubled between February and March as local buyers rushed to take advantage of tax credits. The March sales total was 12.4 percent higher than last year’s sales level, and the month’s vigorous activity helped home sales rise 2.8 percent in the first quarter above sales from the first quarter of 2009.
Additionally, February passenger traffic at Denver International Airport rose 5.1 percent over-the-year. The higher February figure drove a four percent year-to-date increase in total passengers.
In another sign the economic rebound is imminent, Colorado was ranked as the nation’s second-best state in economic outlook by the 2010 ALEC-Laffer State Economic Competitiveness Index. The index – released by the American Legislative Exchange Council (ALEC) – examines each state’s tax structure and spending to demonstrate how public policy shapes economic growth.
Fourteen of 18 indicators moved in a positive annual direction this month, compared to 12 positive annual indicators in the previous report. Twelve indicators moved in a positive monthly direction, compared to thirteen indicators in the previous report.
The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends.