Forecast for 2014 shows continued economic expansion in Metro Denver
The Metro Denver Economic Development Corporation (Metro Denver EDC) and the Denver Metro Chamber of Commerce presented the 2014 Metro Denver Economic Forecast today at Vectra Bank's 21st Annual Economic Forecast breakfast. The event took place at the Denver Center for the Performing Arts (view presentations and the webcast).
"2013 was a year of records in areas such as employment growth, housing, commercial real estate, and the stock market," said Patty Silverstein, chief economist for the Metro Denver EDC. "It will be hard to top these successes in 2014, but we do expect similar growth and expansion in the upcoming months."
Compared with the national average, Metro Denver's employment growth in 2013 was more than 1 percentage point higher at 2.9 percent, which was significantly higher than forecasted this time last year and included gains in each supersector. Silverstein forecasts job growth in 2014 to be 2.7 percent.
"Metro Denver will have quite strong employment growth in three leading sectors of our economy in 2014—natural resources and construction (8 percent), professional and business services (4.3 percent), and education and healthcare services (3.5 percent)," said Silverstein. "Growth in these industries sends a positive ripple effect through other areas of our economy."
The region's population growth averaged 1.7 percent per year between 2007 and 2012, maintaining a stable expansion rate through most of the recent recession and recovery due to strong net migration. Silverstein expects Metro Denver's population growth to moderate slightly to 1.6 percent in 2014, which is more robust than the projected U.S. growth rate of less than 1 percent through 2020.
The Metro Denver EDC's CEO Tom Clark said the forecast is encouraging for business expansion in the region, especially after a record-setting year for many indicators in 2013.
"Metro Denver will continue to record higher personal income, stronger retail sales, enhanced residential and commercial construction, and broad-based job growth at higher rates than both the nation and state. We plan to capitalize on these strengths when pitching companies considering new jobs and investment in our region," commented Clark.
The 2014 Economic Forecast reviews the events of the past several years and examines emerging trends for this year. The forecast includes national-level information and includes estimates for statewide indicators as well.
The forecast for Metro Denver includes the seven counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson. The report analyzes a variety of indicators in the areas of population, employment growth, consumer confidence, and residential and commercial real estate.
Notable indicators from this year's forecast report include:
- U.S. politics were riddled with partisanship in 2013, leading to spending cuts or "sequestration" and a 16-day partial government shutdown. Despite troubled politics, the U.S. economy expanded at a moderate pace in 2013, with gross domestic product increasing 1.9 percent and employment expanding by 1.6 percent. Stock indexes rose to record highs during the year, and personal income began to regain footing. Interest rates remained relatively low, helping to boost the residential real estate market.
- The Federal Reserve started tapering its monthly asset purchases, which are now down to $65 billion per month. While the Fed has pledged to keep its benchmark federal funds interest rate low until 2015, economists worry that tapering may lead to unwanted consequences. Additional risks to the continued U.S. economic expansion include lower-than-expected growth in the Eurozone and a slowdown in major emerging market economies that will lower demand for U.S. exports.
- Barring any unexpected shocks, the U.S. economy will continue to expand in 2014, performing better than 2013. GDP is expected to increase 2.9 percent, although the government spending component will likely remain flat. With an expected 1.8 percent increase in employment, the nation will finally reach the point of economic recovery, meaning the recovery of all jobs lost during the recession.
- Colorado ranked among the top 10 states for employment growth in 2013. The state restored all of the jobs lost during the recession by the middle of 2013, one of only about 15 states to achieve full recovery at that time. Job growth of 2.6 percent topped the U.S. growth rate by a full percentage point and unemployment was well below the national average.
- While the total employment growth rate in 2014 is expected to be slightly slower than 2013, the state should still add over 59,000 jobs. Broad-based job growth is expected across all of the supersectors in 2014, with the exception of the information supersector. The oil and gas industry in Colorado is experiencing exceptional growth that will continue throughout 2014. The construction sector is also posting large job increases, as the demand for residential, commercial, and infrastructure projects picks up. Abundant mountain snowfall during the 2013-14 season should attract more winter tourists, helping to boost the state’s leisure and hospitality industry.
- Higher personal income growth and rising consumer confidence should lead to higher retail trade sales growth in the coming year. Altogether, the state will enjoy another year of economic expansion and job growth as it continues to be a magnet for companies and job seekers due to its business friendly environment and area amenities.
Metro Denver Economy
- Metro Denver experienced job growth in each supersector in 2013, leading to a gain of nearly 42,000 jobs across the seven-county area. This employment growth rate of 2.9 percent was well above the nation and the state. In addition, the unemployment rate in Metro Denver fell to its lowest point in five years at the end of 2013 and will continue to trend down in 2014. While the pace of growth may slow somewhat in 2014, job gains will continue to be broad-based.
- The three supersectors that added the most jobs in 2013 – professional and business services, education and health services, and natural resources and construction – are likely to maintain this distinction in 2014. Only the federal government subsector is likely to shed jobs in the coming year.
- The expanding employment base provided the basis for an improved commercial real estate market. Vacancy rates decreased and average lease rates increased for all property types, a trend that should continue in 2014. The residential real estate market also remains strong with high levels of sales activity and rising home prices.