Richard Wobbekind has seen decades of change in Colorado, from huge population booms to agricultural busts. As lead economist on the annual Leeds School of Business economic forecast, he and his team pour over data and statistical models to try and suss out how the state’s economy may change in the New Year.
For 2017 Wobbekind predicts continued growth and diversitification in the state's economy.
The comprehensive report covers everything from housing costs to molybdenum mining (Colorado is the top producer in the country), but here is what you need to know for 2017.
Things will get more expensive.
The consumer price index is expected to rise. That’s a measure of the average change over time in the prices paid by urban consumers - in this case in the Denver, Boulder and Greeley metropolitan area which is extrapolated for the whole state. Core prices on goods and services are expected to rise 2.8 percent in 2017 and so is inflation - but wages aren’t expected to keep up.
“We have a fair amount of concern about that,” Wobbekind said. “The housing costs are high, the apartment rental costs are high, for this part of the country so when you see that, if people’s wages don’t start going up it’s really going to sort of damage the overall ecosystem when you look at the Colorado economy.”
Housing costs will continue to go up.
Because of our growing population, an increase in high paying tech jobs and the lack of home and apartment construction, partially due to a lack of construction workers, costs will rise.
According to the report, the largest population growth in 2017 and beyond will be along the Front Range. Half a million people will move to Colorado by 2020, and 86 percent of that growth (420,000 people) is forecast for the Front Range. The Denver Metro area, by comparison, will see 270,000 people over that period of time.
More people means more demand for housing. Tech companies, are concentrated in the areas destined for growth. Those high paying jobs can exacerbate an already tight housing market. It’s on a smaller scale, but similar to the Silicon Valley housing boom.
Technology companies are not all bad news. Wobbekind said that the tech industry has given the state more economic diversity, making it better able to weather other fluctuating industries.
“In the big picture it’s a really good thing that you have tech offsetting agriculture or oil and gas when things go down, but that doesn’t mean that that’s true for every single county in the state of Colorado or every single city that may not have that level of diversity,” Wobbekind said.
Tech companies also lead to job growth in other areas, from doctors and lawyers to service jobs. Research has found that for every new high-tech job, five additional jobs are created over time in other sectors, which can also put more pressure on the housing market.
Colorado will see over 63,000 new jobs added in 2017.
Most of those jobs will be in the construction, tourism, education and health services industries.
In the construction industry, the report found that single family home construction is expected to rise with increasing demand.
The growth in the education and health services fields is influenced by the changes in population; more young families are moving to the state, while people who moved to Colorado during the population boom in the 1970s are now in the over 65 age group, creating more need for health care services.
Richard Wobbekind says there has been a leveling off of job losses in oil and gas. Hear more of Jackie Fortier's conversation with the economist here.