There are few bright spots on the economic front for Colorado Springs and the Pikes Peak region, but the release of the sixth annual Southern Colorado Economic Forum’s report found a few areas of optimism while voicing concern the region could fall into another recession.
“Local good news has included a continued decline in unemployment and stronger than expected single-family housing construction,” said the report’s authors. Frederick D. Crowley, associate research professor at the University of Colorado at Colorado Springs, and Thomas J. Zwirlein, faculty director of connections and professor of finance at UCCS, wrote the report. Crowley is also senior economist for the Southern Colorado Economic Forum.
“Today’s economy is noticeably weaker than in 1977 and is in danger of slipping into a double-dip recession,” the report said. The year 1977 is a marker year and used because growth in gross domestic product was strong in the years around 1977, with numbers in the five percent range.
Real growth in gross domestic product in 2000 was 3.75 percent, and .25 in 2001. Those numbers are expected to be about 2.3 percent for 2002, and 3 percent for 2003.
The reasons for the down numbers are many. Foremost, of course, is the recession the nation has suffered with the past couple of years. The terrorist attacks of last year further damaged the economy, and Colorado was hit hard because of the effects on tourism.
This year, however, Colorado Springs suffered the worst drought in memory, and from raging wildfires that smoked out many tourists.
Then, there’s that little matter of losing more than 7,000 high-paying jobs in the technology sector.
“New job announcements have been slow in coming and have not been at comparable wage and salary levels to the positions we lost over the last 18 months,” Crowley said. “Strong gains in new jobs are needed.”
Among others, the onus of generating new jobs falls to the Greater Colorado Springs Economic Development Corporation, which markets the city to companies and manufacturers nationwide. Announcements lately have been few, but some major news is forthcoming, said EDC executive vice president, David Seamon.
“It is going to be a good Christmas,” Seamon said when asked about new jobs for the region. The EDC announced Wednesday that Pavestone Company, the nation’s largest producer of interlocking concrete paving stones and segmental retaining walls, plans to build a manufacturing facility in Fountain, with ground-breaking anticipated for 2003. The company will initially employ about 50 people, but expects to expand to 100 when the plant is at full capacity.
However, more good news is forthcoming, Seamon said, though he is not at liberty to name names for a few days.
“I suspect that from now to the middle of November, we are going to have three other announcements,” Seamon said. “My annual goal is to bring approximately 2,300 jobs to Colorado Springs, and I expect to achieve that target.”
Even during a recession, Colorado Springs is not a hard sell, Seamon said, because people enjoy the lifestyle and environment.
The EDC will soon announce than 2,000 jobs are coming to the region, and the employers are national companies, Seamon said. The jobs will not pay the money many of those recently lost paid, but they are good jobs, added Seamon.
“I don’t think that’s going to happen for a while (high-paying employment)… the jobs we lost at MCI and Intel are high-tech jobs that are probably remnants of the bubble during the 1990s, and I’m not sure anywhere in the country someone can replace those kind of jobs,” added Seamon.
However, as not everyone is an engineer or software author, employment of almost any kind is wanted and needed, officials said.
A number of factors will continue to affect the city and region’s economic recovery, the report’s authors said. Primary concerns are interest rates and continuation of this year’s drought.
“Mortgage rates are expected to rise in the near future,” Zwirlein said. “If rates rise, some entry-level homebuyers will not be able to afford the monthly payments and will be effectively priced out of the market.”
However, the economics of water rights and delivery are also major issues, and if the region suffers another drought this winter and spring, another serious situation could arise.
“Insufficient water capacity may lead prospective firms to decide not to locate in El Paso County,” Crowley said. “The community is at a water crossroads.”
Severe water restrictions in Colorado Springs at the end of this summer could become worse if the drought continues. A worst-case scenario would be a limit on the number of new water taps in the city.
If you would like a copy of the sixth annual Southern Colorado Economic Forum, the authors may be contacted via e-mail at firstname.lastname@example.org or email@example.com.