Economic numbers from early 2014 would lead economists to believe there’s another recession in America.
Not so, said Fred Crowley, a UCCS professor of economics, economic consultant and well-known authority on the subject.
In the first quarter of the year, the gross domestic product dropped 2.9 percent, an annualized number, Crowley said.
“Normally, if you see a negative 2.9 percent, we’d be in a recession,” Crowley said.
That number compares to the fourth quarter of 2013, when the gross domestic product increased 2.6 percent.
Crowley and others attributed the low first-quarter number to frigid weather — caused by the effects of the polar vortex, which brought Arctic-like conditions across much of the United States — at the beginning of the year.
“It wasn’t really representative of what was going on in the economy,” Crowley said, citing employment numbers that have continued growing. Unemployment numbers have dropped, and initial claims for unemployment are also still dropping.
“Bad weather in much of the U.S. in early 2014 was a significant drag on the economy, disrupting production, construction and shipments and deterring home and auto sales,” Gus Faucher, economist with the PNC Bank, told Forbes.com. “But data show growth rebounding in the second quarter, with improvements in home and auto sales and residential construction.”
Also in Forbes.com, Stephen Auth, chief investment officer at Federated Investors, predicted the second quarter GDP would come in at an increase of more than 4 percent.
“The labor market is recovering,” Crowley said. Furthermore, “For the first time in many years — pre-2008 — real wages are going up.”
“Consumer confidence … drives 65 to 70 percent of all economic activity.”
– Fred Crowley
[/pullquote]Real wages increased 0.1 percent over last year, he said. And although the upward rate is minimal, “it’s a whole lot better than a negative number,” Crowley said.
For the first quarter in the Colorado Springs market, net wages increased .5 of 1 percent, Crowley said. He added the optimistic note that if that rate continues, it will result in a 2 percent increase this year over last year.
El Paso County employment is up 1.3 percent from a year ago, and consumer confidence is up 1.8 percent from last year, “so consumers are feeling really good.
“Consumer confidence — ultimately that drives 65 to 70 percent of all economic activity,” he said.
Secretary of State Scott Gessler listed on his quarterly business and economic indicators site that confidence continues to grow slightly.
The Leeds Business Confidence Index increased from 59.9 percent to 61 percent, where 50 is measured as neutral, according to Gessler’s site. Consumer confidence improved for all areas except capital expenditures.
Second-quarter figures won’t be available until the end of July.
Housing starts tend to show economic activity. Locally, though, the Waldo Canyon and Black Forest fire rebuilds have skewed the housing market numbers. Taking into consideration permits taken out to rebuild after the wildfires, “housing activity is up a little less than 1 percent,” Crowley said.
In figures compiled by Crowley, June 2011 through May 2012, 1,658 building permits were taken out in El Paso County, compared with 2,442 from June 2012 to May 2013. June 2013 through May this year, the number was 2,270 permits.
Crowley estimated 2,275 building permits will be taken out from June this year through May 2015 in El Paso County.
On another important front, because there has been no wildfire this year, “I’m expecting tourism to do much better this year than last,” Crowley said.
Also, this year’s USA Pro Challenge has two stages in the area. In Stage 4, on Thursday, Aug. 21, riders will cover a course stretching from Garden of the Gods to downtown.
The following day, Stage 5 begins at Woodland Park; cyclists will ride to Breckenridge that day.
“We can’t help but have higher reservations for tourism season,” Crowley said.