Most measures of the Colorado economy are moving upward, said Alison Felix, economist and Denver branch executive of the Federal Reserve Bank of Kansas City.
The U.S. economy is also expected to expand moderately this year, she said.
Felix delivered the news at the inaugural State of the Small Business Luncheon Tuesday. She was joined by Kelly Manning, state director of the Small Business Development Center Network; Aikta Marcoulier, executive director of the Pikes Peak Small Business Development Center; and Tatiana Bailey, director of the Southern Colorado Economic Forum. A video of the program will soon be posted on YouTube.
All presented similar data showing the economy will moderately expand and that small businesses drive the economy.
“Colorado Springs is on a very positive trajectory and small business is the reason,” said Mayor John Suthers. Between 85-90 percent of growth will come from small businesses already here, he added.
“We’re already lucky to be here in Colorado. Our economy continues to grow at a rapid pace,” Felix said.
As a result of weak global economies and a strong U.S. dollar, Colorado’s exports have slowed slightly over the past two years, Felix said.
Unemployment rates continue to decline, with Colorado Springs at 3.4 percent as of February. The state unemployment rate is 3 percent and the national rate is 5 percent, Felix said, citing Bureau of Labor Statistics and Haver Analytics. Mountain and eastern plains counties have an unemployment rate of less than 3 percent.
The Federal Reserve Bank’s Federal Open Market Committee targets a 2 percent inflation rate. Core inflation has been around 1.7 percent nationally, Felix said, adding the FOMC expects to maintain the federal funds rate at ¼ to ½ percent.
“We expect the interest rates to increase very slowly,” Felix said.
The net migration of people into Colorado has grown 1.2 percent and El Paso County has seen a 2 percent growth in population due to migration, she said.
Payroll employment growth in Colorado has grown 14.2 percent in the last 10 years, compared with a rate of 6.8 percent for Colorado Springs and 9.8 percent for Pueblo. The nation’s payroll employment growth has lagged behind, at 5.7 percent.
Having expanded since 2006, crude oil production in Colorado and the nation has declined since late last year. The number of drilling rigs in the state has significantly decreased from around 70 in 2014 to slightly more than 20 in April this year, Felix said.
The break-even price for oil production is $79 per barrel in our region, she said and producers made $51 per barrel in March.
“We expect $45 a barrel oil production to the end of 2016, and next year, $65 a barrel,” she said.
Manning showed the national rankings of states:
- first in fastest-growing economy;
- first in small business lending;
- second best state to start a business;
- second most-educated state;
- second best state for entrepreneurship and innovation; and
- fourth happiest state.
Colorado Springs ranked first for mid-to-large metro areas in high-tech startup density, she said. She did not cite a source for the data.
Business owners said they experienced increased sales of $102 million, capital formation of $240 million and $78 million in contracts made as a result of consulting with Small Business Development Centers in Colorado last year, Manning said, citing data verified by the clients.
Marcoulier presented the SBDC impact in the El Paso, Park and Teller county region for 2015. Last year, the office consulted with 400 clients, 49 percent women-owned, 39 percent veteran owned and 18 percent minority owned. The office helped launch 31 businesses. Consulting created 88 jobs and retained 105 jobs. The work last year resulted in $15.3 capital formation, an increase of $7.3 million in sales and $4.8 million in contracts awarded.
So far this year, 16 businesses made nearly $6.9 million in Small Business Administration 504 loans in El Paso County, 17 in the region totaling nearly $7.3 million. These loans provide financing to buy fixed assets such as real estate, buildings and machinery.
During the same time period, the SBA worked with lenders to make 85 SBA7a loans in El Paso County totaling almost $38 million. Regionally, 100 SBA7a loans were made totaling more than $41.9 million, she said.
“For every $1 spent on the Pikes Peak Small Business Development Center, the SBDC provides a return on investment of $77,” Marcoulier said. “That’s money coming right back into our community, and we’re very, very proud of this.”
She ended her presentation by reminding the crowd of more than 200 people about Small Business Week featuring events daily May 2-5.
In Colorado Springs, the demand for jobs reached 13,944 in December, compared with a supply of 12,424, Bailey said, citing WANTED Analytics and the Pikes Peak Workforce Center as sources.
Of all job openings in March, software engineers led the list, followed by customer service reps, registered nurses, administrative assistants and sales reps. Also, the median salary of posted jobs reached $62,800, compared with the Colorado median of $59,500.
Most people in the region, 37,000, work in the health trades, followed by retail, accommodations and food, education and professional and technical services.
Businesses with fewer than 500 employees make up 99.7 of all U.S. firms, Bailey reported, and businesses with fewer than 20 employees comprise 89.6 percent of firms, citing 2012 and 2013 data from the U.S. Census Bureau.
In the last 20 years, 40 percent of private-sector new jobs are from startups, not including startups that have closed. Small businesses accounted for 63 percent of net new jobs between 1993 and 2013, Bailey said.