As national headwinds build, Boulder County and Colorado will continue its positive course say local economic experts at the recent Boulder Economic Forecast. But it’s a cautionary tale, with 2020 following last year’s “growing but slowing” says Dr. Richard Wobbekind, executive director of the CU- Boulder Leeds Business Research Division at the recent Boulder Economic Forecast.
“We’re forecasting job growth in 2020 but at a slower rate than in 2019,” Wobbekind told more than 400 business and civic leaders at the 13th annual Boulder Economic Forecast held January 30 at the Embassy Suites Hotel. The event was hosted by the Boulder Economic Council, Boulder Chamber and sponsored in part by RE/MAX of Boulder.
Experts provided a critical look at the coming year from the perspective of demographics, housing, economic sectors and job growth.
In Wobbekind’s keynote address, he said slower economic growth will be more apparent as the year progresses, but it will hardly qualify as a recession.
“We believe Colorado will be a top 10 growth state in 2020, but you have to pay a little more attention when the growth rate slows down,” he notes.
The deceleration is due to a slower national economy, tight labor market, trade tensions, upcoming elections and general uncertainty about what lies ahead.
At the same time, Colorado’s population and job growth will continue, but at a slower rate. The 2019 unemployment rate dropped to three percent, moving still lower than 2018’s low of 3.3 percent.
Even with the robust job growth, which came in part from Colorado’s successful focus on attracting higher-wage jobs,
middle-wage jobs are needed, says Colorado State Demographer Elizabeth Garner.
“Something that we forget about in economic development is that when we create high-wage jobs that also creates low-wage jobs,” says Garner. But higher wage jobs drive up the price of housing while creating more jobs for lower wage service workers who can’t afford the higher housing costs. Garner says more jobs that pay between $50- and $100- thousand dollars are needed.
Middle wage jobs help maintain economic balance.
Though migration to the state has slowed, Colorado’s population is still growing faster than most of the U.S., reports Garner. By 2020, the state will be home to 5,842,076 people.
Boulder County’s population growth ranks eighth statewide and it’s the eighth largest county with more than 325,000 residents.
Yet the city of Boulder leads the state in population decline. Boulder’s in-migration population peaked in the 1990s and declined in 2018 by 525. Garner notes that students move to Boulder for college, leave after graduation, then return, and then leave again. One key reason: it’s hard for a young adult to afford to live, buy or rent in Boulder.
Now, fewer young families live in Boulder, and the tide has shifted toward a higher number of deaths than births.
And the main factor impacting Boulder County is age.
For decades, Colorado’s population has been predominately young. But with every passing year, more residents cross into the 65-plus category, making it the fastest growing age group.
Garner says the age wave sweeping the state has far-reaching impact across the economy, housing, labor supply, and healthcare. For example, as people retire, aging results in a labor shortage. When people choose to age in place, housing stock for people moving in or moving up is negatively impacted.
She explains that the aging population in part results in the housing market’s constraints. As older adults want to downsize, they compete with first-time homeowners for smaller, more affordable entry-level homes.
In addition, construction costs have risen, says Wobbekind, citing costs of permitting and other costs that make it difficult to build homes under $400,000. “The housing that’s available is more expensive than the wage levels of the people who can afford it.”
And it’s critical to build housing that meets the needs of the day. Today, that means housing with accessibility features suitable for all ages and abilities, says Garner.
One help for housing affordability: appreciation has slowed from 10.6 percent in 2017 to 2.9 percent in 2019. Wobbekind is hopeful that real estate in 2020 could tip toward the buyer’s side of the scale.
Even with the challenges, the dynamics of Boulder County’s economy are strong with well-supported economic vitality, fueled by high concentrations of companies and employment in aerospace, biotechnology, cleantech and information, according to Wobbekind.
For more information, see Boulder Economic Forecast presentations at: bouldereconomiccouncil.org/
By Tom Kalinski, RE/MAX of Boulder. Tom is the owner and founder of RE/MAX of Boulder, the local residential real estate company he established in 1977. For questions, e-mail Tom at email@example.com, call 303.441.5620 or visit boulderco.com.