With all the uncertainty looming in the national, state and local economies, Colorado State University Economist Dr. Phyllis Resnick said it helps to look at the quitters.
The high number of people who feel safe enough in their prospects to quit their paying jobs now says a lot about President Donald Trump’s chances at improving the national economy — and just as much about how Colorado will fare during the next few years, Resnick told a crowd at a North Metro Chamber of Commerce breakfast Feb. 10 at the Denver Marriott Westminster.
“Economists really like to look at the ‘Quit Rate’ in the economy to really understand what’s happening with the labor market,” Resnick said. “The theory is that people don’t quit their jobs when there is no opportunity to move into other jobs.”
Resnick was one of a trio of speakers that offered chamber members an idea of economic signs and portents for the coming decade.
The national quit rate fell during the recession in the early 2000s but has recovered lately, meaning the national economy is near full employment — jobs may be plentiful, but workers are not.
That means that efforts to further stimulate the economy could lead to short-term improvement, but long-term problems.
“You may not do much but create growth that results in inflation and other negative economic impacts,” Resnick said.
Resnick was joined by Elizabeth Garner, state demographer with the Colorado Department of Local Affairs, and Barry Gore, president and CEO of Adams County Economic Development, at the chamber presentation, billed as the first annual Economic Forecast Breakfast.
Resnick said she and other economists predict a short economic boost in 2017 and 2018 — the “Trump Bump” — followed by a slowing economy.
“None of the national forecasts right now have a recession in them,” Resnick said, “but economists put the probability of a recession in the next two to three years at a higher level than they were prior to the (November) election.”
Real estate, population rising
Resnick said economists predict the same pattern in Colorado — a bump through 2018, followed by slower growth and inflation.
“We are not talking about runaway inflation by any means, but we’re talking about 2 percent to 3 percent again,” she said.
State inflation will continue to drive up real estate prices, she said, and that will be complicated by demographic pressure.
“If you look at the population projections for the Denver Metro region, it translates into the need for about 59 additional housing units per day to house the people we are projecting to move into the region through 2035,” she said.
State Demographer Garner said that number is actually closer to 80 new housing units needed per day across Colorado. That translates to between 30,000 and 40,000 new households formed per year, she said.
The state’s population will become older as Colorado’s Baby Boomers age and will be more diverse overall, especially at the lower working ages.
She encouraged local employers to do their best to help Millennial workers thrive for the region’s long-term benefit. Millennials are typically those younger than 35 years old and they have largely been under-employed for most their working life, she said.
“People give the poor Millennials such a hard time, but do your best to help them out,” Garner said. “Because once they are in and can buy a home, they can buy a second home. We need them to start accumulating assets. We need them to be spenders in our economy.”
Adams County Economic Development’s Gore compared the local economy to a roller coaster for the next several years.
“You can decide whether you are at the top and headed down or whether you have enjoyed the ride up,” Gore said. “But I will tell you that, for our North Metro region, you either need to hold on tight and white-knuckle it or you can put your hands up in the air and enjoy the thrill of what we are about to go through.”
Gore listed projects around Denver that will have a big impact on the northern metropolitan area — from retail developments around Arvada to unique housing developments along the Clear Creek valley and from the Westminster Station and Downtown Westminster developments to new resort hotels and freight warehouses along Interstate 70 to Denver International Airport.
“Those jobs don’t pay the higher wages we’d like to see,” Gore said. “They typically pay a little below the county’s average. And when we look at the cost of housing, the cost of educating and the taxes they pay and the wages they make, it becomes a very interesting formula — and it is going to challenge us.”
It becomes an issue when you have lower wage jobs but expensive housing that demands higher wages.
“The world as we know it in the Metro North region will not be the same,” he said. “It’s exciting, and as an economic developer there is no better time. But it’s going to challenge our elected officials and business leaders to understand how do we deal with this together.”