Defying Trends, Western Economy on the Rise

By Richard Martin, 11-12-07

With the national equity markets slumping and Fed chief Ben Bernanke predicting an economic slowdown, the question becomes, how long can states in the Mountain West defy the national trends?

The Front Range economy should continue steady growth in the coming year unless the wider economy plunges into recession, said Patty Silverstein, chief economist for the Metro Denver Economic Development Corp., at a Longmont investors’ breakfast on Thursday. The same day, the Small Business Index from Vectra Bank showed Colorado’s unemployment rate creeping higher in October, to 3.9 percent. The U.S. unemployment rate is about 4.5 percent. One question for Colorado: how will the turmoil in Denver’s residential housing market affect the red-hot commercial real estate sector?

Also positive is the outlook in Montana, where in the last couple of weeks, according to the Great Falls Tribune, “the state’s Commerce director gave a positive report to economic development officials, a state economist reported on a record-tying upbeat consumer confidence measurement, Montana commodity prices [remained] high, the energy sector is growing and poised to boom, and Canadians are visiting and shopping here in record numbers.”

Gov. Brian Schweitzer threw a slightly damp blanket on the state’s prospects in late October, however, when he said a cooling off of the economy is inevitable: “ there will be a downturn.”

Utah’s economy enjoyed the strongest job growth in the country in September with a 4.4 percent rise in total employment (second and third were Wyoming and Montana, respectively). “Even the prospect that the price of gasoline might remain above $3 a gallon in Utah and that the pace of home construction will continue to slacken, doesn’t significantly diminish Utah’s economic outlook for next year,” writes the Salt Lake Tribune’s Steven Overbeck, reporting on the forecast from Kelly Matthews, executive vice president and economist for Wells Fargo Bank in Salt Lake.

Booming energy production, strong tourism results, a resilient construction sector buoyed by the continuing influx of new arrivals, a resurgent technology industry – all of these are contributing to making the Mountain West the nation’s strongest economic region. Now, some snow for the skiing industry would help.

In other business news:

-- The path to a new method of distributing millions of dollars from the explosion in oil and gas exploration in Colorado got a bit longer last week, as a special committee on the allocation of severance taxes and mineral-lease revenue was given more time to draft a new bill. The legislature is having difficulty coming up with a consensus bill that will satisfy all of the parties who see state funds from energy development almost doubling this year.

-- The downturn in the stock market has been especially painful for Niwot-based footwear maker Crocs, which saw its stock fell 11 percent on Nov. 8, less than half its value on Halloween. Claiming that Crocs management “issued materially false and misleading statements,” a San Diego law firm known for shareholder suits filed a class-action lawsuit against the company after it cited distribution problems in Europe and Asia for its recent disappointing results.

-- Even if the economy goes south, you can always forget your troubles with a trip to the State Fair … not so fast. “Despite legislative help to get it out of debt two years ago,” reports The Pueblo Chieftain, “the Colorado State Fair is expected to become insolvent by the 2010-11 fiscal year, a Joint Budget Committee staff assistant told lawmakers Wednesday.” A report from the committee staff chided State Fair management for “failing to develop its revenue sources.”