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ARCHIVED  October 8, 1999

Regional economy thrives on basics

Jobs and homes, the chicken-egg combination that has sent the Northern Colorado economy soaring for as long as the Business Report has tracked it, will continue to drive the region’s growth index even higher.

That conclusion is contained in economist John Green’s economic forecast for the first year of the new millennium.

“Employment growth is the key,” Green said. “If people don’t have jobs, they won’t have money to spend. And jobs will stay forever.”

The index shows the regional economy growing 2 1/2 times faster than when Northern Colorado began to wake from a recession in 1991. And the growth in employment that feeds the rising index is 30 percent higher than in 1991.

Regional chart-watchers are talking these days about an economy that is becoming less vulnerable to events that just a few years ago might have shaken it. It means that even when jobs don’t stay forever, losses are shared and absorbed by an economy that finds places to put displaced workers.

Lyle Butler, president of the Greeley/Weld Chamber of Commerce, offers examples: The 1998 closures of Electronic Fab Technology Corp. in Greeley and Merix Inc. of Loveland, and the loss of nearly 800 jobs, would have dealt a powerful blow to most other regional economies of similar size.

“Despite what happened in ’98 with those closures, the growth has continued,” Butler said. “Here in Greeley, ConAgra had some layoffs. And yet, the economy keeps forging ahead.”

With few exceptions, job losses quickly turn into gains. A labor shortage that grips the region, especially in high-tech industries, means that a laid-off workers can move into jobs with similar or smaller-size employers, thus feeding an economic sector that otherwise would struggle.

Advanced Energy Inc. and Celestica Corp., two high-tech stalwarts in the Fort Collins employment market, have both been on a hiring binge during the third quarter of 1999, evidence of the ability to absorb losses elsewhere.

The rate at which new jobs are created in Northern Colorado has hovered between 4 percent and 5 percent annually for the past three years. While Green’s report cautions that the rate may slow, and may even fall below the historic trend for the next year, other economic factors that drive the index hold fast to their rising lines.

Construction continues to boom. The number of single family housing permits pulled in the first half of 1999 has soared beyond expectations, and rose to 600 regionally during just one spring month. That’s six times the number that builders sought when the decade began.

The Business Report’s last quarterly forecast questioned whether the torrid pace set during the last half of 1998 could be maintained during the current year. Now the question is, can it continue for another?

“I thought that in 1998 builders had pulled enough permits to carry through this year,” Green said. “Apparently not.”

Fort Collins builder/developer Giuliano & Father Construction Inc. has been running at a peak pace during 1999, building as many homes as a tight construction labor supply will allow.

“Each year we say, ‘Well, gosh, it’s got to slow down,’´ said John Giuliano, son of the firm’s founder. “But it doesn’t. I remember in the early ’70s, when I was just getting started in the business, people thought it was going great. But it’s nothing compared to this.”

Giuliano’s job, and that of anyone in the residential and commercial construction business, has been easier during the third quarter of 1999. Shortages of insulation, drywall and concrete that had squeezed builders during the past two years have eased, allowing companies to forge ahead with the record numbers of building permits they’ve stacked in city, town and county planning offices.

If any factor, or combination of them, looms to put the brakes on the region’s economic growth rate, it likely will be from a source well outside Northern Colorado.

Volatility of foreign markets has already shown that it can take chunks out of the local economy. The so-called “Asian flu” during 1998’s fourth quarter had high-tech firms of all sizes wheezing. Likewise, a combination of inflationary pressure and an upward tick in interest rates could throw water on even the healthiest sectors of the region’s economy.

“I think the only thing that we’ll see right now that could curb this is if interest rates inch up just a little bit,´ said Giuliano, who will build more than 60 homes by the end of the year, mostly in Loveland.

“But I can’t think of anyone, anywhere that I’ve talked to around here who thinks this won’t go on for another 10 years.”

Jobs and homes, the chicken-egg combination that has sent the Northern Colorado economy soaring for as long as the Business Report has tracked it, will continue to drive the region’s growth index even higher.

That conclusion is contained in economist John Green’s economic forecast for the first year of the new millennium.

“Employment growth is the key,” Green said. “If people don’t have jobs, they won’t have money to spend. And jobs will stay forever.”

The index shows the regional economy growing 2 1/2 times faster than when Northern Colorado began to wake from a recession in 1991. And the growth in employment…

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