Chaffee County Economic Development Corporation (EDC) heard an extensive in-depth review of current economic trends Friday from noted economist Dr. Richard L. Wobbekind at the annual EDC session on Friday, January 3, at the Salida SteamPlant.
The program was billed as an opportunity for members to gain insights into the known and unknown on conditions that all economic sectors will face in the year ahead after a few tumultuous years.
Wobbekind, Associate Dean at CU Boulder’s Leeds School of Business, used extensive statistics and numerous graphs in his presentation. He addressed questions on the potential for a recession, inflation, economic growth in the county and state, home prices and lack of workers for jobs now open.
“(I’m) absolutely a firm believer that city and county managers, city and county government, economic development organizations, chambers … we all care about the same thing – we want people to have a better life,” said Wobbekind.
On current economic conditions and the question of a recession, Wobbekind disagreed with those who feel as if the U.S. were already in a recession, saying economic data never supported that contention.
“If you look at the types of things that were measured, in terms of measuring a recession, at the top of the list is employment and income; we’ve never gotten close to having employment and income not be in stationary territory,” he stated.
He also pointed to ‘mixed signals’ on the strength of the economy, including confidence factors in the economy, including the interest rate environment and other business concerns on economic health.
Forecasts do not indicate we are headed for a recession, Wobbekind indicated, saying the information on his charts showed more of a “really slow growth scenario.”
He added that unlike the recessions in 2001 and 2008 or the 2020 COVID recession, “whatever this is, it should be so much more mild” than those previous downturns.
On the jobs front, he said the U.S. has recovered all the jobs lost after the COVID pandemic, noting that if there had not been a COVID recession, about 2.5 million more people would be employed in the workforce.
He noted that while some may chalk the losses up to older people who’ve left the workforce for various reasons, there are many younger workers who are not in the workforce as well, “and we never really should have lost them,” he observed.
Another difference, he said, between the earlier recessions and the pandemic-caused recession, was the quicker recovery of jobs, which he partially credited to the 6.8 trillion-dollar recovery package passed by Congress.
He cited the most recent report showing the unemployment rate at 3.5 percent, the lowest since the start of the pandemic in February of 2020, with a tight labor market manifested by the federal Job Openings and Labor Turnover (JOLT) report estimating 1.8 open jobs for every unemployed person in the country; a huge labor shortage.
Colorado is doing much better in that and other arenas, he noted, ranking in the upper tier of states in term of job recovery since the pandemic.
Wobbekind drew laughter from the audience when he commented about not having graphs tracking the most recent jobs report out from the Labor Department that day, blamed on a lack of internet connectivity. There were 500,000-plus jobs created in January, multiple times what was expected.
Turning to income and other indicators, Wobbekind cited factors such as s0-called transfer payments are too high, showing consumers are consuming more than before COVID, tied with a much lower savings rate by Americans recently.
Last fall, three back-to-back monthly declines in savings were among the highest in U.S. history, he said.
He reminded the audience that because 70 percent of our Gross Domestic Product (GDP) –the sum of all goods and services produced — comes from consumption, it has a significant impact on economic health.
Also concerning is the fact Americans are increasingly running up credit debt as well as spending more of their income, partially to keep up with the inflationary pressures in the economy.
The big three factors there, he said, are food, housing, and transportation costs, all of which have shown improvement recently.
Some business surveys, such as from the National Federation of Independent Business (NFIB) have shown a decline in confidence levels. Wobbekind said, that, given the improving economic statistics, are too negative.
“No one seems to know what they’re worried about, but seem to feel they should be worried,” he said.
Regarding the partisan debate on raising the U.S. debt ceiling, he asserted failing to raise the ceiling could have disastrous results for the country’s economy. Citing past stalemates over raising the ceiling, as in 2011, this has to be resolved, he said. “You can’t keep using this as a bargaining tool.”
Attendee Eric Pegler, owner and business coach with Digital Coach Pros LLC., said after at first dreading going over boring economic data, he was …”pleasantly surprised by the growth and (to) learn of the rebound in Colorado businesses in the wake of the recent COVID-19 hurricane which blindsided many businesses and put many businesses out of business.”
“Dr. Wobbekind turned what could have been a boring three hours of economic statistics into a stimulating overview of hopeful optimism,” said Pegler.