The Colorado Outlook Economic and Fiscal Review, June 2017 The following information is excerpted from the Colorado Office of State Planning and Budgeting’s June 2017 forecast. To access the full forecast document, click on the image above or follow this link: https://goo.gl/G6jYke
The Economy Economic growth has accelerated in the first half of 2017, and the expansion is expected to continue. Colorado’s technology-related sectors remain robust and continue to fuel much of the state’s growth, while formation of new business entities has rebounded. Although Colorado has the lowest unemployment rate in the nation, tight labor market and housing market conditions are constraining the state’s economic expansion. Rural areas continue to experience lower job and income growth than along the Front Range. Average of ISM Composite Indices
The Institute for Supply Management’s Manufacturing Composite Index and NonManufacturing Composite Index report the momentum of economic activity as assessed by businesses across the country and in most industries. The May indices show that both the manufacturing and nonmanufacturing sectors continue to expand.
60 55 50
Overall economic activity for the U.S. is expanding at its strongest rate since the end of 2014.
Source: Institute for Supply Management
Jan-17
Jan-16
Jan-15
4.0
Philadelphia Fed Economic Activity Indices
3.0
The Federal Reserve Bank of Philadelphia’s monthly State Coincident Economic Activity Index is indicating modestly higher growth for Colorado’s economy in recent months, while the Leading Index for Colorado shows economic growth is likely to accelerate in the near-term.
2.0 1.0 0.0 -1.0
Indices show slightly stronger economic growth since the middle of last year, with increased momentum of late.
-2.0
8.2%
6.9%
4.5%
5%
0.6% 0% -0.4%
-1.7% -5% -10%
Filings for new entities, such as LLC's and corporations, are experiencing renewed momentum, a positive sign for future economic growth.
-9.0%
-15% 2008
2009
2010
2011
2012
2013
2014
2015
2016
2017Q1
Source: Colorado Secretary of State
Mar-17
Oct-16
May-16
Dec-15
Jul-15
Feb-15
Sep-14
Apr-14
Nov-13
Jun-13
Jan-13
Aug-12
Mar-12
Job Supply/Demand Rate, April 2017
1.4
Colorado’s year-over-year job growth was 1.8 percent in April, down from 2.5 percent a year ago. This slowing is at least partially due to the lack of available workers, as the state had only 0.5 unemployed people per online job posting in April, the lowest rate in the country.
Oct-11
Filings of new entities formed to do business in the state, which mostly consist of limited liability companies and corporations, increased by 2,750, or 9.5 percent, in the first quarter of 2017 compared with the year prior. This higher level of new business activity will help support continued economic growth. New entity filings slowed in 2015 and the first part of 2016, contributing to the slowdown in the economy.
9.5% 7.0%
May-11
Source: Federal Reserve Bank of Philadelphia
13.8%
10%
Apr-09
Coincident Economic Activity Index for Colorado, July 1992=100, Six-Month % Change, Seasonally Adjusted Leading Index for Colorado Three Months Ahead, Seasonally Adjusted (3-month Moving Average)
Annual Growth in New Business Filings
15%
Nov-08
Jan-08
Jun-08
-3.0
Jul-10
Jan-14
Jan-13
Jan-12
Jan-10
Jan-09
Jan-08
Jan-11
*Readings above 50 indicate expanding economic activity.
35
Dec-10
40
Feb-10
45
Sep-09
65
Five of Colorado’s seven metro areas had more online job postings than unemployed people in April.
1.2
1.2
1.2
1.0
0.8 0.8
0.7 0.6
0.6
0.4
0.4
0.5
0.5
0.2 0.0 Boulder
3.5%
Annual Job Growth, April 2017
3.2%
Denver- Fort Collins- Colorado Aurora Loveland Springs
2.5%
2.1%
2.1%
2.1% 1.5%
1.4%
1.0% 0.5% 0.0% Boulder -0.5%
Fort CollinsLoveland
Denver
Greeley
Colorado Springs
Pueblo
Pueblo
Statewide
Among Colorado metro areas, Boulder has experienced the most job growth over the last twelve months, at 3.2 percent, followed by Fort Collins, Denver, and Greeley, all at 2.1 percent job growth. Grand Junction was the only metro area to lose jobs over the last twelve months.
1.8%
2.0% 1.5%
Grand Junction
Source: The Conference Board, U.S. Bureau of Labor Statistics
Most metro areas saw job growth over the prior 12 months. Only Grand Junction has fewer jobs than a year ago.
3.0%
Greeley
Grand Junction
Statewide
-1.0%
-1.0%
-1.5% Source: Colorado Department of Labor and Employment – modified estimates
Annual Home Price Appreciation, 1st Quarter 2017 16%
Every metro area in Colorado experienced home price appreciation above the national average, and five of Colorado’s seven metro areas were in the top 10 percent nationally. Home price appreciation remains strongest in the metro areas along the northern Front Range.
14%
Home price increases along the Front Range remain among the highest in the U.S.
12%
All Colorado metro areas are experiencing price appreciation above the national average.
10% 8% 6% 4% 2% 0% Fort Collins Loveland
Boulder
Denver* Colorado Springs
Greeley
Pueblo
Grand Colorado Junction
United States
Source: Federal Housing Finance Agency
General Fund Revenue Forecast After an increase of just 1.7 percent in FY 2015-16, General Fund revenue is expected to increase 3.4 percent in FY 2016-17 and 6.7 percent in FY 2017-18. Although sales taxes and individual income taxes are recovering from the oil and gas downturn and weaker economic growth during 2015 and 2016, General Fund revenue growth overall this fiscal year was weighed down by taxpayers delaying income from investment gains in anticipation of federal tax changes, as well as the continued decline in corporate income tax revenue. However, these factors will not reduce growth in FY 2017-18. Forecast
$12.0
$11.0 $9.8
$10.0 $8.5 $7.5
$5.5
$5.4
FY 2002-03
$6.0
$7.7
$6.9
$6.5
FY 2001-02
Billions
$8.0
$10.3
$9.0
$7.7 $7.1
$6.7
$6.4
$6.1
$5.7
$10.0
$4.0
$2.0
FY 2017-18
FY 2016-17
FY 2015-16
FY 2014-15
FY 2013-14
FY 2012-13
FY 2011-12
FY 2010-11
FY 2009-10
FY 2008-09
FY 2007-08
FY 2006-07
FY 2005-06
FY 2004-05
FY 2003-04
FY 2000-01
$0.0
Source: Office of the State Controller and OSPB Forecast
General Fund Budget General Fund Money, Obligations, and Reserves
$13.0
Projected reserve shortfall of $285.4 million
Projected reserve shortfall of $142.7 million
$12.0
$0.390 $11.0 $0.442
Billions
$10.0
$9.0
$11.530 $10.870
$11.140
$10.428
$8.0
$7.0
$6.0 FY 2016-17 Projected Funds Available
FY 2016-17 Obligations
General Fund Spending
FY 2017-18 Projected Funds Available
Reserves
Funds Available
With this forecast and the budget for FY 2016-17, the State’s General Fund reserve is projected to be $142.7 million below the required statutory reserve amount. The State’s General Fund reserve for FY 2017-18 is projected to be $285.4 million below the required amount. This is $52.3 million above the level that would trigger budgetbalancing actions by the Governor.
FY 2017-18 Obligations
Required Reserves
Taxpayer’s Bill of Rights: Revenue Limit $16,000 $14,000
TABOR revenue is projected to be $302.3 million under the Referendum C cap in FY 2016-17. With this forecast and SB 17-267, TABOR revenue is expected to be below the Referendum C cap by $582.8 million in FY 2017-18 and by $665.2 million in FY 2018-19.
Millions
$12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0
TABOR Revenue
TABOR Limit
Referendum C Cap
Source: Office of the State Controller and OSPB Forecast
www.colorado.gov/ospb