Economic Picture

National Economy According to the Denver Post (June 21, 2006) inflation, led by energy costs, is more than offsetting wage increases. People at the high end of wages still see an improvement while the middle and lower levels are seeing a distinct lowering of purchasing power.

In May, the housing starts were up almost 5% for the month (Denver Post 6/21/2006). However, analysts see this as a result of the dryer than normal Spring and that the overall market is still slowing. New building permits fell for the 4th straight month. Several analysts made a point this was a slowdown and not a "bust."

New home sales were down 10% for the first four months of this year compared to 2005 while purchases of pre-owned homes slowed 3.1% during the same period (Denver Post 6/20/06).

The National Association of Home Builders sales index for new homes fell to 42 in June, down from 46 in May (Daily Camera 6/20/2006). A number below 50 indicates more than half see sales as being poor. Many builders associated this with increasing mortgage rates, increasing costs of construction (i.e., lower profits), and investors pulling back from the market.

By July 4, 2006 the construction industry showed spending fell 0.4% in May following a 0.2% drop in April (Daily Camera 7/4/2006). This is the largest drop in almost 2 years. Analysts predict construction will continue a gradual decline under pressure from higher mortgage rates, a slowing housing market and sharp increases in energy.

The national unemployment rate was down 0.1% to 4.6% (Daily Camera 6/17/2006)

Regional Economy

Colorado's economic output is still rising (Denver Post 6/7/2006). Our 2005 numbers showed an increase of 4.2% up from 3.9% in 2004. This still shows the 6-12 month delay behind the rest of the country. This same report revised the 2003 numbers downward to 1.4% growth rather than the 2.1% initially reported.

Colorado stills ranks very high in the number of foreclosures. As of last month the state ranked 7th for initiations of foreclosures for 1Qtr 2006. The state ranked first during March and April (Denver Post 6/20/2006)

Prices of existing homes in the Boulder/Denver area fell for the first time in 16 years (Denver Post 6/2/2006). Prices in Denver fell 0.35% during 1qtr while Boulder's fell 0.12% during the same period. There remain a large number of homes on the market. According to the Office of Federal Housing Enterprise Oversight, shows an annual appreciation of 3.24% for Denver and 2.53% for Boulder. Eastern counties are still under stiff downward pressure due to foreclosure rates and new home sales.

Colorado ranked 5th in growth of personal income during 1st quarter (Daily Camera 6/23/2006). Personal income grew 1.8% in the state when compared to 4th quarter 2005.

A survey by The Daily Camera (6/17/2006) shows no Boulder area employers expecting to cut staff. Almost 47% expect to add staff over the summer while the remainder expect to maintain current levels. This compares to 2005 when only 30% expected to add jobs and 7% expected to cut jobs during the same period. Across Colorado, 6% of employers expect staff reductions, 39% expect additions and 53% expect to maintain staffing levels.

The Colorado unemployment rate rose slightly to 4.5% in May (Daily Camera 6/17/2006). Most see the likely cause to be the seasonal shutdown of the ski areas. The overall rate was slightly higher that in April but still down from the 5.2% this time in 2005. Local county unemployment rates were...

• Boulder 3.7% (up from 2.6% in April but down from 4.4% in May 2005)
• Broomfield 4.3% (no change from April and down from 4.8% in May 2005)

Five sectors posted job losses while 11 showed job increases. Colorado has added 47,000 jobs since May 2005 with most increases in the professional, business, construction, trade, transportation and utility sectors (Daily Camera 6/17/2006)