In this inaugural issue, the Office of Economic Analysis & Business Research in the School of Business Administration at Fort Lewis College and Region 9 EDD team up to discuss macroeconomic data pertinent to Region 9. Our evaluation of income, unemployment, and inflation indicate a strong economic base with indicators of growth in the region.
Average annual income in Region 9 continues to grow, see Tables 1 and 2, and is slowly catching up with the rest of the state, Table 3. Region 9's average income for the year 2005 increased about 4.5% to just over $25,000, or about 60% of average Colorado statewide income. La Plata County continues to have the highest average income of any of the Region 9 counties with an annual income of about $32,000, or about 29% higher than average. The lowest annual income is in Dolores, about 21% below average.
Table 3 presents annual average income as relative to the rest of the Colorado. Overall, since 2001, Region 9's weighted average income has grown from just over 58% of the state average to just almost 62%. La Plata has grown the fastest, relative to the state, of the five counties and Dolores the slowest.
Figure 1 presents a gross county product (GCP) index of the region and state and demonstrates how the five Region 9 economies have grown relative to Colorado. The quarterly data runs from the first quarter of 2001 to the fourth quarter of 2005. Generally, we can see that Region 9 economies have grown faster than the rest of the state. We can see that while Colorado's aggregate economy contracted for a couple periods, 2002 and 2003, Region 9 grew at a fairly constant rate, the smallest county, San Juan excepted.
Table 4 presents the average weekly wages for Region 9, state, and nation. Like overall income, Region 9 weekly wages are about 60% of the state average (see Figure 2 where data has been smoothed to remove seasonal fluctuations). Though not presented here, the ratio of La Plata's weekly wage to Colorado has grown the fastest, rising from 68% in 2001 to 80% in 2005. Both Dolores and San Juan have stayed more or less constant relative to Colorado.
Figure 3 normalizes the weekly wage to 2001 wages for Region 9, Colorado, and nation. As before, this allows us to make more direct comparisons of how income and productivity is growing over all regions. The three counties with the fastest growing income levels are La Plata, Archuleta, and Montezuma.
Figure 4 presents the weekly wage growth rate and shows La Plata's wage has grown quickly, over 4% per year; about one percentage point above both Colorado and the nation as a whole. Archuleta and Montezuma have also seen faster wage growth than the nation, and are slower than La Plata by less than one percentage point.
Figure 5 presents each of the Region 9 county monthly unemployment and average Region 9 unemployment rates; for comparison purposes, state and national unemployment rates are also shown. We present the standard deviation of unemployment across the five counties to illustrate how differences in unemployment rates across the counties have evolved over time (STDEV_R9). Unemployment in Region 9 is very cyclical, therefore, all data presented is smoothed to remove these seasonal movements. Overall, unemployment in Region 9 is higher than the state and nation, with the exception of La Plata. The standard deviation has remained fairly constant over the period, implying that cross county unemployment has stabilized.
Table 5 presents the annual average unemployment rate for Region 9, Colorado, and the US for 2001-2006 (data for 2006 is only through June, the latest available data). The trend in unemployment largely mirrors the state and country, slowly rising over the five year period (and adding credence to the “jobless” recovery).
1If the standard deviation rises, this is interpreted as a worsening in the relative labor markets and vice-versa if it falls.
In future issues, we will develop a Durango Price Index to gauge inflation in the region. In this issue we examine inflation in Denver and Phoenix, the city specific inflation rates closest to Region 9. Note that Phoenix inflation rates were not reported until 2002 and all the data is semi-annual.
We also present the core rate of inflation; inflation with the more volatile food and energy sectors removed. Core inflation in Phoenix was not reported until 2003. Many consider the core rate of inflation to be a more accurate view of inflation as the energy and food sectors are highly susceptible to large and frequent variations in prices.
Figures 6 and 7 present the semi-annual inflation rates from the first half of 1996 to the first half of 2006. Table 6 demonstrates the annual inflation data for 2001 – 2006 (only the first half). As we can see Denver inflation and core inflation has been generally above US inflation, though since the statewide recession in 2002 –2003, it has generally been lower. Phoenix’s inflation has been generally lower.
Respondents to the Livingston Survey (at the Federal Reserve Bank of Philadelphia) believe that inflation will remain somewhat low, about 1.5% nationwide, over the next twelve months, fueled in part by the Federal Reserve’s continued hawkish attitude on inflation.
Table 7 is inflation for Western cities size B/C (50,000 – 1.5 mil), and includes all cities in BLS region 42. Given a number of differences in small cities, such as higher transportation costs, less competition, relatively limited supply of housing, prices in these areas experience higher inflation than the national average and our two comparable western cities of Denver and Phoenix.
With respect to inflation in the Region 9, given that all the cities are small (size D, less than 50,000), it reasonable to expect inflation to be running a little bit higher than in Denver and/or Phoenix. Higher transportation costs, which raise prices to all goods and services delivered to area, and faster housing price growth contribute to the higher inflation rate. A back of the envelope calculation shows that rental housing prices alone contribute roughly 0.05% to Durango’s average inflation rates above Denver’s average inflation.
To more directly estimate local inflation rates, we will be introducing the “Durango Price Index” (DPI) over the next quarter as an abbreviated consumer price index. We will provide a more depth discussion of the DPI in this upcoming issue.
All the data used in this study is readily available from the Bureau of Labor Statistics (www.bls.gov), the Bureau of Economic Analysis (www.bea.gov), and the Federal Reserve Bank of St. Louis’ FRED II database (research.stlouisfed.org/fred2/). As a service of Fort Lewis’ Office of Economic Analysis and Business Research to Region 9 all the raw data is available at soba.fortlewis.edu/econometer/ This data will be updated quarterly.
2Includes Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.
National, State, and Local Unemployment Comparisons
When comparing La Plata County with the national and Colorado economies with respect to unemployment and personal income, the local economy fares very well. La Plata County’s unemployment rate continues to remain below both the national and the state’s rates (see Table 1).
TABLE 1 – Comparison of Unemployment Rates – National, State, Local
|
October 2005 Unemployment Rate |
October 2006 |
United States |
5.0% |
4.6% |
Colorado |
4.4% |
4.1% |
La Plata County |
4.9% |
4.4% |
Sources: U.S. Department of Labor, Bureau of Labor Statistics and Colorado Department of Labor and Employment, Labor Market Information
Quarter to Quarter – With the local tourist season beginning in quarter two, three of the four sectors of the tourist industry increased on a quarter to quarter basis. Ridership on the Durango & Silverton Narrow Gauge Railroad increased by 440.9%, visitors to Mesa Verde increased by 619.5%, enplanements at the Durango-La Plata County Airport decreased by 4.1% and lodger’s tax revenue (adjusted for inflation) increased by 70.3%.
Year to Year - On a year-to-year basis, ridership on the Railroad decreased by 0.9%, visits to Mesa Verde National Park increased by 31.1% over the second quarter of 2005, enplanements increased 10.4%, and lodger’s tax revenue (adjusted for inflation) increased on an annual basis by 17.5%.
Quarter to Quarter - Retail sales, after adjustment for inflation, increased from the first quarter of 2006 to the second quarter of 2006 by 18.4%.
Year to Year – Comparing the second quarter of 2005 to the second quarter of 2006, retail sales, after adjustment for inflation, increased by 9.7%.
Quarter to Quarter - Employment in La Plata County is estimated by the Colorado Department of Labor and Employment. These estimates are subject to significant revisions. According to state estimates, employment in La Plata County in the second quarter of 2006 increased by 4.3% from the first quarter of 2006.
Year to Year – Employment decreased by 1.1% from year to year.
Quarter to Quarter - Calf prices, after adjustment for inflation, decreased 5.5% from the first quarter of 2006 to the second quarter of 2006, while alfalfa hay prices increased 15.6% during the same time frame.
Year to Year – On an annual basis, calf prices (adjusted for inflation) decreased 8.1%, while alfalfa hay prices decreased 0.2%.
Quarter to Quarter - Industrial kilowatt-hours used in La Plata County decreased by 1.1% from the first quarter of 2006 to the second quarter of 2006.
Year to Year – On an annual basis, industrial kilowatt-hours used increased by 0.8%. Most industrial usage of electricity in La Plata County is to compress natural gas for transmission through gas pipelines.
Quarter to Quarter - The number of new residential electric meters in La Plata County increased by 0.3% from the first quarter of 2006 to the second quarter of 2006.
Year to Year – On an annual basis the number of new residential electric meters increased by 2.0%. The annual increase in the number of residential electric meters suggests that the population of La Plata County is continuing to grow. The population of La Plata County was estimated to be 46,229 in 2003 (the most recent number available from the Census Bureau).
Quarter to Quarter – We are no obtaining deposit information data from the Federal Deposit Insurance Corporation. Deposit information is not available on a quarter to quarter basis, but on a bi-annual basis.
Year to Year – On an annual basis, bank deposits increased by 11.6% from the first half of 2005 to the first half of 2006 (adjusted for inflation). Bank deposits are an important indicator of the economic health of the community as well as an indicator of the ability of local banks to make loans to consumers and business borrowers.
Quarter to Quarter - Enrollment at Fort Lewis College decreased from the first quarter of 2006 to the second quarter of 2006 (from the winter term to the summer term) by 55.4%.
Year to Year - Enrollment on an annual basis decreased by 3.0%. The college stabilizes the local economy on a seasonal basis because most spending by students occurs during the September through April time frame while tourism activity peaks during the summer months.
Quarter to Quarter – Construction activity in
Year to Year – On a yearly basis, construction activity increased 2.7% (comparing quarter two of 2005 to quarter two of 2006).
Quarter to Quarter - The federal government’s energy price index (adjusted for inflation) decreased by 8.6% from quarter to quarter.
Year to Year – On an annual basis the energy price index increased by 6%. Energy prices can be highly volatile from one quarter to the next. However, there has been an overall increase in energy prices since the beginning of 2002. Energy prices are very important to La Plata County because the county is a major producer of natural gas. Rents and royalties, as well as property tax revenues associated with natural gas production, are significant sources of income to La Plata County.
Quarter to Quarter – According to data obtained from the Durango Area Association of Realtors, the median price of country homes sold in La Plata County, after adjustment for inflation, decreased by 0.5% from the first quarter of 2006 to the second quarter of 2006.
Year to Year - The annual increase in the median price of country homes sold (adjusted for inflation – in 1990 dollars) in La Plata County was 14.1%, to a non-adjusted price of $345,250.000.