New military arrivals triggered faster Springs area economic growth in 2008

The arrival of additional troops at Fort Carson in recent years paid off in a big way last year as the Colorado Springs area economy grew during 2008 at the fastest rate in three years, even after adjustment for inflation, according to a new report.

The area’s economic output grew by 5 percent from the previous year to $24.1 billion, according to figures released Thursday by the U.S. Bureau of Economic Analysis. The growth rate is the fastest since 2005 and faster than either the state or national averages. Economic output is the value of goods and services generated in the local economy and is calculated by the bureau for all 50 states and each of the nation’s 366 metropolitan areas.

The increased output shows the area’s economy headed in the opposite direction as nearly every other indicator, including unemployment, payroll job losses, city sales tax collections, housing construction and sales and new vehicle registrations.

After inflation, the area’s economic output grew last year by 3.2 percent, or nearly triple the rate of each of the previous two years, the bureau said. That compares with statewide output growth of 2.9 percent and nationwide growth of 0.7 percent, both after adjustments for inflation. When calculated on a per-person basis, the area’s inflation-adjusted output was up 1.6 percent, or more than twice the nationwide increase and seven times the increase in the statewide average.

The Bureau of Economic Analysis calculates the output data, which it calls gross domestic product, primarily from income statistics compiled by the U.S. Bureau of Labor Statistics. Data for 2009 and 2010 will be released in February 2011.

Gains in the Springs in output from professional and business services, a broad sector that includes military contractors, and government accounted for most of the output increases, growing by 13.2 percent and 4.7 percent, respectively. The bureau did not report output numbers for the area’s construction and manufacturing industries because it contained confidential information about individual companies, but output likely dropped in both sectors.

Fred Crowley, senior economist for the Southern Colorado Economic Forum, attributed most of the growth to troops moving to Fort Carson as part of a major expansion of the post in the past five years that has nearly doubled the amount of personnel stationed there. He said more gains are likely this year, reflecting the arrival of more than 6,000 troops as another brigade and headquarters unit moved to the mountain post from Food Hood in Texas.

Dave Bamberger of Bamberger & Associates, a local economic research and consulting firm, said he was skeptical of the increased economic output numbers for the Springs because they are headed in the opposite direction from other economic indicators.

“It seems like this is reflecting increased productivity, and that is good news but it doesn’t outweigh all of the bad news on the job front,” Bamberger said.

The Springs was 86th among the nation’s metropolitan areas in economic output, but 48th in inflation-adjusted growth. Grand Junction had the nation’s fastest-growing economy at 12.3 percent, largely as a result of oil and gas drilling. Five of Colorado’s seven metropolitan areas ranked in the top 50 in inflation-adjusted growth, including Fort Collins at 4.2 percent, Pueblo at 3.6 percent, Boulder at 3.2 percent and Denver at 2 percent.