Economist says Springs in recession

Colorado Springs-area payrolls declined last month for the first time in nearly five years while the area's unemployment rate rose to a nearly five-year high of 6.2 percent, the Colorado Department of Labor and Employment reported Friday.

Put the job losses together with record foreclosures, declining home construction and slowing retail sales, and the total picture shows a local economy in recession that likely will last into next year, one economist says.

"A recession is defined as a sustained general slowing across the economy. When the housing and financial sectors were declining, it wasn't a general slowing, but now with the retail and other sectors slowing, it looks like we are in a recession," said Fred Crowley, senior economist for the Southern Colorado Economic Forum. "The only part of the definition that doesn't fit is one month of decline is not a sustained slowing."

Area payrolls fell by 100 in August to 263,500- the first drop in area employment since December 2003. Local payrolls grew nearly 1 percent last year, but payroll growth slowed every month this year after February.

Six of the 10 sectors of the area's economy that are measured by the department lost jobs in August compared with a year earlier: construction, manufacturing, retailing, information technology, finance, and professional and business services. The health care, hospitality, services and government sectors added 2,200 jobs during the same period, but it wasn't enough to offset the losses.

The area's jobless rate rose to a nearly five-year high of 6.2 percent in August, from 6.1 percent in July as the number of area residents without jobs jumped to the second-highest level ever - 99 short of the June 2003 record.

The unemployment rate is calculated from a survey of area residents and is adjusted for seasonal changes, while the payroll numbers come from a survey of employers and are not seasonally adjusted.

"What the unemployment rate doesn't pick up is people who are working part-time because they can't find full-time work, those are working in a job for which they are overqualified or those who have become discouraged and stopped looking for work. It doesn't begin to show the depth of the problem," said Tucker Hart Adams, a veteran Colorado economist who retired earlier this year.

The Pikes Peak Workforce Center, a joint El Paso and Teller county agency that matches workers and employers, is helping 25,000 people, up 40 percent from three months ago, said spokeswoman Jeanne Cotter.

"There are jobs out there, but they pay less than most people want," Cotter said. "There are lots of people who are in what we call survival jobs; people will take just about anything to keep food on the table, but keep looking for something better."

Both Adams and Crowley said they expect employment declines to worsen in coming months, especially after Hewlett-Packard Co. moves technical support and information technology operations elsewhere next year.

A recovery isn't likely until at least mid-2009, when thousands of troops are expected to move to Fort Carson, Crowley said.

One element of recovery is employers that relocate or expand operations here. Two major employers are considering opening in the Springs and eventually providing jobs for about 2,000 area residents, said David White, executive vice president of marketing for the Colorado Springs Economic Development Corp., a private nonprofit agency that recruits industry.

"We are one of two finalists in both cases and very close to making a decision," White said. "In the last two months, we have seen a significant upswing in leads and the number of companies coming to Colorado Springs for a visit. While we are concerned about declining employment and rising unemployment, that upswing tells me that things are picking up and companies are going through with their expansion plans."

The statewide unemployment rate rose for the fourth straight month in August and now stands at 5.4 percent and the number of Coloradans with jobs fell by 21,500 to just under 2.6 million in August, the largest one-month decline since 1976.

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