The Colorado Springs-area economy will remain in a recession until an influx of troops arrives at Fort Carson in the middle of next year, triggering a recovery, the Southern Colorado Economic Forum predicts in its 2009 forecast released today.

The 5,600 additional troopsare part of an expansion that began in 2005 and is slated to double the size of the mountain post by 2013. Their arrival is expected to boost local payroll growth next year to 0.9 percent and reduce the area's jobless rate to 5.3 percent, according to the forecast to be presented at the forum's annual presentation this morning.

"The arrival of additional troops at Fort Carson in 2009 will be very timely for the local economy," which has been struggling this year and will continue to do so into next year, the forecast says. The group attributes the local downturn to the nation's capital markets falling into disarray, record local mortgage foreclosures, declining local housing construction and steep increases in energy and food prices.

For this year, the forum expects local payrolls to grow only slightly- about 1,500 jobs, or 0.6 percent - and the area's unemployment rate is expected to continue rising - averaging 5.7 percent for the year - as job losses accelerate during the rest of this year, according to the group's forecast. Last year, local payrolls grew by 0.8 percent and the area's jobless rate averaged 4.4 percent as the local economy started to slow.

"The (local) recession has been very mild so far in terms of job losses, which I believe is the best barometer of the local economy. People really start cutting back (on spending) when they are unemployed," said Fred Crowley, the forum's senior economist. "The local job market will continue to deteriorate, but once the troops begin arriving at Fort Carson they will be enough to offset the job losses in the rest of the local economy."

A survey of 244 local business leaders by the forum and local accounting firm BiggsKofford reflected a similar outlook - 49 percent said business activity was slightly or much worse this year, compared with 31 percent who said activity was slightly or much better. Thirty-eight percent attributed the slowdown to tight credit. More than two-thirds of those surveyed expected activity to be slightly or much better next year.

Although the arrival of the troops will trigger a recovery, any turnaround will not be immediate, said Tom Zwirlein, the forum's director and a finance professor at the University of Colorado at Colorado Springs. The nation's credit markets won't fully recover from the recent meltdown for at least 12 months and foreclosures must drop sharply before the housing market can rebound, he said.

"We have never really recovered form the last downturn because we have not attracted the good-paying primary jobs that were lost. Instead we have attracted smaller employers who generally pay less than those they replaced," Zwirlein said. Primary employers are those that make a product or provide a service to customers or clients outside the area, which brings income and wealth into the area.

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