Taking stock of the economy: Where do we go from here?

What's the shape of things to come?

The year is now half over and there seems to be a general sense that while the recession is far from finished, at least we're no longer in free-fall. So where do we go from here?

There's a lot of talk about whether this recession is going to be "L"-shaped -- a steep fall followed by a nearly non-existent recovery -- "V"-shaped -- a steep fall followed by a sharp rebound -- or even "W"-shaped -- a fall, a recovery and then another slide.

Which one is it going to be? Well, if we knew that, we'd be picking stocks. We talked to two local economists and to three local business people about what they see happening in the economy.

Reasons for optimism
There are reasons to be optimistic that Colorado, and Colorado Springs, in particular will pull out of this slide sooner than the rest of the country.

"The housing market is improving a little bit," said Fred Crowley, senior economist for the Southern Colorado Economic Forum. "Retail sales had a small shot in the arm from the troops that arrived back in February."

Colorado, said Joe Winter, senior economist with the Colorado Department of Labor and Employment, didn't get the big housing bubbles that places like Arizona and California did, so the state is better positioned to get back onto an even keel as housing recovers.

"Compared to most states, Colorado had what seemed like bad luck at the time," Winter said. "It seems like extremely good fortune now."

Crowley flat out predicts that, in Colorado Springs at least, the economy hit bottom early in the second quarter and things are already getting better.

"We probably will not rebound sharply, but we will rebound steadily, especially with the arrival of the troops (at Fort Carson)," he said.

The trouble for struggling families, however, is that unemployment is a lagging indicator of the economy, as companies delay hiring until they can be sure business is really improving.

"(Unemployment) will probably go four, maybe five months behind the bottom," Crowley said.

"Once you make the decision to get rid of your trained and loyal person, you tend to keep them out until you really have orders in hand," Winter said.

What about that "W"? Winter said the classic "W" recessions came from the oil shocks in the late 1970s and early 1980s. And his fear is that the same thing could happen this time.

"If (oil prices) continue to spike, that might be the single greatest contributor to a ‘W' shape," he said. "That not only affects the U.S. economy, but the economy of every country."

And while oil prices and business orders are real, tangible things, the forces that push them ultimately depend on nothing more than good old fashioned confidence. It's confidence that allows consumers to buy, manufacturers to hire, banks to lend and investors to invest. Once people believe the economy is getting better, both economists say, it will get better.

"I think the psychology is turning around," Crowley said. "It has improved over the last few months. I don't know if you're going to celebrate with a bottle of champagne, but maybe with a bottle of beer."

Longtime Coloradans, Winter said, are used to the booms and the busts. Mining, oil, gas, telecoms, dotcoms - they've all come and gone.

Ultimately, he said, that's a good thing. It means the Colorado economy is resilient and that capital, both in dollars and in human terms, will find a productive outlet.

"I'm a Colorado boy," Winter said. "The boom and bust which has been part of this state's heritage since the mining days seems to still be going along."

Different hiring patterns
There are few better places to keep an eye on the local economy than Katie Garcia's desk at Express Employment Professionals, a staffing firm at 2414 S. Academy Blvd. Garcia is a senior staffing manager for the company and she sees the ups and downs in hiring at every level.

This summer, hiring patterns are not normal.

"This year, the patterns have been broken," Garcia said. "This would be a very busy time in manufacturing and the numbers are 20 percent of what they would have been."

The biggest surprise to Garcia is how few mid-level professionals from industries that have been hammered in the downturn -- mortgage brokers and loan officers, for instance -- have come seeking work. There are jobs out there for those people, Garcia said.

"I'm wondering where they're all at," she said. "To refocus your career and use your talents for something new would be very easy for these individuals."

The economy is improving, Garcia believes. She hears it as she discusses hiring plans with businesses.

"I have seen companies start to get more positive," she said. "I think they're starting to say, ‘Hey, we're going to survive.'"
One part of the economy that's doing just fine? Staffing services, Garcia says.

"A lot of people will look at me with puppy dog eyes and say, ‘Oh, I bet you're hurting,'" she said. "No, we were smart. We had a diversified client base. We are tired when we leave to go home."

Worried
Jack Gilbert wants to be optimistic, but he's worried.

He and his wife, Bernadette, own the Ponderosa Market/Black Forest General Store. In May, they reopened the business at 11580 Black Forest Road after months in a temporary location next door.

"We've moved our business twice in the last six months," Gilbert said. "Not something I'd recommend."
He's also shifted the store's focus to natural foods and fresh groceries.

"I am a little nervous," Gilbert said. "I need people to feel like they can come here and this is their grocery store."

The nearby pizza restaurant closed because of the economy, he said, which should have helped. But with home construction at a standstill, his lunch crowd has evaporated.

"Literally, the next 30 days will tell me if this concept is going to work," Gilbert said. "I'm counting on that we will squeak through the tough time here."

He started the spring with a more positive outlook, but Gilbert now believes it's going to take longer to turn America's economic ship around than he'd hoped.

"People are finding it's more of a struggle to get things going this summer than they thought," he said. "I think we're just going to muddle through the next six months."

Following his father's footsteps
Danny Boyd followed his father's dusty footsteps into refinishing hardwood floors.

"My dad told me the qualifications for this job are a strong back and a weak mind," he said.

With 26 years in the business, Boyd, owner of Boyd Hardwood Floor Company, has seen the ebb and the flows of the local economy.

And while new home construction took a staggering blow from the economic meltdown, Boyd's remodeling work is staying steady - knock on wood.

"It's looking like a pretty good summer," he said. "I'm about as busy as I've ever been."

There's a little more competition these days, and he sees more refinishing jobs than pricier work installing new floors, but at least the business keeps coming.

"I may not be the norm," Boyd admits. "I had a couple of weeks where I didn't have any work at all. I sat at home going, ‘Oh man, I'll never work again.'"

But now, he's booked six weeks out -- right on par for his business this time of year.

"I tell the guys, ‘If we do a good job, they'll tell three people, if we do a bad job, they'll tell 10," Boyd said.

Flooring is doing fine, he says, and he thinks the rest of the economy will catch up.

"I'm thinking so, yeah," Boyd said.