This year should be a good one in terms of economic growth, but Colorado economist Tucker Hart Adams wouldn’t bet her retirement income on it.
Before a packed house at the University of Northern Colorado ballrooms Tuesday, Adams, senior partner with Summit Economics in Colorado Springs and the keynote speaker for the Northern Colorado Business Report’s 2014 Economic Forecast, said she often will not give forecasts because nothing is absolute.
But she said she sees good reason to be optimistic, anyway, for the United States’, Colorado’s and Weld County’s economies, which grew respectably in 2013.
“I’d say there’s a 70 percent probability that we’ll have relatively healthy economic expansion continue in 2014,” Adams told the crowd of about 500.
Adams was one of a six speakers, discussing varying parts of the industry, including agriculture, banking and real estate.
The United States, she said, should see an annual growth rate of 2.5 percent to 3 percent; she expects roughly 200,000 new jobs a month — just enough to absorb new job seekers and getting the unemployed back to work — inflation should stay around 2 percent and interest rates should stay low, though maybe not quite at the record lows we’ve seen as of late.
“I would give about a 15 percent probability to a less optimistic forecast,” she said, noting that turmoil in European financial markets could continue, and Congress could “do something stupid.”
The bigger concern with the economy is confidence, she said. Consumers, she said aren’t spending, and businesses aren’t expanding.
“If people are afraid to spend and businesses are afraid to hire and invest, then it makes” things worse, Adams said. “That’s primary reason this expansion (in 2013) has been as sluggish at is has been.”
Weld County, also known as the Greeley Metropolitan Statistical area, is doing somewhat better than the state in a couple of areas outside of oil and gas (where Weld produces roughly 80 percent of the state’s oil output): housing and population growth.
“Housing is really strong,” Adams stated. “You have the strongest housing growth in the state at 54 percent through November, twice the rates of the state’s housing.”
She said single family housing is up 40 percent, almost twice the rates of the state’s growth rate, while multi-family is up more than 300 percent, with an apartment vacancy rate that is the lowest in state at 1.3 percent.
“So, in summary, it’s going to be a decent year and with a little luck, a good year,” Adams said. “Maybe, just maybe this time, the pigs will fly and we’ll have a really terrific economy.”
» Mike Bond, market president for Guaranty Bank in Greeley in Eaton, noted how out-of-state banks have taken a majority of the deposits in Colorado markets. He said that will likely continue as community banks crumble under the weight of the expense of federal regulations. He branches will continue to decline as banks increasingly come up with technology that allows consumers to bank at home.
» Agents from Realtec delivered varying accounts of the northern Colorado real estate markets.
In the Greeley area specifically, industrial space has been pretty much leased or purchased, real estate agent Nick Berryman said in a video message to the crowd.
“We’ll likely see new construction projects happen in 2014,” Berryman said of the industrial sector.
Multifamily construction has soared throughout the region, all with vacancy rates of less than 5 percent on the west side of Interstate 25, and less than 2 percent in the Greeley area.
Predictions include 2,300 new apartment units in Fort Collins, 800 in Loveland and 1,000 in Greeley. All three, agents said, will experience increasing rents as a result.
» Doug Claussen, an agricultural CPA with Kennedy and Coe LLC., said the real opportunities may be on the protein side of the agriculture, as cattle prices increase amid low feed costs.
Corn and wheat have hit fantastic highs in recent years, but they’re coming down sharply, Claussen said.
“The pricing discussion has a dramatic effect on any row crop … out there,” Claussen said. “We’re seeing costs of production that are very close to what selling prices are. They’re going into the growing season looking at best at a break-even on some of these grains, but 2015 could be different. We’re assuming the draught we’ve seen in last number of years, we’re at the tail end.”
Claussen said ag real estate in Colorado has grown 23 percent form 2012 to 2013, averaging $1,780 per acre.
“As crop farming stabilize and trails off into break-even, we’ll see changes in how ag real estate is valued,” Claussen said.