Unemployment, retail sales figures shed light on local economy

Recently released unemployment numbers indicate that Archuleta county may be in better shape than it was last month — and in better shape than the U.S. overall.

However, the picture of the local economy remains murky and it is unclear if the area has actually gained a reprieve from the recession or if it has merely seen a drop in population, as the unemployed leave the county seeking job opportunities elsewhere.

In the monthly Bureau of Labor Statistics (BLS) report released last Thursday, indications suggest that the recession may be slowing down. However, although jobless claims were down nationally for the first time in 20 weeks, the overall U-3 unemployment numbers (reported monthly by the BLS) continued to climb, from 8.9-percent last month to 9.4-percent in May, counting about 14.5 million Americans out of work.

Conversely, the BLS reports that local unemployment numbers dipped this past month, from 9-percent in March (which was a 15-year high) to 7.9-percent in April. At first glance, the numbers appear to bode well for Archuleta county. Yet, while unemployment is down over a percentage point from the previous month, 7.9-percent is still higher than any month reported in 2008 and up a full three points from the same month last year.

Unfortunately, April’s unemployment drop, although initially encouraging, may not accurately reflect the full extent of how deeply the recession continues to hit Archuleta county.

First of all, BLS data for local unemployment figures do not include so-called U-6 numbers: underemployed part-time workers and jobless Americans who have grown so discouraged they’ve stopped looking for work. Nationally, the U-6 figure grew from 15.8-percent in April to 16.4-percent in May. With the U-6 number, more than 25 million Americans count as unemployed or underemployed — a significant jump from the 14.5 million listed in the U-3 numbers.

With no U-6 data for Archuleta county tallied, it is impossible to determine how many local residents are either underemployed or have given up looking for work.

Secondly, the Archuleta unemployment data does not account for residents who have recently moved away. When asked if the drop in unemployment numbers could be skewed by residents leaving the county, Employment Specialist Gabe Torres of the Colorado Workforce Center said, “Definitely. Archuleta County has been dropping in population numbers.”

Recent indications — foreclosure numbers, increasing numbers of real estate listings, utility customer disconnects, and declining school enrollment — seem to suggest that Archuleta county has indeed decreased in population (see related article), leaving fewer residents on the unemployment rolls as more people pull up stakes to seek job opportunities in other states.

Another indicator of a slumping economy is declining retail sales and the Pagosa area seems to reflect the national trend. Also last Thursday, the U.S. Commerce Department reported a sharper-than-forecast decline in retail sales as consumers continued to keep a clamp on their wallets. While food and necessities remained high on shoppers’ lists, large-ticket and luxury items saw an almost 10-percent drop from the same month last year and continue to trend downwards from late last year when the economic crisis hit.

As reported May 21 in The SUN, Archuleta County and the town of Pagosa Springs reported a 7.12-percent decrease in sales tax revenues so far this year, with a 25.46-percent decrease in February sales tax receipts (compared with Feb. 2008), and March sales tax receipts showing a slight .19-percent increase from the same month last year. April sales tax receipt numbers should be available tomorrow.

However, local retailers are reporting that both April and May continue to show an overall decline in sales.

Jeff and Michelle Puskas, owners of a downtown shop that caters largely to the tourist trade, report a 50-percent drop in sales for April and a 30-percent drop in May sales (relative to last year). “Based on where we’re located, we get a lot of local business owners dropping in and we’re hearing that (decreased sales numbers compared to last year) from downtown merchants,” said Michelle.

Jeff said that, “Eighteen months ago, we owned three businesses and employed twenty people. Last year, at this time, we had two businesses with six to eight employees.” However, hard times have hit the Puskas family and their business. Jeff said, “We sold that business last year and now we only have this business, with just one part-time employee.”

Michelle also reports hearing that people have been leaving the county, pointing to her computer, saying, “Our data base of local customers has diminished. We’re seeing a lot of people leaving.”

“We’ll be thinking about that within the next year,” Jeff added, saying, “if it’s even viable to stay. With (county property) taxes going up but services going down and revenues going down, I can’t see why it would make sense to stay.”

Although the couple’s store caters mostly to Pagosa area visitors, retailers with a largely local clientele also report a continued decline in sales. Terry Smith, owner of a local hardware store (and owner of the now defunct Circle T Pro Lumber and Hardware) said that sales for May were down about 15-percent but added, “This month is worse, really. We’re tanking at about 27-percent for June.”

Smith said that while the business had budgeted for a 17-percent decline for 2009 (making May numbers slightly good news at 2 percent better than projected declines), overall the prospects appear grim for a turnaround this year. “A little less rain might help,” he said, “but just a little.”

Smith said that the store was considering extreme financing packages on home furnishings (with five-year no-interest loans) to try to boost this year’s sales numbers. “We have to try whatever we can to make this better,” he said.

Likewise, Rolly Jackson, owner of an electronics store in Pagosa Springs (which also largely services local residents), reports that, “Basically, if you look at the whole operation (Jackson owns several stores in Colorado), we’re a little ahead for May 2009. Individually, we’re down about eight-percent in our Pagosa store relative to May 2008.”

Nonetheless, a down economy has not deterred Jackson from opening a new store in Pagosa Springs and he stated that he will be opening a cellular phone service store, providing two new jobs for the local economy.

With the release of the sales tax revenue report tomorrow, local government officials should have a better idea of how the retail sector of the economy is doing. Normally, retail sales figures are closely monitored by economists, since consumer spending accounts for about 70 percent of U.S. economic activity.

Nor do forecasts create a sunny picture for the future. Despite a slight rebound by consumers during the start of the second quarter of this year, economic activity shrank at a 5.7 percent pace in the first three months of this year. Furthermore, while some analysts believe that the economy could return to growth as soon as the third quarter, most economists believe the economy is shrinking at about a 2 percent pace in the current quarter.

Locally, with slumping retail sales, a stagnant construction environment, record levels of foreclosures and housing inventories, the unemployment situation, while appearing positive on the surface, will most likely not substantially improve any time soon. In fact, Torres reports that the Colorado Workforce Center has had difficulty finding employers to post jobs with the center. “I’m out there knocking on doors asking employers for job listings and I’m not getting any responses.”

jim@pagosasun.com