Last Thursday, the Bureau of Labor Statistics reported that unemployment in Archuleta County went from 10.9 percent in March (the highest level in over two decades) to 9.8 percent in April, falling a full 1.1 percent.
While good news for local workers by any account, the report presents a picture of a sluggish employment situation in the county.
Traditionally, February and March are the months showing the highest numbers of unemployed in Archuleta County, with April showing a slight improvement from the previous month. With the exception of the years 1978-1980 and 1982, in every year since 1976 (when the BLS began compiling reliable unemployment statistics for Archuleta County), April unemployment numbers improved from the previous months.
In fact, for the past 34 years, the average improvement from March to April has been 1.33 percent. However, subtracting 1978-1980 and 1982 from the equation and averaging across 30 years, the average improvement jumps up to 1.77 percent.
Given the 30-year average, the April 2010 improvement of 1.1 percent presents a less-than-optimistic employment picture in the county.
The local unemployment numbers appear to reflect the national job situation — a slight improvement but one that falls far short of expectations.
Last Friday the BLS reported that national unemployment fell from 9.9 in April to 9.7 percent in May, with a job increase of 431,000 jobs (some analysts had predicted as many as 750,000 jobs created in May). More disappointing was that only 41,000 private sector jobs were created, far fewer than the 180,000 median prediction of 82 experts surveyed by Bloomberg.
The alternative unemployment measure, the U6 number (including total unemployed, discouraged workers who have given up looking for work and part-time workers desiring full-time work) fell from 16.9 percent in April to 16.6 percent in May.
In Archuleta County, it is unknown what the local U6 number is since the BLS does not calculate those numbers for counties. However, with construction down 85 percent from a high in 2006 (accounting for about 15 percent of jobs in Archuleta County in 2007), estimates that at least one-in-five local residents are either out of work or marginally attached does not seem farfetched.
While not strictly an indicator of economic health, unemployment does seem to predict the pace of economic expansion or contraction. Simply put, the more people employed, the more money is circulated throughout the economy, fueling spending on durable goods, services, retail expenditures and even construction — in theory, creating more jobs.
Unfortunately, two conflicting philosophies are at war in Washington regarding what must be done to get a handle on the economy and the jobless situation.
On the one hand, deficit hawks are concerned that a continued infusion of cash into the national economy to create more jobs will fuel inflation. Alleging that holding to a near-zero percent interest rate at the Federal Reserve Bank is not just unsustainable, but will also add to inflation, those concerned with the size of the deficit argue that cutting spending and tightening belts is the answer to a sluggish economy (without addressing jobs creation).
It’s been argued on the other side that more stimulus is required for jobs creation and that the Fed needs to hold the interest rate at its record-low rate in order to encourage capital investment. Contending that expanded business investment and more jobs will add to federal revenues (ameliorating deficits) and pointing out that inflation has been flat over the past two years, the pro-stimulus camp argues that the economy cannot fully recover unless unemployment improves.
For the moment, the direction of the national economy seems to be anyone’s guess. Reports released earlier last week were generally positive, but contained a few indications of slowing for some leading indicators.
Showing a diminished pace of growth in the tenth consecutive month of expansion, the Institute for Supply Management reported growth in April for 16 of 18 categories. Employment in manufacturing grew, while the non-manufacturing sector held steady in April.
While 10.5 percent below spending for the same month last year, construction spending nationwide rose in April from March. However, construction employment declined by 35,000 in May.
On the downside, chain-store retail sales remained flat in May, indicating slowing consumer activity for the second month in a row. While down from April, May personal bankruptcy filings were up 9 percent from May 2009 and the American Bankruptcy Institute predicts that the U.S. is on pace for over 1.6 million filings this year — the highest number since 2003 (prior to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 which severely restricted personal bankruptcy filings).
While the direction of the national economy remains murky at best, the situation locally is even more baffling.
Due out next Monday, the town and county’s sales tax report should give an indication of how local unemployment has affected local businesses and provide somewhat of a picture of the direction the area’s economy is heading.
April is traditionally the slowest month for both sales tax receipts and lodger’s tax receipts, and Monday’s report should provide a fairly accurate picture of how much area residents are spending with local businesses.
“Oh yeah, April is our slowest month for lodgers tax receipts,” said TTC Coordinator Jennie Green. “The ski area is closed and the trails aren’t open yet.”
While it could be assumed that the closing of Circle T Pro Lumber last year might inflate last year’s April sales tax receipts, the liquidation sales did not begin until the latter part of April 2009 and, if those sales did help boost sales tax receipts for that month, it was not reflected in the numbers: Last April, sales tax receipts were down 13.68 percent from the same month in 2008.
With a slight improvement in local unemployment figures, town and county officials are no doubt anxious to see how sales tax revenues fared in April. The combination of data between the numbers of unemployed in the county and how much is being spent with local merchants could provide a general indication of where the economy is heading in Pagosa Country.