Pagosa Country’s economic climate appears to show continued improvement as the Colorado Department of Labor and Employment (CDLE) reported last Friday that unemployment fell in July for the seventh straight month, dropping to 9.1 percent from the 9.9 percent figure reported for June.
Better still, although 2011 appears to be on track to outpace last year for unemployment, July’s jobless number was an improvement over the 9.3 percent figure reported for the same month last year. In fact, the improvement last month in the county’s jobless numbers from May represented the first time since 1993 that June unemployment numbers had improved from the previous month.
Despite the county’s dismal start this year, setting near 30-year records for unemployment levels in January and February, area joblessness has shown significant improvement during the second quarter of 2011.
Nevertheless, this year’s average unemployment remains around 11.2 percent compared to last year’s 10.8 percent 7-month average. In order to improve over last year’s 8-month unemployment average, August numbers would have to fall to 6.6 percent.
At year’s end, if 2011 hopes to show an improvement over 2010 10.3 percent year average, each of the final five months of this year would have to be at least a half a percentage point better than each of the same months in 2010. This year, July is the only month with better numbers than last year’s figure.
While a half-percent improvement each month, every month, through the end of the year would not be impossible, the local economy would need to show a significant and sustained rebound.
Although the CDLE does not consider unemployment an economic indicator, employment levels (either locally or nationally) have a significant impact on consumer spending, which is a key economic indicator. As reported in the Aug. 11 edition of The SUN, year-to-date sales tax revenues for the area are up 7.26 percent from the same 7-month period last year, an indication that the local economy has, for the time being, weathered the worst of the recession.
The seemingly positive economic news emerging locally should be tempered by continued fears of a double-dip recession at the national level.
Last week, the U.S. Labor Department reported that the number of U.S. unemployment claims rose by 9,000 after falling below the 400,000 mark during the previous week.
Initial jobless benefits claims reached 408,000 nationally last week. While a number less than 425,000 new claims is consistent with modest job growth, most economists say that number would need to fall to 375,000 or below to signal a sustained drop in the unemployment rate.
July’s U.S. unemployment rate edged down to 9.1 percent after hitting 9.2 percent in June. However, only 117,000 new jobs were added to the economy last month, far short of the 200,000 monthly rate most economists believe are needed to cut unemployment over the long term and just a third of the jobs needed to return unemployment to normal numbers within the next few years.
Recent news indicates that chances for an economic recovery this year seem slim. On Friday, analysts at Citigroup revised growth projections downwards for the next year, slashing its gross domestic product growth forecast to 1.6 percent from 1.7 percent for 2011 and lowering the 2012 GDP growth estimate to 2.1 percent from 2.7 percent.
Furthermore, a report issued Tuesday by the U.S. Commerce Department showed that new home sales fell for the third straight month in July, with a mere 300,000 year-to-date performance and far short of the 700,000 annual sales most economists say would indicate a healthy housing market. If the sales stay at the current pace, new home sales for 2011 could result in the worst year in the nearly 50 years that records have been kept.
Despite that negative news (along with a dismal report issued Tuesday by the Richmond Federal Bank indicating a contraction in mid-Atlantic manufacturing), stocks rose sharply on Tuesday, following a veritable rollercoaster ride the previous week (mostly due to uncertainty with the European debt crisis). However, if anything has been learned during the worst recession since the Great Depression, good news on Wall Street hasn’t translated into overall good economic news.
After almost three years into this recession, the lesson learned locally is also that good news for Wall Street is not necessarily good news for Main Street. Although the area’s economy appears to have entered into a slight upturn during the next few months, the wise course would be to continue watching what happens on Main Street, U.S.A. — and prepare for any fallout if the recession does indeed take that feared double dip.