Colorado Economy Charts
Here are a few charts that may help show where the state and counties' economy is going.
These charts show a 10 to 15 year regional equilibrium cycle, which runs on top of the roughly 4 year national business cycle. For Colorado, this regional equilibrium cycle can either counteract the national cycle (like 1992) or amplify it (like now).
As the charts below show, the state is in the grip of a double whammy: the national business cycle is down and the regional equilibrium cycle is amplifying this effect on the Colorado economy. This will take a number of years to play out.
This regional equilibrium cycle is based on the relative costs of doing business. This price cycle is shown in the chart Colorado Prices Relative To Nation. Colorado was in the 60's a relatively low cost state with underutilized capacity in labor, land and facility and services. This attracted business, which gradually absorbed the underutilized capacity, resulting in price increases above the national average through the 70's. This had a cumulative effect of reducing the price competitiveness of the state relative to other, competing, states. As a result, business began to move to and expand elsewhere. The downturn in the 1980's was caused by much more than just the energy industry. This major downturn resulted in excess labor and facility capacity in the 1980's and early 1990's which resulted in price decreases relative to other states. As a result the state attracted a host of new and expanded business, which resulted in a price structure rising faster than the rest of the nation in the late 1990's, which brought us to today.
Corresponding to this price cycle is a per capita income cycle. This cycle is shown in the chart Colorado Percent National Per Capita Income. This shows the long term increase in the wealth of the state population relative to the rest of the nation. It also shows the large 15 year regional equilibrium cycles.
In relatively smooth cycles like these we can predict what's going to happen by looking at the inflection points in the rates of change - points where the rate of change in per capita income relative to the nation shifts. Even tho we may be on an upswing in, say, personal income in 1958, if the rate of change begins to slow (an inflection point), as it did in 1958, we could predict that we have begun the downward part of the cycle.
These inflection points are shown in charts States Ranked By Change In Per Capita Income and Colorado Percent National Change In Per Capita Income.
The peak and dramatic drop in Colorado's rank on these charts in 1971 and 1981 portended the decline in regional equilibrium cycle that shortly followed. The peak in 2000 and following drop likely does the same.
As a result of these changes in the personal income, we now see the decline in consumption (retail sales), investment (housing). These then cause a decline in a wide range of tax bases.
State Taxable Retail Sales Monthly Change Short Term
State Taxable Retail Sales Monthly Change Long Term
Cumulative Prior 12 Mo Taxable Sales Change Percent By Region
A quick summary of this report is the projection that 32 of the 64 counties will see declines in taxable assessed value in 2004. 12 counties had such a decline in their 2002 tax base.
Over the years this regional equilibrium cycle has sometimes protected Colorado from national economic downturns. In the 1990's, when the national retail sales fell, Colorado, on the basis of a competitive advantage due to the low price scale show in Colorado Prices Relative To Nation, showed sustained growth. The regional equilibrium cycle ran counter cyclical to the national economy. In the current situation, the regional equilibrium cycle is pro-cyclic, that is, it is amplifying the national business cycle effects in Colorado. This is shown in the chart Colorado Retail Sales Relative to Nation.