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Colorado’s economy is predicted to keep growing in 2020, but slower. Here’s what this means.

University of Colorado's annual economic report is optimistic for agriculture (except for small farmers), bearish on construction (but there’s lots of ongoing activity) and more.

Cows eat hay on the Weathers' farm near Yuma, Colo. on Wednesday, February 13, 2019. (Austin Humphreys/For Colorado Sun)
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The way Dale McCall sees it, farming has enough uncertainty. Unpredictable weather. Unreliable buyers. Even a year with overproduction can drag produce and meat prices down as a farmer’s costs rise. If only Congress would finalize foreign trade agreements, he’d feel a lot better about 2020. 

“Luckily in Colorado, we got our sugar beets out,” said McCall, who farmed for years out in Yuma County, where his son and grandson now tend McCall Farms. “But in North and South Dakota, it’s my understanding, a lot of those sugar beets froze in the ground. They have zero income.”

It’s a different story over in one Greeley neighborhood. 

Leprino Foods completed the last phase of its 1.3 million square foot mozzarella cheese plant in a former sugar beet factory two years ago. The company, which now has more than 500 employees in Greeley, buys milk to make the cheese from local dairy farmers. Its revenues, according to Forbes magazine, came in at $3.2 billion in 2017.

Large companies like Leprino are giving economists optimism that Colorado’s economy, especially in agriculture, will continue to remain strong in 2020, albeit grow slower than last year, according to the 2020 Colorado Business Economic Outlook from the Leeds School of Business at the University of Colorado. This was the same prediction last year for 2019.

But the report also acknowledges the incomplete picture of just noting data points, since big companies can skew the results. “Someone is making money in Colorado agriculture and food systems. It just may not be farmers and ranchers,” says the report, which will be released Monday. “The agriculture value chain has many segments, and one often makes money while others experience losses.”



With the “growing but slowly” sentiment, the report touches on many industries that are doing just that. The use of geothermal heat pumps, the value of the construction industry, apartment rents all follow that trend. But one “surprisingly optimistic” outlook was agriculture. 

This year, Colorado net farm income will reach $1.52 billion, a 21% increase from last year. Next year, that growth rate will slow to 6%. But that’s still better than what many in the industry had anticipated.

Farmers are still waiting for Congress to pass a new trade agreement with Mexico and Canada, two of Colorado’s top foreign trading partners. And of course, there’s the ongoing trade war with China that is having indirect effects on the state. For one, Colorado’s not a large soybean producer, but states that are have switched to corn, a big Colorado crop.



And besides the weather, other unpredictable events have caused consternation and joy. A fire in August at a Kansas beef-packing plant reduced processing capacity so cattle sellers had to hunt for a new buyer and settle for lower payments. A drought in Australia that is causing the land down under to lower its lamb prices has China gobbling up the meat. That, in turn, is expected to help Colorado’s lamb prices increase since less Australian lamb will be available in the U.S. 

But McCall, who is also president of Rocky Mountain Farmers Union, is concerned for his 20,000 members, many of whom are running family farms and ranches in rural Colorado. 

“Many farmers are not able to even afford health insurance or they can’t buy new farm machinery,” McCall said. “And again, back to those young farmers, we need them to stay in business, but if they can’t get an operating loan next spring, then …  many of those are small, they’re family farmers. And once the family farm’s gone, it kind of gets gobbled up by the bigger farms and the industry.”

Jobs, population and housing

Thanks to large companies like Lockheed Martin Space and Amazon expanding their local workforce while others, like Molson Coors Brewing, shrink, job growth continues, though at 1.9% next year compared to this year’s 2.4%. 

In turn, people are still moving to Colorado and finding jobs. The unemployment rate dipped again — 3% this year, compared to 3.3% last year. Last year, the state added 77,744 residents for 1.4% growth, or twice the national rate. Slower birth rates and job growth, however, have economists predicting the state will add 75,700 this year and 72,100 in 2020. El Paso County again saw the largest population growth rate.



That also means more people looking for a place to live. There’s not enough new housing, and rising prices are still an issue, said Matthew Leprino, managing broker at The Ridgewood Company and spokesman for the Colorado Association of Realtors. 

But the industry is seeing appreciation slow, with median home prices going from a 10.6% growth rate in 2017 to 2.9% this year. He’s hopeful that 2020 could become a buyer’s market — even in Boulder, where the median sales price hit $629,000 in October, up 7.5% from a year earlier, according to the association.

“Boulder just got so expensive, especially due to the limit-growth initiatives that they have there. But now Broomfield is seeing that spillover while Boulder isn’t getting more expensive,” he said. “Our spokesperson up in Boulder, Kelly Moye, actually forecast that in 2020, it’s going to be a buyers market in Boulder County, and that’s the first time since 2012.”

One of the construction sites in Denver International Airport’s Great Hall on July 3, 2019. (Eric Lubbers, The Colorado Sun)

In non-residential real estate, the overall numbers look terrible, a “negative surprise,” said Richard Wobbekind, executive director of Leeds Business Research Division at CU. The value of new construction, remodeling or rehabbing commercial projects like offices and government buildings is expected to be down 40% this year to $4.7 billion, compared to $8 billion last year. In 2020, the value is expected to jump back up to $6.4 billion.

Fewer permits mean the impact will hit beyond 2020. The report sums this up with, “there is a notable dearth of big project announcements for starts after 2020. Large contractors are beginning to be concerned about the diminished backlog of work they are seeing.”



But the report tracks data that is available, like building permits. Permits indicate future construction, and right now there’s still a lot of commercial construction, especially in downtown Denver, which means a continued need for labor and supplies. Take the three-year average and you get about $6.3 billion a year, said Michael Gifford, president of the Associated General Contractors of Colorado, which represents the commercial building industry.

“What happened is that in the fourth quarter of 2018, two concourse expansions at DIA and the terminal were booked and that was $2 billion,” Gifford said. “We’re having a three-year, really strong run at a historically high amount of construction in Colorado. So permits really aren’t down, it’s just when they reported it.”

The increase in construction projects has made it difficult to find skilled workers, especially in construction. Even with pay for carpenters or cement finishers “anywhere from $26 to $30 an hour,” companies are being creative to attract interest, said Norm Holden, regional manager for Baker Concrete Construction, which opened an office in Littleton after completing the Denver Broncos’ stadium 20 years ago.

That’s why Baker Concrete reached out to Warren Tech in Lakewood three years ago and created a week-long course to expose students to concrete construction.

“Initially, we went in the first year and showed them how to to build a handicap ramp and some sidewalks,” Holden said. “We had maybe 10 students. And this year was the third time we did it. We had over 50 students.”

Now Baker’s working to expand the program and is supporting an effort to create high school curriculum about the construction trade. 

“I wasn’t able to get 50 new coworkers this year but, you know, hopefully a good portion of them will go into the industry,” he said. “If it’s not with us then with somebody else.”

More 2020 predictions  

  • Colorado is still one of the youngest states, but it’s aging fast. The 65+ population has the fourth-fastest growth rate in the U.S. 
  • Since state lawmakers approved legislation to significantly overhaul oil and gas regulation, the regulatory uncertainty could mean flat or decelerating job growth in 2020.
  • Automobile gas prices in the state averaged $2.61 a gallon this year. That’s expected to remain the same or decline slightly, staying between $2.50 to $2.70 for all grades.
  • Colorado food, computer and electronic exports declined 4.1% as of September with “significant declines” from Mexico and China.
  • While the cannabis market is maturing, especially with states like Illinois legalizing it this year, retail growth is slowing. But there’s still growth for 2020 thanks to a few new laws, including allowing new investors, social consumption areas and home delivery.
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