Southwest Colorado received a mixed bag of news about the economy at a presentation by economist Elliot Eisenberg.
The housing market is improving quickly with vacancy rates decreasing and home prices finally starting to see a boost, but energy prices that have stagnated and lowered in recent years will continue to do so.
Eisenberg, a senior economist with the National Association of Home Builders, presented his economic predictions at a dinner last week hosted by the Home Builders Association of Southwest Colorado.
Energy prices will stay at their current levels for the foreseeable future, he said. A 25 percent drop in natural-gas prices caused La Plata County to lose more than $920,000 in property-tax revenue in 2011.
The housing market is “taking center stage,” Eisenberg said, and it will be the most important sector of the economy in the coming years.
Housing prices will not go lower than their current level, he said.
“The worst is over. If you’ve survived until now, you’ve done something right,” he told builders. “Start building homes. We need more homes.”
As the economy continues to improve, more people will migrate to the area.
“The most important thing in Durango … is household net worth, and that is doing pretty well. People want to sell their houses to move here,” he said in an interview with The Durango Herald.
An improving housing market is also good for employment numbers.
One new home creates five jobs, Eisenberg said.
The unemployment rate has been steadily decreasing during the last year. Colorado and La Plata County are outpacing the nation in recovering jobs lost during the Great Recession and lowering the unemployment rate.
La Plata County’s not-seasonally adjusted unemployment rate decreased from 6.5 percent in February 2013 to 6 percent in March 2013, according to the latest unemployment numbers released from the state.
The U.S. Treasury will wait until the national unemployment rate is 6.5 percent before increasing interest rates, Eisenberg said. The national unemployment rate was 7.5 percent in April.
But there is also lackluster job growth because fewer Americans are working, Eisenberg said.
The nation is caught in a gap between generations. The Baby Boomers, those born between 1946 and 1964, are retiring and the Millennials, those born between the early 1980s and the early 2000s, aren’t working yet.
The good news for employees is employers have reached a peak in labor productivity and will have to hire more workers soon, Eisenberg said.
However, companies have also “figured out a way to not pay their workers” and median household income continues to plummet, which is causing a slower recovery.
“People are having a very hard time. The cost of living is higher, and incomes aren’t keeping up,” he said. “It’s a long-term problem in the economy.”
The solution is more education, he said in an interview with the Herald.
Three decades ago, there were more manufacturing jobs, but those largely went away in the recession. Those not planning to go to college should enroll in vocational school, he said.
“That will alleviate a lot of the problem. Workers need more skills,” he said. “Companies want these people, they just don’t have the skills.”
jdahl@durangoherald.com
