18th Annual Vectra Bank Colorado Economic Outlook: Navigating in the New Economic Reality Requires Steady Hand, Easy Foot on the Gas Pedal

DENVER, Jan. 27, 2011 /PRNewswire/ -- On Wednesday, Vectra Bank Colorado hosted its 18th Annual Economic Forecast Breakfast, titled "Navigating in the New Economic Reality." With their presentations graphically demonstrating the jagged ups and downs of the past decade, this year's speakers offered cautious optimism for a continued slow recovery in Colorado and nationally.

The popular, free economic forecast presented by Vectra Bank Colorado at the Seawell Grand Ballroom in Downtown Denver again drew a sell-out crowd of 700. This year's event featured Mark Snead, Vice President and Bank Executive, Federal Reserve Bank of Kansas City, Denver Branch; Richard Long, Investment Strategy Manager, Contango Capital Advisors; and Patricia Silverstein, President, Development Research Partners. Summaries of their presentations follow.

Mark Snead: The U.S. and Colorado overview

Snead gave an overview of economic conditions in the U.S. and Colorado based on his position with the Federal Reserve Bank. He focused on two questions:  is the U.S. recovery sustainable and has Colorado exited the recession. Ultimately, Snead believes that indeed, the cycle has turned for both. He indicated that it appears the national recovery is sustainable given that GDP growth has become positive; private-sector hiring has been steadily growing since last January; income growth has rebounded moderately; and savings levels have increased. However, Colorado has lagged the nation but is now in recovery and has added jobs for the past six months.  Snead pointed out that several caveats could complicate a recovery including a weak real estate sector, rising interest rates and commodity prices.   For his complete presentation and further information, please visit: www.kansascityfed.org/denver.

Richard Long: "Investing wisely through our big mess"

Long, of Contango Capital Advisors, took the long-term investment view: Recovering from a downturn, he said, can provide opportunities for the active, prudent investor. But "buy and hold" is no longer a sufficient strategy, he argued.

In examining the "state of the mess," Long discussed positive, but slow U.S. growth through persistent real estate and debt problems; different but equally significant issues in the Eurozone; and much better performance from emerging markets and the commodity producers that depend on them.

Long reviewed employment as a component of economic stability, pointing out that jobs have been difficult to obtain in previous decades – but the difference now is that this downturn is taking workers much longer to return to the level of employment prior to the recession. "We're currently at 40 months since the downturn began, and we're nowhere near the level of jobs we had in 2007," he said.

Long pointed out that consumer spending makes up 70 percent of our GDP in the United States, whereas it is roughly 65 percent in most developed countries, and observed that an indebted consumer and budget problems at both the state and local levels will drag growth. "The tipping point for the federal budget is near," Long claimed.

On the investment side, Long noted that the recent years of debt-crazed spending led into repeated anti-recession-oriented stimulus that pushed down interest rates, creating a wonderful climate for bonds. "That run is almost surely over," Long said.

Patricia Silverstein: "Moving the economy forward: Lessons from driving school"

Silverstein presented a series of "lessons from driving school" to help Colorado's business owners map their course on the road to recovery. Coloradans, she noted, have a unique take on their vision for employment. During the last decade – which Silverstein calls the "lost decade" – Colorado's work force grew by 421,000. But during that same time, only 30,000 jobs were created. "Of the remaining 391,000 people, 200,000 are unemployed – and the rest started their own businesses," she said. Business proprietors make up 25.1 percent of Colorado's total employment, significantly higher than the national average of 21.3 percent.

"Too many people have been unemployed for too long," Silverstein said. "With minimal job opportunities, and the government's budget woes, these conditions are slowing down the 'traffic' of our state's economy."

One key aspect of Colorado's economic conditions in recent years, Silverstein said, has come when the rubber meets the road. Consumers aren't buying because consumer confidence hit new lows in 2008 and 2009, and it has stubbornly remained in the gutter. Retail trade in metro Denver fell by 4.7 percent in 2008 and by 10.6 percent in 2009. At last, those numbers picked up by 4.3 percent last year, and Silverstein forecasts 3.3 percent retail trade growth this year.

What about the visible reminder of the recent recession, in the form of lingering "for sale" signs in metro-Denver neighborhoods? Despite the growing population, home sales have fallen in Denver every year since 2004, from 54,012 in 2004 to 38,818 in 2010. This year, Silverstein expects something of a recovery to about 42,500 homes sold. Home prices should be up slightly. But the good news is that metro-Denver homes look to be moving forward without as dramatic and painful a price drop as in other areas. And, finally, foreclosures should decline in 2011 to near the level they were in 2006.

Moving less swiftly, but moving nonetheless, Silverstein notes that commercial real estate has potentially hit bottom. That's partly because developers and businesses are feeling more optimistic, she said – for example, corporate profits increased by 17 percent year-over-year in third-quarter 2010. And getting our region moving again – literally – are investments in infrastructure, from DIA to FasTracks to the Union Station transit hub development downtown. Together, Silverstein projected, these trends should wave the "go" flag to continued recovery this year.

For more information about Vectra Bank Colorado or to schedule an interview with one of the presenters, contact Lisa Cutter, (303) 972-6275.

Vectra Bank Colorado regularly tracks economic trends for small businesses with its Small Business Index for Colorado, which is released monthly and quarterly to news media and on the bank's website at www.vectrabank.com. The Index tracks business conditions affecting owners and managers of smaller enterprises, a major factor in the Colorado economy.  

With assets of $2.28 billion, Vectra Bank Colorado is a proactive, customer-focused organization dedicated to real relationship banking. Part of the Zions Bancorporation (Nasdaq: ZION) family of banks, Vectra serves Colorado's small, middle-market and corporate business clients with 38 locations throughout Colorado and one in Farmington, N.M. The bank's website address is www.vectrabank.com.

SOURCE Vectra Bank Colorado