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What’s happening with the local economy?

The first quarter 2010 Business Conditions Index for the Pikes Peak region was released in April. The results are mixed.According to the BCI, the local economy has been expanding slowly since February 2009. Senior economist Fred Crowley, who teaches at the University of Colorado at Colorado Springs, compiles the index every quarter.Barry Baum, a retired steel executive and volunteer for the Quality of Life Indicators Economic Vision Council, said the BCI is a composite of 10 seasonally adjusted measurements.Two of the measurements are regional and national – the Kansas City Federal Reserve Manufacturing Index and the University of Michigan Consumer Sentiment Index. The Kansas City index measures manufacturing in the 10th Federal Reserve District, which includes Western Missouri, Kansas, Colorado, Nebraska, Oklahoma, Wyoming and northern New Mexico.The University of Michigan Consumer Sentiment Index is a survey of how average Americans feel about their own personal finances, as well as their outlook on the near and long term economy as a whole.Both studies are conducted monthly.Compared with the end of 2008, the two regional and national measurements are significantly up, Baum said.The other eight BCI measurements are local. Two of them – single family and town home permits and sales tax collection – showed sound improvement in the first quarter 2010.New car registrations dipped slightly in February and March, after showing strong growth in January.Another measurement, the number of people employed in the county, bottomed in October and is trending up.The remaining four BCI measurements – passenger traffic at the Colorado Springs airport, foreclosures, the unemployment rate and real wages – were flat or slightly negative for the first quarter 2010.Baum said he is most concerned about the trend in real wages, which are at their lowest point since 2001, when the index was started.”We’ve lost a lot of higher-paying jobs and we’ve picked up some lower-paying call center jobs. Jobs that were once higher-paying have been reduced by pay cuts as much as 18 percent,” he said.Crowley said employment and income are among the last measurements to show recovery from a recession.”The BCI is up 20 percent from a year ago. People may ask, ‘Why don’t I feel 20 percent better?’ The reason is that the improvement doesn’t affect all areas equally,” Crowley said. “We need to wait for the economy to finish growing before we’ll collectively feel the benefits of the improvements.”He’s also seen more recent employment data, which shows that more than 4,000 additional El Paso County residents were working in May than January.Crowley said the Pikes Peak region has suffered more from the loss of manufacturing jobs, compared to the country. “We lost about 55 percent of our manufacturing jobs, while nationwide the loss has been about a third,” he said.Manufacturing jobs are especially important because they pay well, have benefits and create other jobs, such as subassembly and shipping, Crowley said. Professional jobs may pay a bit more than manufacturing jobs, but they don’t spin off additional jobs.Crowley said China’s June decision to allow their currency, the Yuan, to appreciate against the dollar is positive. “That gives us the potential to be more competitive in the world market,” he said. “The problem is we don’t make anything anymore to compete with them.”While continuing to support older industries, the region should attempt to attract new industries like solar panel manufacturers, Crowley said.”It’s time to look at the basic items we consume but don’t produce – bricks, concrete tile for roofs, copper pipe for building,” he said. “What better place to host that kind of producer than in El Paso County?” He cited PaveStone, a company that manufactures concrete pavers and other building products at a facility in Fountain, Colo.Other good things Crowley has spotted in the local economy compared to a year ago: New building permit activity is up 75 to 80 percent, home sales are up 16 percent and the average price of a home being sold is up 5 percent.Robert Powell, a Colorado Springs business consultant, is less optimistic.”I remember when this area was going to be a high-tech region. It was going to be ‘Silicon Mountain,'” Powell said. “Most of this area’s manufacturing jobs went to China and other Asian Pacific countries. A lot of people in manufacturing retrained in information technology, but those jobs are going, too.”Powell said projects like the new mall near Interstate 25 and Austin Bluffs Parkway with a Costco and Lowe’s are a negative for the local economy.”These companies bring some money into the local economy, but they mostly ship money out,” he said. “Every night, every Walmart sends its money to Bentonville, Ark. It doesn’t stay here for a day.”It’s just arithmetic. An economy – local or national – cannot survive with more money going out than coming in.”The North American Free Trade Agreement is another example, Powell said.Under NAFTA, exports are up three times, but imports are up five times. That’s more money going out than coming in, he said.Powell sees little hope for the local economy as long as the policies that have exported manufacturing jobs for the last 30 years remain in place.One thing people can do to help the local economy is “buy local” because that money stays and circulates here for a while, he said.

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