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HomeBusinessStory Business Colorado Still In Top 10 For Personal Income Gains Despite Oil Slu
From The Denver Post 3/24/16
By Aldo Svaldi
Like a surfer who finds a way to catch another wave just in time, Colorado's economy maintained its momentum last year despite a sharp drop in commodity prices.
Numbers out Thursday show the state pivoted enough to maintain some of the strongest personal income growth rates in the country even as neighboring oil patch and farm states got wiped out or beached.
Colorado ranked seventh among all states with a 5.1 percent growth rate in personal incomes last year, outpacing the U.S. growth rate of 4.4 percent, according to the U.S. Bureau of Economic Analysis.
Personal income includes earnings from wages, business draws, dividends, rents, interest and government payments. Per capita personal income was $50,410 in Colorado last year, which ranked 14th among states.
"It is pretty encouraging, and it is supported by the strength in the employment numbers. It is good when two data sets tell the same story," said Broomfield economist Gary Horvath.
North Dakota, which rode an oil and gas boom to top rankings earlier this decade, fell to 50th, and Wyoming came in 47th. Even Texas, which, like Colorado, boasts economic diversification, dropped to 17th.
Mining earnings dropped a relatively mild 2.8 percent last year in Colorado. North Dakota suffered a 21 percent drop in mining earnings, which include oil and gas, while Wyoming was down 9.2 percent. Even Texas was off 5.1 percent.
"Colorado's economy hasn't been as hard-hit by the recession in the oil and gas sector because of the Wattenberg Field. Our economy is also much more diverse than it was during the 1980s — less reliant on commodity sectors and more reliant on services — and Colorado's services sectors are healthy," said Natalie Mullis, chief economist with the Colorado Legislative Council.
Petroleum producers directed a larger share of their dwindling investment budgets to the Wattenberg Field last year, softening some of the blow, although bigger spending cuts are planned this year because of ongoing weakness in oil and gas prices.
The report shows Colorado farmers and ranchers took the hardest hit last year, suffering a sharp 25.1 percent drop in income because of softer commodity prices.
Falling farm incomes in South Dakota, Iowa, Nebraska and Kansas pushed those states to the bottom of the stack for personal income growth last year.
California had the strongest income growth of any state last year, at 6.3 percent, and Utah ranked third with a 5.6 percent gain. Oregon and Nevada also made the top five.
Back in 2014, California, Utah and Oregon shared the top 10 rankings with oil-and-gas-rich states such as North Dakota, Texas, Alaska and New Mexico.
Colorado, too, was in the mix that year. And last year, it pivoted in a way that made its performance align more closely with stronger-performing states to the west even as states to the east and south slowed.
So how did Colorado pull it off? Earnings in health care; professional services; state and local government; finance, real estate and insurance; construction and hospitality all helped lift personal incomes and offset declines in earnings from farming, mining, information and the military.
Professional and technical services made an especially strong showing despite fears that the engineers, geologists and other technical experts would take a hit with slower oil and gas drilling activity, Horvath said. Earnings in those segments surged $1.28 billion or 5.4 percent.
Health care remained robust, and higher tax collections pushed earnings up 4.6 percent versus 2.4 percent nationally in state and local governments in Colorado. A big jump in property tax revenues along the Front Range this year should help maintain those gains.
Even durable goods manufacturing, aided by wind turbine maker Vestas and a host of emerging small manufacturers, saw more hiring and larger payrolls.
On the downside, the report highlights a widening gap between urban and rural parts of the state, which are more dependent on the segments that shrank earnings, Mullis said.
Almost all the personal income gains in Colorado last year came in urban areas, she said.
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