Steidtmann: Routt County’s economy has hit steep drops
Economist speaks as part of annual Chamber meeting
October 29, 2010
Steamboat Springs — Economist Carl Steidtmann offered an audience of Steamboat Springs business people Friday the prospect of a thaw in consumer spending in time for the holidays. However, he likened the steepness of the hits the local economy has taken during the past 30 months to a double black diamond ski run.
"You lost 2,000 of Steamboat's 15,000 jobs over a 30-
month period. That's a fairly depressing number," Steidtmann said. "The fact that you're surviving this tells me you are very savvy businesspeople. I think (employment) will stabilize in the summer and fall (of 2011). Consumers are coming out of the bunker to spend more on gifts and entertainment."
Steidtmann is the chief economist for Deloitte Research and works on behalf of a list of global clients. He's also a resident of Steamboat. And he urged the business leaders gathered at the 103rd annual meeting of the Steamboat Springs Chamber Resort Association to let go of the notion that America's economy will eventually return to "normal."
"Things will return to normal when pigs fly," Steidtmann said. "Normal is an idea you should try to get away from. What is this yearning for normalcy? It's not what we should be thinking about."
Instead, he suggested, business leaders should be thinking about the transformation of the American economy and how they fit in.
The U.S. economy has undergone a "shattering" event, Steidtmann said. He took the term from historian William Manchester's book "A World Lit Only by Fire," which is about the transformation of European society from the Middle Ages into the Renaissance.
When two hedge funds at Bear Stearns failed in August 2007, he said, it foreshadowed a shattering that will prove to have forever altered the American economy.
The current economic recovery has been "the most unusual and difficult recovery in the post-World War II era," Steidtmann said. It has been remarkable for the rapidity with which Fortune 500 companies have returned to profitability, for their reluctance to spend cash and for it's continuation in spite of consumers' reluctance to get off the sidelines.
The United States has lost 8 million jobs in the construction and manufacturing sectors, and prospects for recovering that employment are bleak, he added.
"It's not like they're ever coming back," Steidtmann said. "Those skills don't match with the new economy."
Steamboat has seen the issuance of building permits drop almost 83 percent from the peak, and construction jobs, a key driver of the local economy, are down 27 percent.
A 25 percent drop in retail sales here throughout a period of 26 months describes the second double black diamond slope.
On the hopeful side for Northwest Colorado, Steidtmann said, prices for coal, oil and natural gas all are increasing. In the agricultural sector, prices for beef and lamb are going up, and thanks to a Russian embargo on grain exports after last summer's fires, domestic grain prices also are up.
Finally, Steidtmann offered a glimpse of what Steamboat's role in a post-recession world might look like.
"Bandwidth is destroying the importance of location" for businesspeople, allowing them to live anywhere they please. "I think we're going to be seeing more and more of those people coming to town."