Steamboat Springs Economic experts officially declared a recession last week, sending the stock market tumbling and raising questions about the implications.
Steamboat Springs is feeling the effects of a recession that the National Bureau of Economic Research said began in December 2007. Unemployment is increasing in the nation, state and county, and layoffs have been reported at the Steamboat Ski Area and other local businesses. City sales tax collections were down for September compared with 2007, and early indications are that October numbers also will show a decline.
Steven Hofman, former director of research and policy for U.S. House Republican leadership, offered his perspective on the issues Steamboat will encounter in the days ahead. He noted that the current recession is different from previous downturns.
"In past recessions, you did not have the kind of impact in the kinds of professions that you're seeing right now," Hofman said. "In past recessions, there was always a very disproportionate amount of layoffs in manufacturing and in other kinds of nonprofessional, non-salaried jobs. Now, you're seeing a much more across-the-board impact."
The U.S. Bureau of Labor Statistics released November unemployment figures Friday. Although education and health care appear to be unaffected, Hofman noted, most other fields saw a decrease in jobs. The U.S. unemployment rate increased from 6.5 percent in October to 6.7 percent, the bureau reported.
"Among the unemployed," a news release stated, "the number of persons who lost their jobs and did not expect to be recalled to work increased by 298,000 to 4.7 million in November. Over the past 12 months, the size of this group has increased by 2.0 million."
Routt County's unemployment rate increased 0.8 percentage points from September to October, from 3.2 percent to 4 percent, not seasonally adjusted. Colorado's seasonally adjusted unemployment rate was 5.7 percent for the month; its non-adjusted figure was 5.3 percent.
That downward economic trend does not bode well for tourism, Hofman said.
"The person who is now not buying the $1,500 or more television is not taking the $3,000 or more vacation," Hofman said.
Time to plan ahead
Tourism observers in Steamboat have said they hope to see an uptick in last-minute bookings. Hotel officials and those who sell winter gear have predicted that good snow will attract visitors.
Hofman was skeptical that those factors would have an impact.
"The idea that we are likely to see significant late bookings because of people kind of holding off to see better bargains, holding off to see what the snow looks like, etc., that's probably not going to play itself out like people have hoped," he said.
Sales tax revenue also is decreasing compared with the banner year of 2007.
Preliminary figures for October sales tax receipts in Steamboat show a decline of 6.24 percent from October 2007, outgoing city Finance Director Lisa Rolan said last week. September collections were 3.77 percent less than in the same month in 2007.
The city and county should plan ahead as they prepare reduced budgets for 2009, Hofman said. He predicted that the federal and state government would release money for community infrastructure and other projects. Local officials should keep in contact with their elected representation to make sure their priorities and needs are considered when that funding arrives, Hofman said.
The future will not look like the past, Hofman predicted. Because the economic problems are largely related to risky practices that made people wealthy, Hofman said, the government probably will tighten regulations.
"The things that made lots of people very wealthy beyond their wildest dreams, this is the kind of thing that has fueled the building boom in places like Steamboat," Hofman said, adding that the era of the 7,500-square-foot spec house is over.
Those changes will have a long-term impact, Hofman said, despite a modest recovery that he expects to arrive in middle to late 2009. That recovery won't bring back the building boom, he said.
That makes diversification even more important, Hofman said. Now is the time to prepare, not to hunker down and try to make it through a potentially tough winter, he said.
"If you think that what we're going to have in the county and in the city will be what we had two years ago, even minus a few percentage points, : that is a fundamental mistake," Hofman said. "Because that will not happen, in my judgment."