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578 total votes
Economy is such an all encompassing term. I would be curious hearing from others what specific areas of the local economy they would like to see improve in 2012.
How about reducing taxes so I can spend more money with local merchants?
I hope the the oil and gas industry is careful with our valley's ecosystem and hires local because this valley needs every job that we can get. Ron Paul 2012 Ron Paul 2012
So 20 % think it's snow... Hmmmm.
MORE PORK MILKSHAKES!!!!
Scott, my own personal economy, and I'm not talking about the 300 grand I lost on the value of my house, but rather the bottom line of a paycheck. This is 2012 and 11 dollars an hour doesn't cut it. heck I was making 15 an hour back in the early 90's.
Hi Kevin –
Without question we have seen some big changes over the past 4 years. Routt County has seen boom and bust before. This current recession ranks as a really big one. In reviewing the economic data the peak of the Boom – occurred in the 2nd & 3rd quarters of 2007. The depth of the “Bust” bottomed in Routt County occurred in 1st and 2nd quarters of 2011. (We are currently bouncing along this bottom.)
Here is the damage report:
Loss of about 13% of our business establishments
Loss of about 18% of our jobs
Decline of 15% in total wages and salary
There are segments in the economy (construction) that on an individual basis have much worse numbers. (The numbers above represent all of Routt County / across all industry sectors.) Health Care and Professional/Technical/Scientific industry sectors grew during this period.
One of the interesting things we can tease out of the data is that the average weekly wage has increased. At the “Boom” it was $699 and the “Bust” it is $713. Since the data we look at does not make a distinction between full and part-time jobs, what this increase likely represents is many of the part-time jobs that existed have been squeezed out of the system.
There are so many factors the influence Real Estate – it makes my head hurt when I think about them. In reviewing the median listing price of homes in Routt County we have experienced a 30%+ decline. (Some locations more / some locations less). The pace of the decline has slowed but there may still be some decline ahead of us.
A statistic in the 2010 census data that concerns me is that in Routt County the percentage of homeowners age 60+ that have a mortgage (primary and/or second) is almost 70%. Nationally this number is in the 45% range. There are a lot of reasons for this I know - however, it appears that there are many households in Routt County that likely looked at their home as “retirement” investment and not shelter. For this group there is not going to be a sufficient recovery in home values to make much a difference to them when they will most need it. They are going to be entering their 70’s and 80’s with mortgage payments. That is an ugly challenge.
Scott... your Census stat is not surprising and probably more alarming than you can possibly know! If you couple this with the income side of the equation things are more than just a little depressing. Think about this lovely nugget. The median retirement savings from all sources for someone in their 50's is around $55 k. The median pension payout (for those lucky enough to have a vested benefit) is around $18 k. Even worse than that is the %tage of retirees taking on credit card debt. The last study I saw was in '07 so I hate to even reference it; but it wasn't pretty even then. How on Earth will the "median" person in their 50's even be able to retire? Even if they draw Social Security it won't be enough, nor will their 401k AND pension. The short answer... retirement (as the silent generation knows it) is dead!
Personally this scares the begesus out of me. I have gone so far as to hypothesize that for the first time in our nation's history we will see life expectancy tables reverse (it is proven that you die younger if you work longer), the value of a college degree decline (20 somethings with graduate degrees are already working as waiters and waitresses... and not in resort towns like Steamboat), and taxes soar through the roof within the next 10 - 15 years.
Real unemployment is at near record highs (not just those applying for and receiving benefits) and inflation, IMHO is being under reported. Think about how much more you are personally paying for things like food, energy, and clothing as a % of your pay than you did 10 years ago.
Couple all of this with huge governmental debt and we are in for a very intresting time. Think about it... what two primary sources does public sector use to determine their "income" stream? Revenues from property tax and revenues from sales tax. Of course there are use taxes, but look at any CAFR and you will see the true picture.
If we are quickly heading to a post-consumer society where is the $$ going to come from to fund even "non-discretionary" spending? Seems to me that this is the real elephant in the room that no one wants to even dare mention. We cannot afford to continue to spend like we have over the past 30 years!
So, yeah, I would say the economy is the #1 concern facing not only Routt County, but our Nation. You think there are lots of foreclosures now... just wait until mom loses her home after she loses her job to poor health.
Oh yeah another little nugget to chew on when you think about the big picture... the median wage in the US (according to Census data) is around $50k.
Well, I think this is enough of a active lifestyle community that it includes far more people than average that intend upon being active as they get older and that includes continuing to work as a tradeoff for enjoying the active lifestyle now.
I note that the developers of Casey's Pond retirement assisted living must see a lot of well off retirees willing to stay here even as their health weakens for them to proceed with that development. I doubt that they are hoping to convince people that need assisted living to move to the high mountains with long winters of snow and ice (in normal years). I think they must be counting on people staying here as they age.
So I think the number of people near retirement age with mortgages is not as ominous as it might appear
The local economy is continuing to show a split between wealthy SB area and many of the local employees. SB's and nearby real estate is part of a much larger resort lifestyle market where potential buyers are choosing between here and other resort areas. This market is minimally dependent upon local jobs as enough of the buyers get their income from outside the area.
The local employees were doing well during the boom with rising wages and able to work multiple jobs. Now the hours are way down and the pay is the same or lower. They are the ones walking away from Stagecoach and Soutt Routt, areas dependent upon local income, where housing prices have dropped more than 50%. $250K townhomes during the boom are now routinely selling for less than $100K and have sold for less than $80K.
Hi Just Wondering -
I find the national debt a difficult problem to put into perspective primarily because the numbers are so large. Dave Ramsey - a no nonsense person about personal debt used an illustration about the national deficit/debt that made it real for me. Using the same ratios he what would it look like from a Routt County household view point.
The federal government from all sources will collect about $2.173 trillion this year. It will pay out about $3.818 trillion. In 2011, the outgo (deficit) exceeds income by an estimated $1.645 trillion. The 2011 deficit will be added to the existing debt, which make it $15.2 trillion..
To put this in perspective the Jon Q public household in Routt County has a median income from all sources of $64,892. If Jon's household spent like the federal government does it would be spending $114,015 annually. In addition, it would have total outstanding debt of $454,244.
This family is in real trouble. However, Jon's father-in law owns the local bank and keeps loaning them money because Jon tells him he is good for it. The father-in law does not want his daughter and grandkids sleeping in the street so he continues to loan Jon more money even when it silly to do so. Hoping against hope that Jon will finally become organized and start paying down the principle on the loan not just the interest.
The father-in law knows that he is enabling this bad behavior, however, the downside is too frightening. The two are locked in a dysfunctional co-dependent relationship. It is so unhealthy they both choose deny the magnitude of the problem.
What can Jon do? Not much unless he wants really wants to change his behaviors and thus his lifestyle. Jon says he wants to but he has said this many times. Is he mad enough at the current situation to make the change? To go from a $114,015 lifestyle to a $64,892 lifestyle he has to stop spending on a lot of things he and his wife both think are important. It is going to get ugly and be one heck of a money fight in this household.
The spending cuts necessary are seriously going to hurt, but it’s the only way out. His wife and kids are all going to have to work hard as well to stay focused and disciplined to make all this happen. Jon is going to have to get used to saying NO far more than Yes to things his kids want to do and have.
Jon and his wife must also get second jobs because cutting the households spending to no more than he earns simply balances the household budget. Balancing the budget is not going to solve the existing debt of $454K.
The big question out there for all of us is do we think Jon can pull this off. Is he and his wife mad enough about their current situation to save their household?
Hi Scott W -
Happy New Year my friend. I am confident you and I will have some informed exchanges in the coming year.
I agree with your insights about the sources of Routt County's income. This is one that is challenge to tease out of the data but it is doable. The IRS Master file is organized by zip code and it breaks down sources of reported income - I just have not done this level of income source analysis in several years. Sounds like a good project during a rainy day in April.
I think the target market for Casey's Pond is targeted to the parents of the affluent boomers that live here. Here is a typical scenario. Parents currently live in Ohio. Daughter 1 lives in Steamboat Springs - married with 2 kids, Son 1 lives in the San Francisco condominium with his girl friend. Daughter 2 is living in east Texas with her third husband in a mobile home and between the two of them; they have 6 kids, 3 big dogs, a turtle and a unidentified critter under the porch.
Dad passes away. After a few years mom is increasingly lonely and wants see her grandkids more often. Moving in with Daughter 2 is out of the question. The only space for her is the tool shed. Daughter 1 loves her mother dearly and knows she needs some extra care but is not moving back to Ohio to take care of her. Nor does she want Mom to move in with her family. Solution, mom is has the financial resources to easily afford one of the senior apartments at Casey's Pond and there is a lot going on socially. In addition, she knows that as she needs more care in the future having the assisted living facility and skilled nursing facilities on the same campus is a bonus.
The target customer for Casey's Pond is likely 20% us and 80% affluent parents of boomers that live here.
The missing part of the federal budget analogy is that the federal government is a significant part of the economy and when it cuts spending then it can also, to a lesser extent, be cutting its income. And governments can see massive increased revenues when the economy improves while then costs of unemployment benefits and such also decrease sharply.
It;d be like that family owning a restaurant that employs and feeds the family from the restaurant. It cuts more expenses than the alternatives for the family to eat at their restaurant, but only if they don't eat steak. And it can help the family if they employ family members even if they are a little overstaffed because that is better that being unemployed.
The trouble is that they've lost financial control and cut prices just as they started two expensive lawsuits (wars) and then cosigned loans with everyone without caring about the amount being borrowed or monitoring what the money was be used for.
The restaurant has significant fixed costs and so 5% growth improves cashflow by 10% so a few years of growth with good management could leave them in good shape which is why they find people still willing to lend them money with low rates.
But now all they can agree upon is that is was not their fault and that others in the family, not them, need to change.
As for Casey's Pond, seems to me it is more for those that started moving here in the 60s and want to stay here. It just seems so tough to move a parent to the high mountains with long winters. And also have the resources to pay for a place like Casey's Pond while not simply having room for them at home or a condo of their own with arranged help.
Like it seems to me that there are more residents of the Doak Walker that are local residents and only a few that were moved here as their health declined to be near a family member.
So for your analogy, I think it is divorced Daughter 1, now 62, kids grown and elsewhere, with numerous injuries from living the active lifestyle facing knee and hip replacement surgeries that is thinking she could live at Casey's Pond instead of moving in with her sisters or children. That Casey's Pond offers her a range of assistance and she can see herself needing it at times.
There is no great demographic bulge signalling a growing market for retirement/assisted living for parents of baby boomers. It is the baby boomers themselves that signals an increasing need for such facilities. And, I think, it is likely the leading edge of that will be those whom are less lucky to have health issues earlier than others.
Scott W. Your analogy of the Federal government is just a wee bit off. It is not a creator of an economy but reacts to an economy that already exists. Being a small business owner I would have assumed you had at least a view into ECON 101. Businesses create $$ when they produce a good/service from nothing that is demanded by someone else. GVT simply takes what is already there and re-disributes it. It does not create an economy. There is no doubt that an increase/decrease in spending has a temporary effect, but it does not change the economy... we should have learned this with the pork spending of the last decade. We tried to spend our way out of it... to no avail.
"There is no great demographic bulge signalling a growing market for retirement/assisted living for parents of baby boomers." Under what rock do you live under? What I absolutely agree with you is that Casey's Pond ownership saw an opportunity. They saw Doak with few too many beds to service a community of the size of ours and decided it would be great to capitilize on it versus having them go off to Junction or the Front Range. And to your analogy of Daughter 1, now 62. You are absolutely right! Why would this self-serving baby boomer want to actually help her chlidren like her own "greatest generation" mom and dad did when she got a divorce. She has always made very self-centered decisions, why stop now. I just hope she doesn't expect her gen x or gen y kids to come an see her in the assisted living facility... 'cause they won't.
As far as your view of how well off the boomer generation is... you better take another look at real stats. The picture is not as pretty as you would want to paint it. It seems that you hold some pretty naive views of how well off this upcoming generation of senior citizens is. I'm not going to bury you with studies and stats... it is what I do so am exposed to hundreds of them, but would suggest you do your research... without trying to make it fit an agenda.
The government does create a significant portion of the economy. Consider the districts wherein defense contractors and their manufacturing jobs exist. That would be the pork. Consider the social safety net of jobless benefits and food stamps. Economists say these are programs that most directly put government $$ into the market. These would be the entitlements.
Both are economic creators because they have no peer, or similar, functions in the private sector. Government is producing a good/service that is demanded, and that no one else can or will provide.
Yes, government spending has been too high, but these are not the years to cure that. The positive effects of government spending during a recession is also Economics 101. Scott F's family analogy misses that point.
I disagree that re-distribution is meaningless to the economy. A dollar in a poor man's hand goes into the market more directly than the dollar in a rich man's hand, because the poor man spends so much more of his income on essentials, while the rich man will put some into savings. Also important here is which one creates demand. Lack of demand is by far a bigger problem now than lack of supply. The poor and middle class are more responsible for market demand, the rich are more about creating market supply.
I am not arguing that the re-distribution is morally right or wrong. Just that it can have powerful economic benefit. It can also be wasted.
These are exactly the years to cure the debt. Curtailing defense spending by withdrawing our troops worldwide is needed and would eliminate the deficit.
Then as the federal reserve is chartered by the government, simply reduce interest rates to zero and pay down the principle.
Eliminate departments of the federal government (education as many teachers do not support it, agriculture as it is causing many problems through crop subsidies, energy as it has not moved an inch towards what it was created to do and on and on).
Those states that produce wealth - Iowa, Wyoming, Texas are doing okay and those that do not are failing economically California with 1/4 of all welfare recipients, etc..
The economy in Routt county will be fine it is blessed with natural resources, managing them so that we do not look like rifle is the key. We can work to turn more sunlight into hydrocarbons to eat via potatoes, milk, etc. that fit the environment.
Government should never be a MAJOR contributor to the economy. Its contribution should be limited only to those powers granted by the constitution and only in limited situations. There is now doubt that there is some incremental benefit to the economy, but again, GVT only re-distributes dollars that have been created elsewhere in the market. It does not create. As to your point around social programs... I believe in ECON 101 we called that the leaky bucket... a "necessary evil". Now, my personal belief system is those of us that have been blessed have an obligation that we will be accountable for in the after life (oh wait, that means you have to assume that there is one by which our moral code is based) to take care of those that are truly indigent and cannot help themselves.
In a truly efficient market, social programs would be taken care of by those not for profits whose sole mission is to provide these services efficiently and effectively.
California is actually seeing a split similar to what I described in Routt County.
Silicon Valley up along the Peninsula to San Francisco is doing quite well. San Francisco currently has a number of major office buildings under construction with more being proposed. Silicon Valley is also doing well with Apple and Google both preparing to construction massive new headquarters. And those are merely the largest of many other growing successful companies located there. Both areas have seen their real estate markets stabilize and recover. The froth of the boom is over, but things are at like a normal pace with pricing comparable to 2005 or so.
Meanwhile, the Central Valley is in bad shape as they had booming construction activity during the boom that went to zero and there are precious few other jobs for residents and so there is almost no one looking to buy or rent what had been recently built.
In terms of producing wealth, Wyoming is a tiny blip compared to Silicon Valley.
ybul writes: "Then as the Federal Reserve is chartered by the government, simply reduce interest rates to zero and pay down the principle."
While a simplistic idea in theory moving the rate to zero would not have an immediate impact, especially if like you suggest we cut spending dramatically. The Federal government issues debt with the promise to pay a stated amount of interest for the stated period of time. So, moving a rate on newly issued debt to 0% would not have an immediate impact (less new issues being created). If you are suggesting taking existing issues credit rate to 0% I would say this would be disasterous! What value would any issue of US debt be in the future if the can arbitrarily change the interest they are going to pay to you. This is something that would clearly be unprecedented in the marketplace.
Secondly, in order to issue debt you need a buyer of the debt. If you are issuing new instruments (bills, notes, and bonds) and paying a rate of 0%, the market for your instruments will be much less than other alternatives. Do I buy a US bond paying 0% or something else that is relatively stable paying 1%.
Besides, the Fed funds rate (the rate the Fed can effectively control) is already near 0 (7 bps). You would have to buy a 30 year bond today to get a yield that comes close to keeping up with inflation.
I can tell you that institutional investors (pension systems, insurance companies, corporations) are already modeling "Japan scenarios" for US debt instruments. Scenarios where the Fed funds rate stays at or near 0% for an extended period of time.
A good discussion.
Perhaps, for much of the U.S., "post consumer" is a fair label for several years to come. The key to the national economy, in my opinion, lies with the well being of the middle class. Can they afford consumption beyond bare essentials? The key to a local economy likely lies in the realm where ybul and Scott W have put it - the basic economics of natural resources or products offered. Just with a lowered demand to compete for.
Routt has its wealthy influences. That may set us apart. On the other hand, with our subsidized airline flights, it seems we add uncertainty.
If the government had no interest payment to make and could pay down debt instead (that is if they cut spending so that new deficits were not created) then a zero percent interest rate is not absurd. Given that prior to the federal reserves creation deflation was the major player in the marketplace, if we enter into a deflationary environment then resetting interest rates to zero would be a positive - cutting government spending, controlling the crazed printing of money and easy credit creation would start causing prices to decline and even retirees would prosper in a deflationary environment.
The Japanese need to borrow almost as much, if not more than us in the short term. Promoting a government that lives within its means is needed and it will take pain to get to that point. Yes it is outside the box thinking, but that is what we need right now as the box is headed to the dump.
Wyoming is a tiny blip - however, they actually produce base wealth that silicon valley does not. Silicon Valley is based upon the pension funds of others buying up stocks so that their system works.
The foundation of an economy is energy - wether it is food or energy. Silicon Valley is secondary and requires wealth being created elsewhere for it to survive. Yep the dollars are larger, however, they are the beneficiaries of a convoluted stock, banking pension system that has been based upon debt (borrowing today for more and realizing in the future that you are going to take less).
Our economy has been based upon debt - a mort gage or death grip from its latin derivation. Not a bible thumper - but it speaks of being in debt to another as being their slaves.
The federal reserve being a private company chartered by the federal government - which under tarp lent money to bankers wives with no collateral which then probably bought debt and made them a tidy income.
Unfortunately Silicon Valley creates products that cause us to work more to pay for them. IF one slowed down they might realize they could live on less, but that is not the desired system as it does not create more for the money changers, whom caused the only instance with which Jesus is noted as being upset in the Bible.
Lincoln stated to the brits (more so those living in tiny center of london's financial district that is not governed by British law.) that he did not feel obligated to pay their debts after learning that they were financing both sides of the war, which might have been the reason for his murder. Kennedy warned of the bankers and made an executive order to return to a sound monetary system. Maybe the battles we should be fighting today are the ones we should have been fighting and others have forever.
Lewi writes: "Perhaps, for much of the U.S., 'post consumer' is a fair label for several years to come."
To get very local; our problem is that we have built our infrastructure and economy to rely on much of the US being a consumber based economy. If people quit consuming (i.e. taking vacations) our current economy is hosed. However, to others' point Routt County has vast natural resources and a very strong agricultural heritage, competencies and infrastructure. Given the current environment it seems we do not have an apetite to take advantage of the natural resources (coal, natural gas, timber and ther minerals). Additionally we, as a State and to a lesser extent County, have recently been enacting legislation do discourage agriculture. There is something very wrong when it is cheaper to let raw lande return to sagebrush and willows rather than use the land for agriculture.
A SMART economic plan would seem to me to embrace a variety of sectors including manufacturing, raw materials, agribusiness and consumer sectors (tourism); textiles would be nice too, but it simply is not cost efficent (with the exception of higher end products like Smartwool, $18 for a pair of socks does not appeal to the masses) to produce them in Routt County due to transportation costs.
I can remember many years back (early 80's if I remember right) when we had another bad snow year and the economy tanked. Fortunately, at the time there was enough of a mining and agriculture influence in the County to keep us afloat. I can also remember buying homes all over Routt County... nice homes... for less than most people pay for a car! The ones that were able to capitalize on this laughed their way to the bank in the late 90s to 06. To this point, I still wonder if we have reached the bottom of the real estate market here yet. There are still a lot of properties where foreclosure is delayed waiting for values to increase. At some point that banker in Charlotte, NC is going to want to cut losses and move on.
ybul writes - "If the government had no interest payment to make and could pay down debt instead." Theoretically this is a great idea... unfortunately the current World economy is very much based on the U.S. ability to pay its debt with interest rates higher than 0%. To get us to the point of "debt free" without returning the world economy to the dark ages it would mean (in theory anyway) a period of 30 years where we issued no new debt.
ybul writes -"The foundation of an economy is energy - w(h)ether it is food or energy". I would re-state that the most basic foundation of an economy is food, shelter and clothing. Energy comes from the need to produce one of the other three.
Energy is food.
At some point the excess' of the past need to be paid back. It is time to quit playing kick the can down the road.
The world economy, invests money in the US as a safe haven or to manipulate their currency so they can export their products to the US. The rest of the world needs to return to a system with sound money, which yes will be painful - because many have consumed many years worth of production on credit essentially enslaving themselves or their grandchildren if they kick the can that far down the road - which our elected officials seem to do as everyone wants a promise of roses - when the best course of action might just be messy (as is today in looking into growing potatoes in the valley on large scale again as that is energy for us to produce more wealth).
Those $18 pairs of socks might just become the norm if the current paradigm is not changed soon. It might just be that it is cheaper to burn dollars than firewood as we go the Mugabe route and print up Quadrillion bank notes prior to getting our act together as did Brazil, which has modeled its economy on how ours was founded not how it exists today.
Energy does not "come from the need to produce [food shelter or clothing]".
Energy comes from the Earth.
Wealth is created by the application of that energy to other natural resources.
The basic foundation of an economy is its degree of efficiency in allocation of land, labor, capital and other resources (among them are food, shelter, clothing and energy) which produce output that determines a societys standard of living.
In general, the more energy a society uses per capita, the higher its living standard.
Economy suggests scarcity. Absent scarcity, there is no need to "economize".
In a Garden of Eden there would be no economy because all things would be abundant. Food shelter and clothing would exist in abundance, even in the absence of an economy.
Therefore, the classic definition of economics, as given by British economist Lionel Robbins 1898-1984, is:
"Economics is the study of the use of scarce resources which have alternate uses."
Sled... Should have been Energy consumption comes... Not Energy comes from...
Other than that I basically agree with the rest of your statements.
Energy is not from the earth, oil comes from extra-teresterial activity. Without agriculture and its trade all other activities do not exist. Throw in the need for raw materials such as those produced to build all the wonders of silicon valley and silicon valley does not exist. It probably would not exist in its current fashion without the corporate banking system that exists today.
I can throw a quote at you also, fro T Jefferson. "If you give the bankers control of your money supply then the corporations that grow up around them will take back all your forefathers have fought for".
The increased productivity of the economy comes from creativity and the ability to be more efficient in production.
In general the more energy a culture has used, the higher the value of their paper money on the world exchange - facilitating their perceived higher standard of living or better put consumption.
We use the most and send our troops worldwide to protect "our resources" - essentially most wars are about resources and their control. As the resources have become more scarce the wars to protect them, to put in power puppets to sell them for next to nothing, have been more frequent.
As for Routt County it is in good shape we have a world class ski resort, we produce coal by the mega ton and Electricity by the maga watt, and BEFF its whats for dinner and now we are becoming a OIL and GAS producer on a much larger scale regardless of what the east coast Johney come latleys say so Routt County is much more like Wyoming and very different than California in every way. California has a true unemployment rate of 30%, many of the jobs in that state have left for TEXAS and COLORADO with Austin and Colorado Springs the big winners. The main reason is Sky High Taxes and a law that was passed that would require 25% of all Electricity to be GREEN and Hydroelectric and Nucular don't count even though no hydrocarbons are burned. So as long as Colorado stay bussines friendly we should do better than most. Apple and Goggle do well because they have made deals with the Military Industrial Complex,DARPA and the IRS so they pay little income taxes.
Canyonwind writes"So as long as Colorado stay bussines friendly..." Colorado is business friendly??? Are you kidding me?
We continue to lose large employers on a monthly basis because of our business environment.
One of the ONLY things that has kept Colorado even remotely fiscally strong (relatively speaking) is TABOR.
Having hundreds of world class ski resorts does you no good when real discretionary income has dropped year after year since the current Administration has taken office (people take vacations based on discretionary income). Not only do we have less real jobs (don't let the inflation rate being reported fool you; it is not counting the number of able bodied adults out of work) but those of us that are employed are working for less real (not just inflation adjusted) dollars than we were three years ago.
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