A rough holiday season
Economist Carl Steidtmann forecasts a tough end to 2008
October 22, 2008
Steamboat Springs — The 2009-10 holiday season will be a much happier time than the upcoming one, economist and Steamboat Springs resident Carl Steidtmann told the Steamboat Springs City Council on Tuesday.
Like his prediction of a modest recession with a recovery to start sometime next year, Steidtmann tempered his assessment of a troubled national economy with notes of optimism throughout his report to council members.
“From an economist’s perspective, it’s a really exciting time to be an observer,” said Steidtmann, drawing anxious laughter from the Centennial Hall crowd.
Steidtmann, chief economist for Deloitte Research, said the city’s projection of a 4 percent sales tax decrease in 2009 is probably appropriate. Council members including Jon Quinn and Loui Antonucci had expressed concerns in recent weeks that the projected decrease might be too optimistic.
“This isn’t the Great Depression,” Steidtmann said. “This is a serious recession. It’s certainly one of the worst we’ve had since 1980. But it’s not the Great Depression. We will get a recovery in 2009.”
Steidtmann said Steamboat has yet to experience the recession to the same degree as other areas of the country.
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“Steamboat is way behind the country in terms of the process working its way here,” he said. “But it will get here. : This is a process that’s going to be with us for a long time.”
Steidtmann said reductions in consumer and retail spending will be particularly painful for Steamboat Springs as it approaches the start of ski season. Steidtmann said consumer spending increased to 72 percent of gross domestic product, which dwarfs any other country in the world. As consumers cut back, he predicts consumer spending to return to a level below 60 percent of GDP.
“That’s not sustainable anymore because of the unraveling of debt,” Steidtmann said. “Consumption has to come down. : The consumer’s not in a really strong position to spend.”
Growth in energy development and technology, however, will help offset the reduction in spending, said Steidtmann, adding that Steamboat is particularly well positioned to take advantage of energy development opportunities.
A building slowdown also will greatly affect Steamboat, said Steidtmann. Construction jobs made up 20 percent of Steamboat’s employment at the height of the local building boom.
“I think we’re going to see a lot of projects that are started that are going to have a hard time getting completed,” Steidtmann said. “I think it’s going to be very difficult to raise money.”
He predicted tough times ahead for charity organizations.
“I think it will be a very challenging time to be raising money in the nonprofit sector,” he said. “If there’s a discretionary space in spending, it certainly is charity.”
Also Tuesday, council approved a final development plan for the addition of 35 hotel rooms at the Holiday Inn in the 3900 block of South Lincoln Avenue. Council approved a plan for distributing the money it collects through an affordable housing ordinance passed last year. The money, which totals about $640,000, would be distributed to affordable housing developers through a request-for-proposal process and discretionary grants.
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