No one can walk or drive around metro Denver and not see that the city (and much of Colorado) is in a period of impressive economic growth.
In Denver, housing and rental prices are skyrocketing at the fastest rate in the nation (good for owners, less positive for those coming into the housing market). Cranes for new commercial and residential construction are everywhere. New restaurants, breweries, distilleries and fancy food courts are scaling up, and the “hipster” and ”coolness” factors are all growing. Unemployment is down and advertisements for jobs are all over. The city of Denver has grown its population from 468,000 in 1990 to 664,000 today, one of the few American cities that is growing so much. Forbes just ranked Denver as the #1 city for Business and Career Growth. The city budget is solid and public officials feel comfortable asking taxpayers to approve new taxes in November to deal with important social and economic challenges.
Booms are fun to live through. But, they sometimes have a bad reputation, given that sometimes they are really more like “bubbles”, which then burst, and are inevitably followed by painful busts. Indeed, some observers wonder if the booms or bubbles are “worth it” given the large costs of the busts that follow.
But, bubbles are notoriously hard to identify, and there are booms and there are booms. Since the 1860s, Denver traditionally has experienced periodic natural resources booms from mining, oil and gas. Those industries stimulate the economy, boost hiring, have secondary positive impacts, but then usually fall hard and fast when natural resource prices change. So long-time Coloradans are probably a bit scared of booms, remembering their history and thinking “bubble”.
But, this boom feels a little different. Certainly the state and city have worked hard to diversify the economy, over time, with increasing success. The July 28 announcement of 1,750 jobs from ZenPayroll in Denver over the next 8 years solidifies confidence in the economic future. New movers to Colorado continue in large numbers, not seen since the 1970s, including both many well-educated young people and retiring baby boomers. And, the boom seems to be sustained, even as oil and gas operations have been cutting back over the past year, due to lower prices. Indeed, the Denver Post reports that the energy industry’s share of downtown real estate has fallen from 30% last year to 17% this year, but overall commercial real estate nevertheless remains strong.
The boom won’t continue forever, of course, but it seems to have a more solid and diverse economic base, fueled by new demand from a growing population, corporate re-locations, a thriving entrepreneurial sector, as well as the amenities that bring and keep people here.
While most local governments that have “de-Bruced,” like Denver, can capture the upside of growing tax revenues that come with strong economic growth, one thing that doesn’t boom along with the economy is state revenues, due to TABOR caps. Taxpayers will soon get TABOR refunds, and Colorado will experience the very odd circumstances of a booming economy, coupled with a state government that at the same time will need to cut back funding to higher education, K12, transportation and other vital services. Fortunately, smart public policy decisions can address this issue, and an economic boom is exactly the time to address it.
For now, we should all enjoy the boom, and hope that continues a while longer.