BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh
BBCi CATEGORIES   TV   RADIO   COMMUNICATE   WHERE I LIVE   INDEX    SEARCH 

BBC NEWS
 You are in:  Business
Front Page 
World 
UK 
UK Politics 
Business 
Market Data 
Economy 
Companies 
E-Commerce 
Your Money 
Business Basics 
Sci/Tech 
Health 
Education 
Entertainment 
Talking Point 
In Depth 
AudioVideo 


Commonwealth Games 2002

BBC Sport

BBC Weather

SERVICES 
Tuesday, 29 January, 2002, 10:28 GMT
Denver's survival instinct
Denver is a Western boom town
Denver is a Western boom town
test hello test
David Schepp
BBC News Online's North America Business Reporter
line

The dynamic metropolis known as Denver started out as nothing more than a mining camp after gold was discovered in Cherry Creek about 150 years ago.

Traditional Western pursuits are still popular
Traditional Western pursuits are still popular
It became a boomtown and because of its location at the foot of the Rocky Mountains continued to prosper long after the gold in Cherry Creek was panned to depletion by eager miners.

Today, the city's metropolitan area is an economic dynamo, having experienced one of the greatest surges in population growth of any American city, gaining over half a million new residents during the '90s.

Growth spurt

The growth in population, spurred by Denver's dynamic economy, quality of life and panoramic scenery, has boosted development and redevelopment on a massive scale.

Denver's downtown is renowned for its recent renaissance where a pedestrian mall has become the destination for tourists and locals alike.

The city is building a new football stadium
The city is building a new football stadium
But with the expansion have come growth pains. Housing prices have soared in recent years, making it more difficult for those with modest incomes to afford a home of their own.

Automobile traffic has increased tremendously, with Colorado holding the distinction of having more cars per capita than other state in the US - an average of three per household.

Interstate 25, the main north/south corridor through Denver, is undergoing massive renovation. It is one of most heavily travelled routes in the country.

Slowing economy

Despite the rapid growth, the economies of Denver and Colorado - largely considered equal because Denver makes up more than 50% of the state's total - here has slowed with the rest of the nation.

Colorado's unemployment rate rose to 5.2% in December, according to state statistics, while Denver showed a 4.9% rate.

Manufacturing activity has declined as has the demand for loans, according to the latest report from the Federal Reserve Bank of Kansas City. It also noted home sales and housing starts in Colorado are especially sluggish.

"Despite the fact that people like to delude themselves that Colorado is somehow different, says US Bank chief economist Tucker Hart Adams, "the fact is we are very much in line with the US economy."

In 2002, Mrs Adams says she expects Colorado's economy to retract slightly during the first six months but begin growing slowly in the second half of the year - if the larger US economy begins recovery.

"My biggest concern is not that we're going to have a sustained period of additional contraction," she says, "but rather that it's going to be pretty much waddling sideways for several quarters."

Major industries

The downfall of the US economy has largely been tied to the high-tech sector's bubble-burst. Colorado is home to a number of high-technology firms and is a major telecommunications hub.

Mrs Adams says telecommunications - along with energy - remains an important part of the Colorado economy. Although, neither plays the sizable role it once did.

Recent deals here have resulted in a number of job losses, including one between Qwest and regional telephone company US West, which will result in 7,000 redundancies caused by the melding of the two telecommunications firms.

Other recent layoffs include nearly 1,000 jobs at TeleTech, a manager of call centres for other companies.

In a $1.2bn (852m) deal with IBM, TeleTech has agreed to run customer service call centres for Nextel Communications.

In doing so, TeleTech will close its call centre in suburban Douglas County in an effort to reduce costs by finding cheaper labour in other states.

Slumping energy prices

A drop in energy prices has had a negative effect on the energy sector in Colorado, with oil and natural gas drilling falling to levels not seen in two years.

While industry experts expect prices to rise again as inventories decrease, no one expects to see the record prices for natural gas seen a scant year ago.

Energy analysts here see that as a positive.

"Stability is as important as price," explains Greg Schnacke of the Colorado Oil and Gas Association.

"High-price spikes and low dips are not the best thing for the overall economy and not the best thing for the energy economy," he says. "We need a stable price."

Energy's past

Stable prices mean consumers can better budget the amount they spend on energy, and spend more freely in other areas of the economy.

The talk of stability within the energy sector is soothing words for those who survived the topsy-turvy past here.

In the late 1970s Denver emerged again as a boom town, as surging oil prices led to speculation and near hysteria as energy developers tried to cash in.

By the mid 1980s, as energy prices plummeted, Colorado's economy spiralled downward, resulting in huge layoffs and driving down home prices.

Drilling for gas

But now, while energy exploration and manufacture remain an important component of both the local and state economies, Colorado's economy is no longer as dependent on energy as it once was.

Nevertheless, energy exploration remains an important component of the state's economy - most significantly, natural gas.

Today, the number of people employed by Colorado's natural gas and oil industry numbers about 11,500. And those are well-paying jobs, averaging an annual salary of nearly $60,500.

Winning streak

One bright spot among Colorado's economy is gaming. Casinos saw profits rise 7% in 2001 despite a souring local economy and the 11 September attacks, which many cite as a reason for falling numbers of tourists.

Colorado's economy is heavily dependent on tourist dollars, but gaming here - unlike "destination" resorts such as Las Vegas and Atlantic City, New Jersey - is not.

Just as in other parts of the economy, Americans are keeping their money close to home. For Colorado casinos, that resulted in a record $57m (40.5m) in profits last year.

While gaming may be the anomaly, analysts here expect Denver to emerge from the current slowdown when businesses start expanding again and consumers resume spending - not when economists pronounce an end to the recession.

That assertion is a prime example of the sort of independent spirit Colorado was founded on.

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories