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2008-03-12T10:50:00.002-06:00

Local job market looking up
Employment growth numbers revised higher
By WAYNE HEILMAN
March 11, 2008 - 5:38PM
THE GAZETTE

The Colorado Springs-area job market wasn't nearly as weak as early estimates indicated, state officials said Tuesday after revising last year's local employment growth numbers sharply higher.

The revisions by the Colorado Labor and Employment Department boosted the area's 2007 job-growth rate to 1.13 percent from a previous estimate of 0.69 percent. The department also revised the local jobless rate a bit higher for each of the past two years.

The revisions replace estimates compiled from surveys of employers and residents with data from unemployment insurance reports for the first nine months of the year, the most current available, and then make new estimates for the final three months. The new numbers paint a conflicting picture of the local job market, with stronger job growth at the same time more people are out of work.

That trend continued in January with the local jobless rate jumping to a 2½-year high of 5.4 percent and job growth surging to 2.2 percent. "You've had some headline events with layoffs, but the underlying economy is stronger than we were giving it credit for," said Joseph Winter, a department economist. "Things were not quite as dismal as the preliminary numbers had first indicated." The revisions showed that local job growth slowed dramatically in the first half of 2007 before accelerating in the second half of the year.

At the same time, the local unemployment rate has risen from the same month a year earlier for four consecutive months. None of three economists who follow the local economy had a theory on why job growth and unemployment are increasing at the same time. "The numbers suggest the nation is already in a recession, but I think that we will tiptoe around a recession," said Fred Crowley, senior economist with the Southern Colorado Economic Forum. "This will be nothing like what happened in the last (national) recession."

In Colorado Springs, retail job growth slowed during the first half of the year then accelerated sharply in the second half. Local job growth last year also was strong in the government, professional services, health care and other services sectors. Those gains more than offset declines last year in the local manufacturing, financial services and construction industries, though local construction employment has been rebounding in recent months and showed gains in January compared with a year ago.

Construction work to expand Fort Carson to handle twice as many troops as it did five years ago seems to be insulating Colorado Springs from a national slowdown, said Dave Bamberger of Bamberger & Associates, a Springs-based economic research firm. "The expansion certainly has helped to mitigate the downside of the slump in residential construction," Bamberger said. "We have squeaked through in the last year without feeling a significant bit of pain, but there are some sectors - housing and manufacturing - where the pain is acute."

With statewide numbers, the department made revisions similar to those in the Springs area, reflecting much stronger hiring by retailers than the earlier data indicated, Winter said. Most of the gains came from retailers not included in the state's surveys, mostly small and Colorado-based merchants. "Many merchants didn't cut back staff in January 2007 like they normally would" because two December 2006 snowstorms delayed holiday shopping for many, Winter said.

Retailers added staff to handle crowds last summer and during the 2007 holiday shopping season. Statewide, the unemployment rate in January rose to 4.2 percent, the highest level since October 2006, from 4 percent in December. Statewide job growth fell to 2 percent, the lowest rate in nearly a year, while employment was declining nationally.

2008-03-10T16:12:00.001-06:00

CDOT Shortens Woodmen Rd. Closure
March 9, 2008 10:56 PM MDT

By SCOTT HARRISON
s.harrison@krdo.com

COLORADO SPRINGS - Temporary closures on Woodmen Road at Powers Boulevard in northeast Colorado Springs have been common since a construction project began last April. The latest closure will happen overnight Monday.

Woodmen will close between 9 p.m. Monday and 5:30 a.m. Tuesday, to allow workers to smooth-out the road surface under the new Powers bridge overpass. Troopers from the Colorado State Patrol and flaggers from the Colorado Department of Transportation (CDOT) will help direct traffic through the construction zone. CDOT cancelled a planned closure of Woodman overnight Sunday because workers finished some bridge construction ahead of schedule.

CDOT has detours planned. Drivers eastbound on Woodmen should take Austin Bluffs Parkway south to Dublin Boulevard, then east to Powers, then north to the temporary off-ramp back to Woodmen. Westbound Woodmen drivers should turn north at the new Powers on-ramp, then take Research Parkway west to Austin Bluffs, then travel south back to Woodmen.

CDOT has reduced the speed limit in the construction zone to 40 on Powers and to 35 on Woodmen. Powers remains in a temporary traffic alignment through the zone.

Furthermore, as part of the project, the entrance to Rustic Lane remains closed. CDOT has created a new entrance west of Tutt Boulevard, in which drivers can make only right turns going in and out. Eastbound Woodmen drivers can turn around at Tutt to reach the Rustic entrance. Street signs for Rustic and Country Lane have been moved accordingly.

The Woodmen/Powers project--which CDOT calls The Link--is scheduled for completion in mid-2009. Other future plans will make Woodmen an expressway between Powers and U.S. 24, as well as build overpasses at other major intersections to improve traffic flow along the busy Powers corridor.

Market Trends...

2008-03-10T16:00:00.003-06:00

"I'M GOING OFF THE RAILS ON A CRAZY TRAIN..." OZZY OSBOURNE

And speaking of going off the rails crazy...Bonds and home loan rates just experienced one of the most volatile, crazy weeks ever seen, with fixed home loan rates rising by about .375% by the time the smoke cleared.

During the first four days of last week, Bonds underwent a crazy 313 basis point sell-off - more than they sometimes move over the course of six months. Why the insane action? Uninspiring commentary from Federal Reserve officials, renewed fears of inflation...and another very interesting story playing out last Thursday.

Losses from The Carlyle Capital Group and Thornburg Mortgage decreased their capital to the point where their financial backers had asked for cash back in the way of a "margin call". What does this mean?

Imagine a home that received a loan for 50% of the value...but a provision in the loan stated that under no circumstances could the equity fall below 50%. And the home would need to be appraised every day to evaluate this. If the home lost significant value, the lender would be entitled to an immediate payment to retain the 50% equity position. So if the home did indeed decline in value, the lender would make a call for capital to make sure their 50% margin of loan-to-value remains intact...hence the name margin call.

If the homeowner had the cash to meet this call - all is well. But if the homeowner did not have the cash, the only way to satisfy the lender would be a sale of the home. And that is basically what Carlyle Capital Group and Thornburg Mortgage had to do last Thursday...they didn't have enough cash on hand to meet their margin call, so they were forced to sell home loans that they were hold ing. This flood of mortgage paper on the market pushed Mortgage Bond prices lower...much lower.

The week was shaping up to be one of the worst in history for Bonds and home loan rates - but then, remembering that weak financial news is good for Bonds and home loan rates, Friday's utterly dismal monthly Jobs Report came to the rescue.

On the report that there were a net loss of 63,000 jobs in the US last month - as well as negative revisions to previous months reports - Bonds rocketed back higher, at least enough to erase the previous day's losses, but still ended significantly worse off for the week overall.

"I'D GLADLY PAY YOU TUESDAY FOR A HAMBURGER TODAY"...BUT DID WIMPY REALLY EVER PAY POPEYE BACK? OR DID POPEYE SOMEHOW GET OUT OF MAKING THE LOAN IN THE FIRST PLACE? IF YOU'VE EVER HAD A FRIEND OR FAMILY MEMBER HIT YOU UP FOR MONEY, YOU KNOW IT CAN BE AWKWARD.

READ THIS WEEK'S MORTGAGE MARKET VIEW FOR SOME TIPS ON HOW TO HANDLE THOSE APPEALS.

Forecast for the Week
And don't think the wild ride is over...Bonds and home loan rates are probably not pulling into the station just yet, so stay strapped in and keep your hands on the safety bar. Another week of potential volatility lies ahead, with several key economic reports due for release, including Retail Sales, Initial Jobless Claims, Consumer Sentiment and the inflation-measuring Consumer Price Index.

Remembering that when Bond prices move lower, home loan rates move higher - the chart below shows just what kind of dramatic volatility has been seen of late. The 200-day Moving Average shown in blue has traditionally been a very strong "floor of support" or "ceiling of resistance", depending on which side of the line Bonds are trading. Last Thursday's action saw a deep dip below this benchmark line in the sand - but Friday's strong positive move helped Bonds power their way back above the line.

The news in the days ahead will dictate which side of this important line Bonds will head next, and could determine the trend for the next several weeks...and perhaps even months.

The Mortgage Market View...

NEITHER A BORROWER NOR A LENDER BE?
Ever have a friend or family member ask for a loan? It can be awkward, and for many the knee-jerk reaction is to just pull out the checkbook. But having the funds available to extend a loan is often not the point when it comes to lending money... it's knowing when or if you will ever receive your hard earned funds back.

According to a Federal Reserve survey, over 8% of Americans have loans that have been extended to friends and family. By some estimates, these loans total a whopping $89 billion and an eyebrow-raising default rate of 14%, versus just 1% for those who borrow from a bank. So before you decide to play banker with your friends and family, consider these steps to help avoid a potentially ugly situation.

Don't Commit Right Away. When asked for a personal loan, don't say yes right away, especially if the sum of money is large. It has been said that "quick to borrow is always slow to pay." So while you want to show compassion for the friend or family member and tell them you would like to help, explain that you need a few days to review your financial situation and make a decision. Perhaps another solution will come to them in the meantime.

Just Say No. If possible, try to avoid lending the money. Statistics suggest that the risk of not getting repaid is very high, which could be damaging to your relationship. HOWEVER... before you blurt out a blunt "NO," consider the amount requested, provide an explanation that will not hurt your relationship, and offer to help in a non-financial way. Or consider giving a smaller amount as a gift, with no expectations of repayment. This allows you to be generous on your own terms, and removes the potentially heated issue of non-repayment.

Be Specific. If you do decide to extend a loan, sit down with your friend or family member and set expectations. And don't beat around the bush... be very specific about the term of the loan, interest rate, payment plan, even the penalty that will be incurred should a payment be missed.

Get It In Writing. Always put the terms in writing. Seven out of ten personal loans are not put in writing... but again, consider the markedly higher default rate of non-documented loans. A written agreement reinforces that you are serious about the repayment terms discussed, and it prevents any potential misunderstandings. Promissory notes can be purchased online at http://www.nolo.com/ for a reasonable price. If the loan is large or complex it may be most beneficial to have an attorney draw up an agreement. Make sure the loan papers are filed away in a safe location, and then keep good records.

One important note, if the loan is in excess of $10,000 or the money will finance income-producing activities, the IRS expects you to charge a certain amount of interest...and claim it as taxable income, of course. To find the current rates, visit http://www.irs.gov/ and search for AFR (Applicable Federal Rates). You can also contact your trusted CPA for advice--or if you don't have one, ask me--I may be able to provide a referral.

Coleen Leri First Community Mortgage
5225 N. Academy Blvd.Suite #100
Colorado Springs, CO 80918
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