Economic Diversification
For those of us who have lived in Denver for any length of time, the diversification of our economy illustrated in the Monthly Indicators Reports is striking. Take a look at the supersectors tracked in the reports:
- Natural resources & construction
- Manufacturing
- Wholesale & retail trade
- Transportation, warehousing & utilities
- Information
- Financial activities
- Professional & business services
- Education & health services
- Leisure & hospitality
- Other services
- Government
The February report, on p. 4, shows that all but two of these 11 supersectors recorded growth over the previous year, with the biggest increases coming in leisure and hospitality; professional and business services; and education and health services. Remember – it wasn’t so long ago – when Metro Denver’s economy was almost solely dependent on just one sector? First it was energy and natural resources; later, telecommunications was the biggest driver. And, of course, as each of those sectors experienced downturns, the area’s overall economy suffered.
Now, we see a much more diversified base, implying a more resilient economy.
As the CEO of Colorado’s largest workers’ compensation carrier, it’s interesting to me to look at these trends alongside those in our own book of business to see how they track with what we see statewide. We categorize the businesses we cover differently than the Metro Denver EDC does, using “class codes” and industry labels developed by the National Council on Compensation Insurance. So, there isn’t an apples-to-apples comparison. However, the Denver trends certainly exemplify the broader statewide picture.
For example, and not surprisingly, we’ve seen marked growth in our construction policies over the last decade (we don’t combine it with natural resources), just as the Metro Denver EDC records. There are cranes and building improvements all over the state, well beyond the metro area. We’ve also seen sizable growth over that same period in what we classify as “operations and maintenance” policies. Interestingly, this broad category covers more than 33 types of businesses, including restaurants, hotels, bars/nightclubs, spas, property management and many more. Look at that alongside the growth in the Metro Denver EDC’s leisure/hospitality supersector – which reported the largest year-over-year percentage increase in employment – and then extrapolate statewide, and you get a sense of what an economic engine these businesses represent. And even though services of various types represent the bulk of our business just as they do in the EDC’s report, we’ve seen increases over the decade in the manufacturing sector, like the EDC, and in agriculture-based policies.
This all adds up to a picture of a robust and multi-faceted business base statewide, not just in Denver – just what Colorado needs as we compete globally.
