DENVER--(BUSINESS WIRE)--Sept. 13, 2005--Colorado's economy will
grow at a slower pace in 2006, while impacts for Colorado consumers
from rising interest rates will mirror the national economy, according
to the U.S. Bank (NYSE:USB) 2006 Economic Forecast, prepared by Tucker
Hart Adams, Ph.D., U.S. Bank's Rocky Mountain Region chief economist.
"The outlook for the Colorado economy is closely tied to our
outlook for the U.S. economy," Adams said in the annual forecast
released by U.S. Bank. "As 2005 draws to an end, the economy pauses at
a fork in the road that will determine the economic outlook for a
number of years. Although continued economic expansion is still the
most likely scenario, a compelling case exists for a year that ends in
recession for the nation and most of the industrialized world. Higher
interest rates will have the same impact on Colorado consumers and
Colorado housing prices as they do nationally."
Nationally, the U.S. economy can expect a downturn in output
growth to 3.0 percent, from 3.5 percent in 2005 and 4.2 percent in
2004, according to Adams' forecast. Consumer price inflation will
average 3.0 percent, compared to 3.1 percent in 2005 and 2.7 percent
The national unemployment rate should remain virtually unchanged
at 5.0 percent, due to the newly employed being replaced by
discouraged job seekers that have ceased looking for jobs and are thus
unaccounted for in unemployment statistics. Housing permits will
decline by four percent, as 30-year mortgage rates will climb to 6.5
percent with an increase in loan defaults and foreclosures and fewer
lenders willing to offer unconventional mortgage products, Adams'
The global economy grew by 5.1 percent in 2004, the fastest growth
rate recorded in nearly 30 years, but Adams warns that growth slowed
in each consecutive quarter and world growth is expected to slow by a
full percentage point this year with more slowing to come in 2006.
Adams attributes this global slowdown to the effect of higher oil
prices and anemic economies in Europe and Asia on the more robust U.S.
and Chinese economies.
In Colorado, Adams states that after a decade of averaging 2.3 to
2.4 percent population growth, this critical economic indicator fell
below 2.0 percent in 2002 and has remained at that level. In 2006, the
state's population will grow by 1.5 percent, with Adams noting that
"population growth is a critical component of a robust local economy,
and job growth is not yet high enough to attract large numbers of
people to the state." State employment growth is forecasted to slow to
2.1 percent in 2006, down from 2.3 percent in 2005.
Adams' forecast calls for an increase in personal income of 5.9
percent in Colorado in 2006, increasing per capita personal income to
$38,817, while Metro Denver inflation will average 2.0 percent.
According to Adams, this 2.3 percent increase in inflation-adjusted
per capita income provides an indicator for the level of improved
average standard of living that Colorado residents can expect in 2006.
Retail sales growth will slow to 5.9 percent in 2006 in Colorado,
down from more than 8.0 percent in 2004 and 2005, due to "local
residents and tourists moderating their spending and attempting to
reduce their debt burden," according to Adams. While Adams does not
predict housing prices, the forecast notes that a private mortgage
insurer ranks Denver as the 12th most likely U.S. city to experience a
downturn in housing prices in 2005 and 2006.
U.S. Bancorp (NYSE:USB), with $204 billion in assets, is the 6th
largest financial holding company in the United States. The company
operates 2,383 banking offices and 4,877 ATMs in 24 states, and
provides a comprehensive line of banking, brokerage, insurance,
investment, mortgage, trust and payment services products to
consumers, businesses and institutions. U.S. Bancorp is home of the
Five Star Service Guarantee in which the company pays customers if
certain key banking benefits and services are not met. U.S. Bancorp is
the parent company of U.S. Bank. Visit U.S. Bancorp on the web at
Interviews are available with Tucker Hart Adams beginning at 9:30
a.m. MT today.
The economic forecast will be published on www.ColoradoEconomy.com
at 7:30 a.m. MT Tuesday, Sept. 13.
CONTACT: U.S. Bank
Tucker Hart Adams, Ph.D., 303-329-9218
Adrina Angel, 303-585-6936
SOURCE: U.S. Bank