Colorado Springs Financial Briefs: March 21, 2008

Residential housing permits are down in El Paso County, multi- family vacancy rates are declining and rents have gone up, but only modestly.

"In El Paso County, for each new home not built, four jobs are lost," Tom Zwirlein told the audience at Legacy Bank's Colorado Springs Economic Symposium on March 13. Zwirlein is director of Southern Colorado Economic Forum and was a keynote speaker at the symposium.

The bad news, he said, is that Colorado Springs' sales tax revenue is down, and the county has 1,000 to 1,200 more homes on the market than the historical average.

The good news, Zwirlein said, is that -- given the ratio of home sales to housing units -- the weakness in the local housing market seems to be bottoming out.

"The problems in the national housing market are a lot worse than they are in our local market," he said.

Fred Crowley, a senior economist and associate research professor at the University of Colorado at Colorado Springs who also was a keynote speaker at Legacy's symposium, discussed national issues, warning the audience that he did not have much good news.

"Before a recession," Crowley said, "durable goods peak and drop off," which is where we're at now. "If the supply of loanable funds is too little or does not exist (regardless of interest rates), capital markets cannot be at equilibrium. If financing for the home is not possible, the number of new homes built and sold will decrease and the goods sector will fall out of equilibrium."

The non-manufacturing business index (retail and service sector) has dropped sharply and three successive months of weak to negative job growth is not a good sign, Crowley said.

Civilian employment numbers are barely hovering above zero.

"If they turn negative, then everyone will say we're in a recession," he said.

And household debt as a percent of disposable income is above 14 percent. Since 2001, the general trend for non-revolved credit outstanding has diminished. While that might sound good, the truth is that consumers are using credit cards more. With the average credit card interest rate at 16 percent -- it's the worst type of debt anyone can carry.

"The Fed never lowers interest rates when the economy is doing well," Crowley said. "Every time the Fed has dropped interest rates and unemployment has simultaneously risen, we've had a recession. It's an aircraft carrier -- you can't turn it on a dime. It will take five to six months to pull out of it."

'Business is Personal' summit

The Colorado Treasury Management Association, along with PaymentsNation, will host its annual Rocky Mountain Summit from 7 a.m. to 5:30 p.m. April 8 at the Adam's Mark Hotel, 1550 Court Place, Denver.

Keynote speakers are Larry Johnson, Albert Mensah and Jan McInnis.

There will be four breakout sessions in five tracks: corporate finance and risk control, payment strategies, advanced financial sessions, treasury management principles and relationship management solutions.

The summit includes exhibits by 30 vendors, showcasing the latest trends and technology for corporate or government financial professionals, business consultants and financial industry sales, and support professionals.

The cost is $300 for members or government employees and $435 for non-members. To register, visit www.ctma.org or call (303) 973- 2555.

FirstBank opens Falcon branch

FirstBank, Colorado's largest locally owned bank, has opened a branch at 11695 Meridian Market View, at the intersection of East Woodmen Road and Meridian Road in Peyton.

Gene Contreras, senior vice president of FirstBank of El Paso County, is managing officer of the Falcon branch.

FirstBank has $8.6 billion in assets, 120 retail locations and more than 200 ATMs throughout Colorado.

Rebecca Tonn covers banking and finance for the Colorado Springs Business Journal.

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