According to the Fed's Other Inflation Measure, Inflation's at an 11-year High

According to the Federal Reserve's Underlying Inflation Gauge, the 12-month inflation growth in March was at 3.13 percent. That's the highest rate recorded in 140 months, or nearly 12 years. The last time the UIG measure was as high was in July 2006, when it was at 3.2 percent.

The Fed began publicly reporting on new measure in December of last year, and takes into account a broader measure of inflation than the more-often used CPI measure.

Not shockingly, the UIG has shown a higher rate of inflation than the CPI, most of the time in recent years. Moreover, this gap between UIG and CPI appears to be growing.The gap is simply calculated by substracting the CPI YOY growth rate from UIG YOY growth rate. A negative value means the CPI was higher than the UIG in that period. 

In March, while the UIG was 3.13 percent, the CPI growth rate was 2.4 percent. This was a 13-month high for the CPI.

The use of consumer prices only in the CPI has long been a problem, in that the cost of living and planning for the future does not involve only the basket of goods used in the CPI calculations. A wide variety of assets affect the American economy as well.
As explained by the New York Fed's summary of the UIG measure:

We use data from the following two broad categories: (1) consumer, producer, and import prices for goods and services and (2) nonprice variables such as labor market measures, money aggregates, producer surveys, and financial variables (short- and long-term government interest rates, corporate and high-yield bonds, consumer credit volumes and real estate loans, stocks, and commodity prices).

But don't expect the Fed to abandon its fondness for the CPI and the "2-percent inflation" goal any time soon. Today, the president of the Federal Reserve Bank of Chicago, Charles Evans, reiterated that the Fed is holding to its 2-percent inflation goal - and they're not talking about using the UIG measure.

Areas Where Colorado's Economy Has Diversified

La Voz last month outlined some of the ways Colorado's economy has diversified in recent decades. Noting that the the state's historical dependence on natural resource extraction has made the local economy prone to booms and busts, La Voz looks at a few areas where the state has moved away from having a limited economy:

Outdoor Recreation
Tourism
Cannabis
Renewable Energy

To be sure, the first three on the list are connected to tourism overall, although there's nothing wrong with people traveling to Colorado — especially if the reasons are far more diverse than just "skiing."

La Voz sums it up:

Colorado’s dependence on the extraction industries for its economic well-being has put long-time residents through a historical roller coaster ride of boom and bust cycles. Those days may finally be behind the state with low unemployment rates, some of the fastest growing companies in the country and a diversified set of industries drawn to the state. Now the state’s largest employers are from the Aviation, Healthcare, Telecommunications and Financial Services industries. The new mix of companies has provided sustained growth and an economic engine that keeps Colorado near the top of the class.

New Mexico Never Really Recovered from the Great Recession

The Santa Fe New Mexican recently posted an informative article on the New Mexico economy, which has never really gotten back to where it was before the Great Recession of 2008-2009 — at least not in terms of employment. 

When it comes to New Mexico’s economy, 2006 seems like a lifetime ago.
Job growth that year was its fastest in more than a decade. The unemployment rate dropped to 3.6 percent. The price of oil was at record levels. State government was awash with cash. 

 

Then, with stunning speed, came the Great Recession in December 2007, and New Mexico still hasn’t recovered.  In a state where the economy is based in large part on government dollars, it’s government numbers that paint the picture.  The state’s jobless rate was 6 percent in December 2017, according to preliminary estimates. Alaska is the only state doing worse.

The nation’s rate was 4.1 percent, a 17-year low.  Of New Mexico’s 33 counties, all but tiny Mora County have higher unemployment rates than they did before the recession.  The state hasn’t yet gotten back the more than 50,000 jobs it lost during the recession, making New Mexico one of only a few states that have yet to recover their jobs. 

Read the full article. 

Foreclosure Sales Hit All-Time Low in September

Foreclosure sales in Colorado's metropolitan counties fell to a total of 95 in September, coming in at the lowest total ever recorded since this survey was begun in 2007. During the same period, there were 415 foreclosure filings.

This continues a multi-year trend of declining foreclosure activity, as we can see in the graph. September's foreclosure sales total was the lowest ever recorded with the next smallest being June's total of 106.

Foreclosure filings, meanwhile, we up slightly from all-time high's but remained near the lowest levels we've seen in the last decade. An all-time low was reached in July of this year when foreclosure filings totals dropped to 394.

These figures are totals for Colorado's 11 most-populous counties, plus Broomfield County. Foreclosure filings are the event that begins the foreclosure process, and foreclosure sales occur at the end of the process when properties are sold at auction, often going to the lender.

In the second graph, we see year-over-year changes in total foreclosure filings and sales. In September 2017, filings were down slightly from September 2016, dropping by 5.25 percent. Foreclosure sales dropped by much more, falling 38.8 percent year over year. As we can see in the graph, both filings and sales have been dropping each month for the past 10 months, and the overall trend for both filings and sales has clearly been downward since 2012.

Many counties differ in their foreclosure trends, and the number of foreclosure compared to the overall number of households can vary considerably.

If we look at foreclosure filings in each county on a per household basis, we find that Pueblo County has the fewest households per foreclosure — only 394 households per foreclosure — while Larimer County has the most — 2,771 households per foreclosure. Note that a larger number means fewer foreclosures in relation to population size. In other words, the larger the number of households per foreclosure, the lower the "foreclosure rate."

Also note that the counties with the lowest foreclosure rate tend to be higher-income counties such as Boulder and Douglas counties. Pueblo, Mesa, and Adams counties, on the other hand — which have higher foreclosure rates — have lower overall income levels.

A similar trend holds when we make the same comparisons using foreclosure sales. Pueblo has the fewest households per foreclosure sale (2,723) while Broomfield County reported no foreclosure sales at all.

Some counties are certainly more foreclosure-free than others. But, even those counties that have some of the highest foreclosure rates, relatively speaking, are still way down in their foreclosure totals from what we were seeing back in 2009 and 2010. Foreclosure activity continues to be at very low levels across all metro areas for now.

(This data is collected from the Public Trustee in each county.)

Colorado Homicide Rate Up in 2016

According to the FBI's annual crime report, released in September, Colorado's homicide rate increased to 3.7 per 100,000 in 2016. That's up from 2015's rate of 3.2 per 100,000, and from the 50-year low of 2.6 recorded in 2010.

2016's rate was a 12-year high, but still remained well below the homicide rates that were common during the 1970s and 1980s:

Compared to the nationwide homicide rate, the Colorado rate has been lower every year since 1963. The nationwide homicide rate in 2016 was 5.2 per 100,000.

Since the 1990s, the US homicide rate has been nearly cut in half, and the US rate hit a 52-year low in 2014 when it fell to 4.4 per 100,000.

Compared to other US states and Canadian provinces, Colorado's homicide rate places it as one of the lowest-homicide rates in in the US, and puts it on a par with central-Canadian provinces like Alberta and Manitoba:

As a map: 

Within the state of Colorado, metro areas can differ significantly. Over the past decade, the metro area with the highest homicide rate has in most years been Pueblo (no Pueblo data is available for 2008). In 2016, Colorado metro areas reported the following homicide rates, per 100,000:

Pueblo: 6.7
Grand Junction: 6
Colorado Springs: 4.5
Denver: 4.3
Fort Collins: 2.6
Greeley: 1.4

By this measure, Fort Collins and Greeley are among the safest places in the world. Grand Junction's homicide rate spiked in 2016, but with such a small overall population, it's impossible to say if this change reflects any real trend in the region. 

These numbers, however, are by full metro areas. If we look within a single metro area, such as the Denver Metro Area, we'll find significant differences there as well. For example, the City and County of Denver is the primary driver of homicide rates in the area. In 2016, there were 57 homicides in the City and County of Denver, and 22 in the City of Aurora. In the metro area as a whole, however, there were 124 homicides total. Thus, Denver and Aurora alone accounted for nearly two-thirds (63 percent) of all homicides in the metro area. This is in spite of the fact that those two cities make up only 37 percent of the total population of the metro area. 

Case-Shiller: Denver home prices growth falls to 35-month low

According to the latest Case-Shiller report, home prices have been moderating throughout the year, with August's report showing a 7.2 increase over August of 2016. This was the smallest rate of increase found in 35 months, or since October of 2014.

August's growth rate is down from the November 2015 peak of 10.9 percent.

Meanwhile, home price growth in the 20-city index has been largely flat, but slightly growing over the past year — although overall growth is below that found in Denver metro. In august, the 20-city index grow rate was 5.9 percent, which is a six-month high.

While overall growth is outpacing the 20-city sample, we can also see that Denver's index value is now well above where it was during the last peak home-price period of 2006.

The  index for metro Denver had peaked at 140 back in August 2006. But now, the index value is 201, up 43 percent from 2006.

The 20-city index, meanwhile, is not even back to its former peak, and is now still down 1.7 percent from where it peaked during August of 2006.

Clearly, home price growth in Denver metro is strong, even when compared to a variety of other large cities throughout the US. This is partly fueled by job growth in general, and specifically by job growth in the energy sector.

Moderation in price growth, however, also reflects a similar moderation in job growth that metro Denver is now experiencing.

Releases of deeds of trust in metros fall to 32-month low

A deed of trust is "released" when a home loan is paid off. This event is recorded by the public trustee in each county in Colorado.

Trends in public trustees tell us about how much activity there is in terms of home loan refinances and home sales. In many ways, activity in releases of deeds of trust are an indicator of demand for real estate purchases in Colorado, and historically, we have seen more release activity during times of economic boom. 

Activity Through September of This Year 

In September 2017, we found that releases had fallen to a 32-month low in the 11 largest counties in Colorado, plus Broomfield County. These counties include more than 90 percent of the population of Colorado. 

In September, releases totaled 20,730. That's the lowest total since February 2015 when releases totaled 18,826. September 2017's total up down from the same month a year earlier, falling 26.6 percent from September 2016's total of 28,252.

Looking at counties, individually, we find that year-over-year, the counties with the largest drops were Douglas, Broomfield, and Denver counties. There were no counties that reported increases during this period. 

Although September's total is clearly down significantly from December 2016's peak, overall activity continues to be generally robust as demand for housing and homes for purchase remains strong. Although the Federal reserve acted to allow the Federal Funds rate to rise slightly over the past two years, mortgage rates spikes in late  2016, but fell throughout much of 2017. Without a sustained increase in mortgage rates, we're likely to continue to see relatively strong numbers for releases of deeds of trust. At least, this will be the case until there is a general worsening of the labor market and economy overall.  

So, for now, release activity is moderating, but compared to most years since 2008, activity is relatively strong. This reflects ongoing interest in real estate purchases and in refi activity in Colorado.