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Saturday, July 19, 2003

'Bottoming Out' in Denver?

Well I think in the last post I've made my own position clear. But of course it's possible that I'm wrong. Well-known recent data, as well as the consensus of 'informed opinion' would have things otherwise, and they may be right. Indeed, my demographic thesis has nothing especially riding on the US situation. The US did, after all, have record immigration in the 1990's and has a very different demographic profile to that of Europe and Japan. So on these grounds I feel I would have little to eat my hat for if things should be otherwise. But still the doubts remain.......

At the same time, not everyone will agree with me, and often the arguments are interesting, and worth listening to. John, for example, in Colorado, has written to me about the state budget process there. The numbers this year show the best 'fit' between projected and realised in years. This he feels may show that things have finally 'bottomed out'. It is an interesting argument, and, he may be right.

Attached is an excel spreadsheet of the gross revenue intake for the State of Colorado for June. Don't worry, it's very public information, although the 'public' doesn't seem much interested in receiving it. It's prepared by our internal econ types every month and shows the gross recepts and the previously projected.

This process is very interesting because 'projected' used to come from two sources: An economist at the legislature, and a second economist in the governor's office. Keep in mind the inherent separation of powers in the U.S. government (which extends to the state government level). Our internal economist used to teach econ and stats and had a competition going between the two offices as to who did the better projections. About the middle of last year the legislative economist dropped out because he was consistently worse than the governor's office. It really was no big deal because they were both so far off (as much as 10% in a month) that it didn't make much difference, but bragging rights were at stake and it was embarassing to the legislature to be consistently worse (by fractions of percentage points). Both the Governor's office and the Legislature are firmly in control of the conservative wing of the Republican party in Colorado, but they're still frequently at war with each other.

From the number, it looks like projections and revenue are getting close, This is actually the best match between the two since early 1999 (by our numbers the down turn started far earlier than the Federal government numbers indicate). I personally think this may indicate we've hit bottom. This is the first time in a long time that actual exceeded estimated.

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