The third week of May was a brutal one for the U.S. economy, especially for those with money to invest. In Colorado, the economic news seemed a little more upbeat. The state’s unemployment rate …
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The third week of May was a brutal one for the U.S. economy, especially for those with money to invest.
In Colorado, the economic news seemed a little more upbeat.
The state’s unemployment rate fell to 3.6% in April, the lowest since before the pandemic.
More Coloradans are back to work, with 15,400 returning to jobs in April.
Average hourly earnings grew 10% in the past year to $34.34 while the work week shrunk 12 minutes from last year to 33.3 hours.
This and other Colorado job data was released May 20, but more on that below.
It’s rising gasoline prices that everyone is talking about.
But even as everywhere in the state went above $4 per gallon, the increase had less impact on Colorado than anywhere else in America, according to an analysis of the 200 largest cities by LawnStarter, a lawn service with its own data and editorial team who put together reports on impacts to the lawn care industry.
“Interestingly, five of the six Colorado cities we ranked also had the five lowest percentage increases over the past year leading up to May 17 — Fort Collins wasn’t far behind at No. 9,” Jason Medina, LawnStarter’s managing editor, said in an email. “That tells us that Coloradans have either been staying home more, not driving as much, or both during this time period.”
Coloradans also pay less taxes on gas than most Americans, he added. The state had the 10th lowest motor-fuel tax per gallon, of about 22 cents. A new 2-cent gas tax to help pay for transportation projects in the state was just delayed by lawmakers by nine months and now starts in April.
“That, of course, doesn’t include other taxes like local taxes and a new gas fee that’s being delayed, though it would add only 2 more cents per gallon. The delay isn’t providing much relief — at least not at the pump,” he said. “However, the state gas tax makes up a big chunk of total taxes and is relatively lower than what many Americans pay.”
Gas prices and inflation
The data tracks closely with the weekly gas price report from AAA. This week, Colorado had the fourth lowest average price for a gallon of regular gas. The states with lower prices were Arkansas, Kansas and Oklahoma, which had the lowest at $4.03.
Colorado’s cost jumped a penny from last week, to $4.137 a gallon and was up from a year ago’s $3.089, according to AAA. Colorado is at the highest per-gallon price in 22 years, which is how long AAA has tracked Colorado data.
Nationwide, gas prices averaged $4.589 a gallon. On the other end, California averaged $6.061.
But being the least-impacted state in an uncertain economy doesn’t change economist Kishore Kulkarni’s outlook: it’s dismal. We’ve been hugely impacted already. Gas is averaging $1 or more per gallon than it was a year ago. In fact, the rising gas prices may have finally gotten everyone to notice inflation, but those who earn less may start seeing recent wage gains canceled at the gas pump.
Blame the Russian war on Ukraine, said Kulkarni, who teaches at Metropolitan State University of Denver. Both countries produce crude oil and all of that production is being impacted, not to mention sanctions and bans on Russian oil.
“We use a lot of gasoline. We use almost one-fifth of the world’s gasoline stock,” Kulkarni said. “And that has really started the whole thing of the recent inflation, the expected inflation in the future, as well as the actual inflation in the U.S. economy. And both are increasing. And because we don’t see an end to (the war) for a while, at least, this is going to get worse.”
The U.S. produces 20% of the world’s oil while also consuming 20%, according to the U.S. Energy Information Administration.
Other inflationary factors were already underway before the war, Kulkarni added. Supply chain disruptions in the pandemic created shortages that caused prices to jump. Unprecedented government pandemic spending, which many Americans received directly in their bank accounts, led to the Fed increasing the money supply. It’s now at $21.8 trillion compared with $15.5 trillion in February 2020.
“We have a perfect storm brewing because of all these different reasons in the U.S. economy, and in a way,” Kulkarni said, “it’s not surprising that we have gotten to 7.9 to 8% inflation, which is the highest in the last 42 years.”
A big problem with financial crises is that they don’t hit all people the same way. Even in the pandemic, many higher-paid workers could work from home, avoid getting sick by staying away from crowds and cut down on gas consumption.
“Financial crises are never equitable. They don’t care about the differences in the economy, the poor suffer a whole lot more than the rich,” Kulkarni said. “And the same thing happens with inflation. Inflation is inequitable because it hurts the poor more than it hurts the rich.”
There’s not an easy solution, but he suggests looking at programs to reduce poverty so people are overall better off to start with — protect the income of the lower-wage workers.
“The situation can turn around,” he said. “Let’s suppose we have a stoppage of war, some kind of peace where the pipeline of Russia starts flowing again. Suppose we have a reduction of gasoline prices because of that. Suppose OPEC countries actually do say ‘Let’s increase the supply of oil to the maximum capacity’ then oil prices will go down and inflation can be blocked. Interest rate increases are going to slow down our demand structure, which is a step which was needed for a while. … But in that scenario, if we go back to the peacetime quickly then we probably turn around. Otherwise, I don’t know when this is going to end.”
This story is from The Colorado Sun, a journalist-owned news outlet based in Denver and covering the state. For more, and to support The Colorado Sun, visit coloradosun.com. The Colorado Sun is a partner in the Colorado News Conservancy, owner of Colorado Community Media.
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