Colorado's rough ride through 30 years: a forecasting retrospective from the 'Duchess of Doom'.

• Author: Adams, Tucker Hart
• Position: The ECONOMIST

"Now that you aren't going to be writing an annual economic forecast," said ColoradoBiz Editor Mike Cote, "why don't you write a monthly column for us? You can write on any topic you wish."

That's an intriguing offer, although my guess is that if I don't stick pretty close to Colorado and economic topics, he'll give me a new set of instructions.

My career began with the stagflation of the late 1970s and early 1980s, when the metro Denver inflation rate flirted with 17 percent and the prime rate topped out at 22 percent. Mortgage rates often reached 18 percent, and at one point 49 different mortgage products were available to Colorado borrowers.

Rates came down and the economy boomed, although oil prices continued to soar. I called my friend, economist Bill Kendal, the other day to say, "Bill, it looks like our forecast of $100-a-barrel oil was right."

"True," he replied, "but we made it in 1982." It's like they told us in graduate school--if you stick with your forecast long enough, it will eventually be correct.

This was also the period of the baby boom generation's great migration west. Colorado's population was growing at a compound annual rate of 2.7 percent, from 2.21 million in 1970 to 3.24 million in 1985. Massive residential and commercial construction accompanied this inflow of young residents.

The period from 1982 to 1990 encompassed the second longest economic expansion in U.S. history. But Colorado participated in very little of that. Do you remember Exxon's Colony project (oil shale) near Grand Junction? "They can't shut that down," the pundits said. "They've invested billions of dollars in it." Well, they shut it down on a Friday afternoon, laid off 2,200 employees, and by Monday morning there wasn't a U-Haul trailer available between Denver and Moab, Utah.

We had our own regional recession caused by the demise of the twin booms, with more jobs lost in the construction sector than the energy sector. Because jobs were available elsewhere, people left the state in droves--more than 75,000 between 1985 and 1990. Housing prices plunged as people were forced to sell at any price so they could buy in their new location. New home construction declined more than 78 percent from 1983 to 1989.

We began the 1990s in an extremely competitive position. There was a young, well-educated labor force looking for jobs...