What next?: Economist eyes rebound in late 2002.

• Author: Schwab, Robert
• Position: Nancy McCallin - Interview - Statistical Data Included

EVEN BEFORE SEPT. 11, TUCKER HART ADAMS SUGGESTED that serious world financial turmoil, perhaps starting in Japan, could put a crimp in Colorado efforts to recapture some of the steam that has kept the state's economy bubbling energetically for the past decade.

The likelihood of such an economic disaster, she told a crowd of business leaders at an annual University of Colorado at Denver business breakfast in October, was 5 percent.

But after Sept. 11, "all that has changed," Adams said.

She told the crowd she was boosting the prospects of a longer, deeper recession in 2002 to 25 percent, and her prospects for a milder, but still hurtful, recession from 55 percent to 65 percent.

percent, and her prospects for a milder, but still

Everything calculated before September, she said, suddenly had become "more pessimistic."

Yet a week after that October event, the Dow Jones Industrial Average had regained the levels where it was trading before the attacks.

Two weeks later, on Halloween, the government reported that the national economy had shrunk less than what was expected during the third quarter, although the figure, minus 0.4 percent on an annual basis, signaled the beginning of a national recession.

Up. Down. Up. Down.

The nation's economic reports seemed to be following the pattern of our individual emotions after the attacks on New York and Washington D.C. and the start of the war in Afghanistan.

Nancy McCallin, chief economist for Gov. Bill Owens and director of the governor's Office of State Planning and Budgeting, along with Adams and Rich Wobbekind, of the University of Colorado, have long been recognized as the state's three top economic forecasters. On Nov. 1, ColoradoBiz interviewed McCallin about her view of the coming economic year. Edited excerpts follow.

BIZ What is the outlook for Colorado in 2002?

McCALLIN I think the first half of 2002 is going to be weak, but by the end of 2002, we're going to see a rebound. What we have right now is a national economy that is in recession, in my opinion, and it was probably in recession prior to the Sept. 11th attacks. Colorado is very dependent on the national economy. As goes the national economy, so will go Colorado's. Two-thirds of any economy is consumer spending. We had a very weak consumer-spending market even prior to Sept. 11th. Last year, it was up 11.2 percent, and this year, January through July, on an annualized basis, we were only growing by 1.8 percent. So we were not even...