Although Colorado’s economy continues to outperform much of the rest of the country, a new survey shows state business leaders remain pessimistic heading into the new year.
The results released Wednesday by the University of Colorado-Boulder Leeds School of Business show a confidence index of 39.8. It was the same score as the last quarterly Leeds Business Confidence Index and tied for the fourth-lowest in the survey’s 20-year history.
A score below 50 is negative.
The 143 respondents expressed pessimism even though Colorado’s job and gross domestic product growth rates continue to outpace the national rates. They expect some improvement in this year’s second quarter, nudging the score up to 43.2, but still on the negative side.
Colorado’s labor force participation level is the country’s second-highest, said Rich Wobbekind, a senior economist and faculty director of the Leeds Business Research Division during a call with reporters.
The participation rate, or the number of people employed or looking for a job divided by the working-age population, is considered a good indicator of long-term economic growth.
Colorado’s employment rate in November was 2.9% above the pre-recession peak and grew 3.7% year-over-year, translating into 103,400 more jobs. Wobbekind said revisions to the 2002 data will likely boost the actual growth in employment to 4.4%, or 120,000 additional jobs.
Colorado’s per capita personal income increased 7.9% year-over-year in the third quarter of 2022, the best in the nation. Personal income is forecast to grow 6.2% this year.
However, high interest rates, inflation and labor shortages continued to weigh heavily on business leaders who responded to the survey Dec. 1-20. Nearly 58% believe the U.S. will be in a recession during the first half of 2023, Wobbekind said.
“Whether or not we have a technical recession in our view is somewhat immaterial. It’s going to be a slowing economy,” he added.
However, Wobbekind expects any recession to be mild.
The national gross domestic product is expected to grow by less than 1% this year, compared to more than 3% in 2022. Colorado’s GDP, which grew at an annualized rate of 3.5% in the third quarter of 2022, is forecast to increase by just 2% this year. Wobbekind noted that would still be twice the national forecast.
“We’re describing a slowing state economy consistent with a slowing national economy,” Wobbekind said.
Business leaders expressed concerns about companies’ profits, sales, hiring and capital spending. The expectations for the four categories slipped from the fourth quarter of 2022. The scores ranged from 42.1 to 39.7, “clearly in bearish territory,” Wobbekind said.
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