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Colorado business leaders grow more pessimistic about economy

Tamara Chuang
Colorado Sun
The Colorado Sun
Courtesy

Colorado business leaders apparently took one look at inflation and rising interest rates and changed their minds about where the state’s economy is headed in the fourth quarter.

Despite data showing two job openings per unemployed worker, some employers are pausing hires, while others nationwide have had layoffs. The sentiment pushed the Leeds Business Confidence Index to its fourth lowest level in 20 years.

“For this to be a soft landing, for the Federal Reserve not to send us into a more significant recession, we need to have a balance between these people who are getting laid off and those open jobs that are there,” said Rich Wobbekind, faculty director of the Leeds Business Research Division at the University of Colorado Boulder business school. “We need to have the people getting laid off go into these open positions that are available out there.”



This survey asked 163 Colorado business executives about their plans and expectations for the economy and their companies in the fourth quarter, which starts today. The rating measures a company’s expectations for hiring, revenues and profits, as well as capital expenses and state and national outlook.

The Leeds report put overall sentiment at 39.8 points, compared with last year’s 56.1 in the fourth quarter and 67.3 in the third quarter. A 50-point mark is considered neutral. 




Colorado business leaders become more pessimistic each quarter in 2022, pushing the University of Colorado’s Leeds Business Confidence Index down to a score of 39.8, its fourth-lowest point in 20 years.

But Wobbekind pointed out that some sentiment is based on personal perception. It’s been influenced by inflation increasing at its highest rate in decades, and ongoing interest rate hikes, which pushed 30-year fixed mortgage rates above 7% earlier this week.

“I don’t think those perceptions are bad or wrong, but they seem to be a little bit more extreme,” he said. “I mean, the economy hasn’t totally fallen off a cliff. It’s got high inflation pressures. It’s got high interest rates. But, the flip side is, at least it was true in August, we’re still generating a significant number of jobs. The employment market was pretty solid. I feel like the perceptions are accurate but maybe a little more negative than the reality.”

Wobbekind and the Leeds team also offered other insight into Colorado’s economy:  

  • 98% of survey respondents said inflation is impacting their business, with 57% planning to increase wages because of it. Nearly half plan to increase their prices and pass the added costs to customers.
  • Colorado’s inflation rate increase is projected to increase 8.2% in 2022.
  • The inflation rate will slow to 4.1% in 2023.
  • The number of jobs in Colorado is forecast to increase 4.1% this year from last year. But the job growth is expected to slow to 1.9% in 2023. 
  • Colorado’s gross domestic product is projected to increase 2.1% this year and 2.8% in 2023. Industries with the largest GDP gains this year include arts and entertainment, and accommodations and food services, with both up at least 20% from last year.
  • Colorado’s personal income growth is expected to increase 5.7% this year.