Few Surprises, and Fewer Optimists, in Economic Forecast
Survey of Colorado’s business leaders hits deeply negative territory, though experts reject characterizations of recession.
The Denver skyline from above. Colorado's business leaders maintained their bleak outlook on the economy; their perspectives shaped the fourth-worst economic outlook in the 20-year history of the Leeds Business Confidence Index. Below, Richard Wobbekind speaks at the Business Research Division's annual economic preview.
Optimism in Colorado’s business community is in short supply.
The latest quarterly economic forecast from the Leeds School of Business at the University of Colorado Boulder is the fourth-most pessimistic report in the 20-year history of the Leeds Business Confidence Index. And it immediately follows the fifth-lowest mark recorded in the third quarter of this year.
If there is good news, it might be that we’re hitting bottom, according to the Business Research Division at Leeds, which issues the report.
“We do find some optimism in the survey coming from Colorado’s economic strengths, as the state continues to be a leader coming out of the pandemic-induced recession,” said Brian Lewandowski, BRD executive director. “But negative national trends, plus uncomfortably high inflation locally, remain headwinds for business leaders across industry sectors.”
The LBCI captures Colorado business leaders’ three- and six-month outlooks on the national and state economies, industry sales, profits, hiring plans, and capital expenditures. For the fourth quarter, 163 participants recorded their responses to a wide-ranging survey on these economic topics.
Among the highlights:
- Overall, the index fell to 39.8, squarely in negative territory and well below the long-term average of 54. An index of 50 is considered neutral.
- All six of the broad categories in the survey were in negative territory, though the outlook on the national and Colorado economies rose from the third quarter.
- In Colorado, employment increased 1.9 percent above the pre-pandemic peak, with personal income, per-capital personal income and GDP all rising.
Notably, inflation remains a major concern for businesses. Modeling from BRD projects an 8.2 percent increase for the year, and a 4.1 percent increase next year. Nearly 80 percent of panelists reported moderate to extreme inflationary impacts on their business, and 57% expect to increase wages in response to higher inflation.
‘Definitely not in a recession’
Those rising costs have led to pointed questions about whether the nation is in a recession, which Lewandowski and Richard Wobbekind, BRD faculty director, debunked in podcast.
“When you look at the broad set of indicators, including income and employment, you find many of them are still positive,” Wobbekind said. “The employment numbers are so strong, I would say we are definitely not in a recession.”
“I do think we’ll see a downturn in 2023, but I don’t think it’s going to be particularly deep,” he added, predicting an economic slowdown as the Fed works to battle inflation.
Read the full fourth-quarter LBCI report on the Leeds website.