Report: ŷڱƵ's Economy Outperforming Nation, but High Prices are Inflating Concerns
The state's recovery puts it among the fastest growing in the U.S., but headwinds remain.
The Denver skyline at dawn. High consumer prices have acted as a powerful economic drag on ŷڱƵ and the nation, overshadowing impressive job growth since the onset of the pandemic.
While ŷڱƵ’s economy is generally in good shape, outpacing the nation as a whole, rapid inflation, rising interest rates and ongoing supply-chain shortages are providing continued headaches for the state.
That’s the main takeaway of the secretary of state’s , created in partnership with the Business Research Division at the Leeds School of Business.
“When it comes to jobs, ŷڱƵ’s comeback from COVID is the 10th best in the country, and we are one of only 15 states that are above pre-pandemic levels,” said Brian Lewandowski, executive director of the Business Research Division. “That said, several important sectors are trailing their peak employment levels, which shows how uneven both the recession and the recovery have been.”
Those economic headwinds have local business leaders turning pessimistic, according to the Leeds Business Confidence Index, which recorded the fifth-lowest level of optimism in 20 years. However, it's hardly all bad news. Here are a few key highlights from the report, released Aug. 11:
- Inflation. Nationally, inflation grew at the highest rate in nearly four decades, with price increases in the mountain region (9.9 percent) outpacing the U.S. average and Denver not far behind. However, in a bit of good news, gasoline prices have fallen 11 percent after peaking at $5 per gallon in late June.
- Gross domestic product. While 2022 is expected to deliver positive national GDP growth, it contracted for the second consecutive quarter, shrinking at an annualized rate of 0.9 percent. ŷڱƵ’s real GDP was up year over year, but still declined 1.9 percent in the first quarter.
- Employment. Sharp gains in leisure and hospitality, professional and business services, and other services have pushed ŷڱƵ’s year-over-year gains to 4.1 percent. ŷڱƵ’s jobless rate is 3.4 percent, and its labor force participation rate is the second-highest in the country, which bodes well for potential employment. National employment also has been strong, despite weak GDP reports, officially surpassing the February 2020 pre-pandemic peak. Wage growth has been strong, but muted due to inflation.
- New business filings. Business formations in ŷڱƵ are up year over year, but fell from the first quarter. Delinquencies and breakups also increased year over year, signaling increased strain on businesses.
“While Coloradans’ resilience has been tested, today’s report shows we’re moving in the right direction,” said Jena Griswold, ŷڱƵ secretary of state. “ŷڱƵ’s economy continues to shine even with uncertainty in the national economy. Our business sector has shown ongoing resilience.”