Colorado biz leaders pessimistic despite signs of economic resilience
BOULDER — Despite signs that Colorado’s economy remains relatively strong heading into the first quarter of 2023, state business leaders are expressing near-historic levels of pessimism, with many saying they believe a recession is imminent.
More than half (57.8%) of the Colorado business leaders surveyed as part of the University of Colorado’s first quarter 2023 Leeds Business Confidence Index think a recession is on the horizon in the first half of this year.
The LBCI was 39.8 for the first quarter of 2023, a figure that remained unchanged quarter-over-quarter and represents the fourth-lowest tally ever recorded in the index’s 20-year history.
An LBCI score — which is based on impressions of the state economy, national economy, industry sales, industry profits, industry hiring and capital expenditures — of 50 is neutral. The survey includes responses from 143 Colorado business leaders.
Among the top concerns for business leaders, according to the LBCI, were “high interest rates and inflation, labor shortages and fears about slowing consumer spending.”
Pessimism rules the day, despite data that shows that Colorado’s “employment recovery has outperformed most other states” since the outbreak of the COVID-19 pandemic, said Rich Wobbekind, faculty director and senior economist at the BRD. Additionally, there are “lots of positive signs in terms of inflation coming down.”
In many ways, “whether or not we have a technical recession is somewhat immaterial,” so long as business leaders behave as though one is rapidly approaching, Wobbekind said.
“Business leaders tend to be more pessimistic than what we believe is the coming reality,” he said, attributing the negative feelings to organizations’ internal data that could be more dire than publicly available statistics, as well as the potential of an overrepresentation among LBCI respondents from sectors that are heavily dependent on low interest rates.
Respondents recorded negative perceptions for all six components of the LBCI heading into the first quarter of 2023.
“Industry sales and profits each declined quarter-over-quarter by 1.3 and 2 points, respectively. Individuals with a negative sales outlook (51%) outweighed those with positive perceptions (20.3%), while 28.7% remained neutral,” the index report said. “This imbalance was even more pronounced for profits — the negative perceptions outweighed positive, 51% to 18.2% (30.8% remained neutral).”
Looking ahead, business leaders expressed slightly more confidence. The LBCI for the second quarter of 2023 was 43.2. That’s an improvement, to be sure, but still well below the threshold for optimism.
Source: BizWest
