BOULDER — Business leaders in Colorado expressed pessimism about the state’s economic outlook ahead of the fourth quarter of 2022.
That was the message from the quarterly Leeds Business Confidence Index presented Thursday by the Business Research Division at the University of Colorado Boulder’s Leeds School of Business. The fourth-quarter confidence index — which is based on the state economy, national economy, industry sales, industry profits, industry hiring and capital expenditures — was just 39.8, which represents the fourth-lowest figure in its 20-year history.
A score of 50 is neutral. The survey includes responses from 163 Colorado business leaders.
Expectations around the national and state economies were the only indicators that saw a positive increase from the last quarter.
“The national economy has had two quarters of negative GDP,” said Rich Wobbekind, faculty director and senior economist at the BRD. “Behind that, there’s talk about a recession, very high inflation and a strong monetary response from the Federal Reserve. Amongst all of that, there is still very strong employment growth. We also observe other things in the employment market that indicate strength in the economy.”
Industry hiring had the highest confidence index out of all the indicators, with 43.3, but it also saw the steepest decline from the third quarter. Industry sales and profit also declined, with 50% of respondents perceiving a negative sales outlook.
Sixty-two percent of the respondents said they believe the economy already entered a recession earlier in 2022, and 21% said they believe one will begin in 2023.
On the bright side, Wobbekind said, the Colorado economy continued to outperform the national economy in several metrics. Colorado saw better employment recovery and gross domestic product growth than the national average, and inflation is growing more slowly in the state than in the country at large.
“We see the state economy as quite a bit stronger than the national economy,” Wobbekind said.
Still, inflation is a major concern for Colorado businesses. It is projected to increase 8.2% in 2022, and 77% of panelists surveyed by the BRD reported moderate to extreme inflationary impacts on their business.
“This is clearly a reading in bearish territory,” Wobbekind said.