BOULDER — Heading into the second quarter of 2023, Colorado business leaders continue to feel mostly pessimistic about the state’s and nation’s economic footing.
More than half (56.9%) of the Colorado business leaders surveyed as part of the University of Colorado Boulder’s first-quarter 2023 Leeds Business Confidence Index think a recession is on the horizon this year.
The LBCI was 45.1 for the second quarter, up from a dismal 39.8 in the first quarter.
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, and the long-term average is 53.8.
Observers must look back to early 2022 to find a period where there was an overall optimistic vibe among business leaders. The current sub-50 LBCI score streak represents the third-longest period of pessimism in the index’s 20-year history. A total of 230 panelists responded to CU’s survey from Feb. 1 through Feb. 20.
“Three quarters in a row of negative (perceptions) is obviously a concern,” CU faculty director and senior economist Rich Wobbekind said.
Of the respondents who expect a recession this year, many believe that it will occur in the back half of 2023.
“I don’t think that’s so crazy,” particularly given the recent turmoil in the financial and banking sectors, said Wobbekind, who has been hesitant throughout early 2023 to co-sign recession predictions.
Inflation and interest-rate hikes (which, somewhat ironically, were implemented to fight inflation) were the two leading areas of concern for Colorado business leaders approaching the second quarter.
Throughout early 2023, economists have predicted a “pretty sharp slowdown” in jobs growth, said Brian Lewandowski, executive director of the Business Research Division at the University of Colorado Leeds School of Business. While that slowdown is occurring, “we’re not seeing a spike in people losing their jobs and running out to claim their unemployment benefits.”
Technology, however, is a sector that has seen some significant employee cuts. Tech layoffs “continue to roll out, which has caused some consternation” throughout the wider economy, Wobbekind said. “We are a tech state. The significant players that have been laying people off nationally have operations in Colorado.”