In this Capitol Report:
Colorado’s Economy in 2019: Three Crystal Balls Offer Answers
As 2018 comes to a close, the statewide business community has been offered three crystal balls through which they can peer at economic prospects for 2019. The forecasts are offered by:
- Colorado Legislative Council,
- Colorado Office of State Planning and Budgeting, and
- Business Research Division, Leeds School of Business, University of Colorado Boulder.
Below are summaries of the forecasts by the three organizations.
Colorado Legislative Council
Over the next two years, the U.S. and Colorado economies will continue to expand, albeit at a slower pace than in 2018. The slowdown in growth is consistent with a maturing U.S. economic expansion and will coincide with slower global economic activity. As the stimulative impacts of federal tax cuts wear off, growth in business investment and consumer activity are expected to moderate. Higher interest rates and an increasingly tight labor market will pose stronger headwinds to private sector growth. International trade policy uncertainty continues to cloud the outlook for businesses, and will contribute to upward pressure on prices for consumers and businesses alike until tensions ease.
Relatively high housing costs and rising interest rates have cooled housing markets in many regions of the U.S. In Colorado, rapid home price appreciation along the northern Front Range has spread to surrounding areas. The higher cost of living is expected to continue to influence population migration to and within the state, while also putting downward pressure on consumer activity unless wage growth can keep pace with rising housing costs.
Colorado Office of State Planning and Budgeting
Colorado’s economic expansion has continued at a healthy pace in 2018. Employment growth has been strong, while wage growth has outpaced inflation each month for the past year. Oil and gas production continue to set record highs, but recent price declines may limit growth. Housing price growth has slowed in recent months, in part due to rising mortgage rates, but rental rates remain stable. Colorado’s economic activity is forecast to remain positive over the forecast period, but growth will moderate under tighter labor market conditions and constraints on construction activity. Recession risk remains low, but has increased since the September forecast as concerns of slower global growth and the ongoing trade dispute cause increased caution among investors.
Business Research Division, Leeds School of Business, University of Colorado Boulder
Richard Wobbekind, executive director of the Business Research Division, Leeds School of Business, University of Colorado Boulder, told an audience of more than 100 on December 10th at the Grand Hyatt Denver that “The (economic) momentum will carry into 2019 but at a slower pace,” according to The Denver Post. According to The Post:
“Growth in Colorado is slowing because of a tight labor force, higher interest rates and a slowing U.S. economy,” said Wobbekind. He doesn’t see a recession in the card until 2020 or later.
For news media coverage of the economic forecasts, read:
“Colorado surplus could top $1.2 billion, according to latest revenue forecasts,” by Marianne Goodland, Colorado Politics, December 20th.
“Colorado economy on pace to keep growing in 2019, says CU report,” The Associated Press, December 10th.
“Colorado economy predicted to slow next year, but not stall,” by Aldo Svaldi, The Denver Post, December 11th.
“Here’s what will happen when Colorado’s economy starts slowing down,” by Tamara Chuang, The Colorado Sun, December 11th.