Colorado business leaders have curbed their optimism about the state economy, according to the latest edition of the University of Colorado Boulder’s Leeds Business Confidence Index (LBCI).
Released by the Leeds Business Research Division (BRD) at the Leeds School of Business, the Index remained positive, but decreased 11.2 points to 56.1 ahead of the fourth quarter 2021 (a score of 50 is neutral), indicating expectations of a sustained recovery.
Of the six components of the LBCI, five recorded positive perceptions, with the most optimism in industry hiring (61.6). Short-term pessimism was recorded for the national economy (48.9).
“Concerns around COVID-19, particularly the Delta variant, have played the biggest impact in this tempered confidence,” said Rich Wobbekind, senior economist and faculty director of the Business Research Division. “Inflation and a constrained supply chain, as well as politics, have also played a role, according to our survey.”
The report shows business leaders expect the state economy to continue to outperform relative to the nation. Of the 264 panelists surveyed, 81.8% believed the state economy will stay neutral-to-positive in the fourth quarter, compared to 65.5% on the national level.
In Colorado, the labor market is also recovering well compared to the nation. Colorado ranks 16th in the nation in terms of recovery and recorded a smaller jobs deficit compared to the nation through August (-2.9% versus -3.5%).
While hiring and capital expenditures both decreased ahead of the fourth quarter, the outlook is still positive. The value of construction in particular has increased 22.1% year-over-year through the first eight months of 2021, with residential construction driving the growth at an increase of 34.2%.
Unemployment in Colorado continues to underperform compared to the nation. In August, Colorado unemployment was 5.9% and ranked 35th in the country. The national unemployment rate in August 2021 was 5.2%.
Looking ahead to Q1 2022, business leaders anticipate a sustained economic recovery, with all six components ranking positively and an overall index of 57.2.