Business leaders show scarce economic optimism


This chart shows the relative scores of the factors that comprise the Leeds Business Confidence Index.

Entering the third quarter of 2022, the Leeds Business Confidence Index (LBCI), a marker of Colorado business leaders’ expectations for the local and national economy, took a nosedive, falling 26.6% from its average level for the past three quarters and a whopping 38.9% from where it was at this time a year ago. 

The LBCI is derived by the University of Colorado Leeds School of Business. It compiles ratings on the state economy, national economy, industry sales, industry profits, industry hiring, and capital expenditures from 216 business leader panelists who complete a survey. 

Of those categories, the national economy received the lowest rating and industry hiring received the highest. The issues driving the lack of confidence in the national economy were sustained high inflation, rising interest rates, and continuing supply chain issues. Of the three, inflation was the number one concern of a full 60% of respondents, with only 27% citing interest rates and half that many pointing to the supply chain.

LBCI staff also surveyed the participants on the question of a potential nationwide recession. They found that 23% of those who responded believe the country is already in a recession, while 57% anticipate that we will be in one within a year.

In the area of construction, the LBCI report cited Dodge Data and Analytics’ as having determined that “the nominal value of construction” in Colorado increased 4.1% year to date in April 2022 compared to April 2021. However, these numbers do not factor in the impact of inflation.

Two bright spots for Colorado are its employment and per capita income statistics. The report noted that, “strong year-over-year employment growth was recorded in all of Colorado’s seven metropolitan statistical areas (MSAs) in May.” As well, “Six of Colorado’s seven MSAs ranked among the top 100 nationally for employment growth.” Of the state’s seven MSAs, Boulder had the highest rate at 5.3% employment growth and Greeley had the lowest at 3.6%.

Looking at employment numbers, our state lost 375,200 nonfarm jobs as the pandemic took hold between February 2020 and April 2020. In the two years from May 2020 to May 2022, we gained 410,300 jobs, ending the period with 9.3% more jobs than before the pandemic. In fact, by February 2022, Colorado recorded the highest number of jobs ever, then surpassed that number three months later. 

Over all of 2022, our state is projected to add 89,500 new jobs, with the largest components in Leisure and Hospitality, along with Business and Professional Services. As of May, Colorado had a very respectable unemployment rate of 3.5%.

In the first quarter of this year, Colorado ranked eighth among all states in per capita personal income at $70,764. We ranked second in per capita personal income growth year-over-year. Although some slowdown is expected in the coming months as federal stimulus money from the pandemic is used up and not replaced, the LBCI report tells us that “wage and salary personal income growth is expected to remain strong.”

Even in the area of inflation, our state is doing better than the country as a whole, with the rate expected to increase only 7.7% this year and drop to a much more reasonable 3.3% in 2023, based on Leeds’ Business Research Division’s model. On a positive note, 72% of those surveyed expect inflation to moderate over the second half of this year and throughout 2023.