Report: Economy on right track, but uncertainty still remains
Colorado’s labor force is growing. The state’s gross domestic product rate is up. The number of new business filings is still strong. All good signs in the state’s latest quarterly report, but economists said “uncertainty and concerns” caused by labor shortages and inflation remain.
Colorado Secretary of State Jena Griswold and economists from the University of Colorado’s Leeds Business Research Division said the results from the fourth quarter of 2021 show the state is moving in the right direction.
“Colorado’s economy is on the cusp of returning to prepandemic levels in a lot of areas,” Griswold said in a call with reporters Thursday.
The Quarterly Business and Economic Indicators report prepared by Leeds in conjunction with the secretary of state’s office showed Colorado’s GDP grew 5.5% over the last year, compared with 5.7% nationally. The state has regained about 89% of the jobs lost at the beginning of the pandemic, compared with 84% nationally.
“While our recovery continues, we all know there’s still a lot of work to be done,” Griswold said.
One way the secretary of state’s office has proposed helping small businesses squeezed by rising costs and wages is to cut business filing fees to as low as $1. Legislation introduced in the Colorado House would save businesses across the state a total of up to $17 million, Griswold said.
The numbers paint a picture of a strong economy nationally and in Colorado, but it’s one “fraught with uncertainty and concerns,” said Rich Wobbekind, senior economist and faculty director of the business research division at CU’S Leeds School of Business.
The national employment growth rate slowed a bit in December, and unemployment insurance claims were up nationwide and in Colorado in January, Wobbekind said. However, the latest national figures “are showing a return to more normality,” he said.
“This, frankly, was caused by the surge in omicron and now that we’ve seen that peak in many parts of the country, we feel like that’s going to really put us back on a stronger path to job recovery in the months ahead,” Wobbekind said.
Colorado’s unemployment rate was 4.8% in December. The national rate was 3.9%
One concern is the tight labor market and the pressure that creates to raise wages to compete, Wobbekind said. Federal statistics show there are 0.6 workers available per job opening nationally, the lowest num
ber on record for the survey on job openings and labor turnover.
Nationwide, wages rose 4.7% percent in December from the same period in 2020. In Colorado wages rose 5.7% in December from December 2020.
“That’s good news for the Colorado worker and probably part of why there’s concern for small businesses.” Wobbekind said. “They’re having difficulty finding labor. They’re seeing wages going up.”
The number of business dissolutions recorded by the secretary of state’s office jumped 13.1% for a total of 11,363 in the fourth quarter of 2021, compared with the same quarter in 2020. Wobbekind said part of the reason could be that a lot of the government financial support approved during the height of the pandemic has run out.
“I know a lot of small businesses, restaurants and retail are trying to see whether traffic will fully return,” Wobbekind said.
Colorado had the country’s fourth-highest labor force participation at 68.3% in December. The rate is calculated using the number of people employed or looking for a job divided by the working-age population.
Wobbekind said Colorado’s labor force is up nearly 54,000 people, or 1.7% larger, than in January 2020. “Those are very, very important factors for the state economy’s ability to grow GDP.”
On the other hand, Colorado ranks high for the number of people leaving jobs as part of what some analysts have called “The Great Resignation.” Millions of people haven’t returned to their jobs or quit to look for other work or higher pay during the coronavirus pandemic.
Colorado’s “quit” rate was 4% in October, the country’s highest, according to the U.S. Bureau of Statistics. It was 3.5% in November, behind 19 other states but still higher than the national rate of 3.0%.
“There’s still a shortage of supply of workers across the board even though we’ve seen some growth in the labor force,” said Brian Lewandowski, executive director of the research division at the Leeds School of Business.
One reason could be a significant decrease in the number of people working more than one job. Lewandowski said the number of people with more than on job has dropped by about 750,000 nationally.
Wobbekind added that there could also be a mismatch between job openings and prospective candidates.
Some of the tightest labor supplies are in health care, education and business and professional services.