State economic outlook strong; national expectations weaken

BOULDER — Business leaders in Colorado have lowered their economic expectations for the end of the year and the first quarter of 2018, mainly because of the national economy, according to the Leeds Business Confidence Index.

The report, prepared by CU Boulder’s Business Research Division at the Leeds School of Business and released Monday,  said despite the drop, the index remains in positive territory.

The reason for the drop is attributed to a lowering of expectations for the national economy, but leaders are still optimistic about the state’s economy.

The overall index came in at 56.5 for the fourth quarter and 55.3 for the first quarter of next year. An index value of 50 equals neutral.

The index fell 3.2 points from last quarter but still remained higher than last year’s figure, gaining 3.5 points from the fourth quarter of 2016.

The report, based on responses from 284 business leaders to a survey, focuses on the national economy, state economy, industry sales, profits, hiring plans and capital expenditures.

“We are seeing a larger decline in optimism about the national economy than we are about the state economy,” said Richard Wobbekind, executive director of the Business Research Division. “The state economy is still considered healthy and a larger percentage of respondents believes it is expanding rather than contracting.”

The index reflected modest declines in expectations across a number of economic indicators. Sales and profit expectations ranked among the highest of the six survey components, but both still slipped ahead of the fourth quarter. Capital expenditures and hiring also fell as growth expectations slowed.

Colorado’s job market remained a bright spot as the state continued to exhibit strong employment growth. Jobs increased 1.8 percent year-over-year in August 2017, the 14th-fastest rate in the country. Meanwhile, the state unemployment rate continues to outperform the nation as a whole, coming in at just 2.5 percent.

Colorado’s low unemployment rate, however, could make it difficult for employers to fill vacant or new positions, leading more than one-quarter of survey respondents to name it their top economic concern. Housing was the second most frequently mentioned issue, specifically high real estate prices and a lack of affordable housing that could discourage potential employees from relocating to Colorado.