Business confidence drops into negative territory

BOULDER — State business leaders have expressed pessimism about the economy for the first time since 2011.

The Leeds Business Confidence Index released by the Leeds Business Research Division at the University of Colorado had been in positive or neutral territory since the end of the recession. But that changed in the update released today.

Panelists cited concerns about trade, politics, the economy and general uncertainty looking ahead to the fourth quarter of 2019.

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Responses followed a common theme, according to Richard Wobbekind, executive director of the Leeds Business Research Division, who oversees the report.

“There’s too much uncertainty,” Wobbekind said. “It’s not necessarily the tariffs; it’s the uncertainty about how they are going to be resolved.”

The Leeds Business Confidence Index measures Colorado business leaders’ optimism and expectations for six components: the state economy, the national economy, industry sales, industry profits, industry hiring and capital expenditures.

The fourth quarter survey was conducted Aug. 30 to Sept. 20, prior to the announcement of congressional impeachment proceedings.

A score of 50 marks a neutral outlook. The overall index dropped 7.7 points from the 2018 fourth quarter outlook to 46.9.

Five of the six index components read negative for the fourth quarter of 2019, with industry sales being the only measure still in positive territory. All six fell into negative territory when panelists were asked about the first quarter of 2020.

Panelists were most pessimistic about the national economy, with a score of 38.5, an 11.6-point drop from the fourth quarter of last year. Roughly 56 percent of panelists said they expect the national economy to slow in the fourth quarter, while nearly 12 percent still expect acceleration.

Small employers surveyed were less optimistic than large employers.

Although panelists surveyed were less than rosy about Colorado’s economy, with a score of 47.4, the state’s real GDP growth is still at 4.4 percent year-over-year and 3.6 percent quarter-over-quarter. Essentially, the state is still growing, but growing more slowly.

Colorado’s unemployment rate is also very low, leaving a big question, said Wobbekind

“If these things don’t get resolved — these uncertainties in trade issues — does the business sector really hunker down more so than they’ve done already?” Wobbekind said.