State: Recession likely to be short, but deep

DENVER — Economic activity in Colorado is seeing improvements, but so far, the improvements are slight, according to the latest Colorado Economic and Fiscal Outlook, released Friday.

The governor’s Office of State Planning and Budgeting report summarized the state of the economy as this:

“While this recession is likely to be the shortest on record, it is also likely to be the deepest.”

Return to pre-COVID levels may be slow and contingent upon health concerns, the report said.

“This global pandemic has had a terrible impact on the economy and our way of life.” Gov. Jared Polis said about the report. “Coloradans are resilient, innovative, and talented and we will get through this challenging time together. While we are taking cautious steps to rebuild our economy, we cannot let up in our shared efforts to slow the spread of COVID-19. If Coloradans don’t wear masks in public or practice good social distancing and physical hygiene, then we will see case counts rise as they have in other states and the economy will further suffer,” he said.

The report said that personal income and personal savings increased in April, largely due to the federal government stimulus and increased unemployment benefits. Earned income declined, however. And the savings rate increase suggests that people are not spending.

Increased savings likely means that consumers have delayed spending and when and if they spend later, it will accelerate recovery, the report said.

Colorado lost more than 300,000 jobs in March and April due to the pandemic, and the unemployment rate rose to 11.3 percent. Yet the professional-services sector — scientific, technical, professional jobs — buffered the impacts somewhat and performed better than the same sector in other states, the report said.

Forty-six percent of small businesses reported revenue declines in June, but that was down from 68% in late April. 

The report forecasted that the state’s general fund revenue will take a hit this fiscal year and next, but will likely see an increase in fiscal 2021-22.

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