CU-Leeds Business Confidence Index bounces back from historic low

BOULDER — Colorado business leaders, who felt historically pessimistic earlier this year about the state of the economy, are expressing a bit more optimism heading into the back half of 2020, according to the latest University of Colorado Leeds Business Confidence Index released Wednesday.

While the COVID-19 pandemic is still a huge concern for a majority of the state’s business leaders, Colorado’s economic resiliency and pent-up demand combined to boost index scores for the third quarter of the year. 

Still, the Q3 index score of 44.3 indicates an overall pessimistic outlook. A score of 50 is considered neutral and the index stood at 50.8 in the first quarter of 2020, the last quarter recorded before the pandemic. The index declined to its lowest recorded level in its 17-year history — 29.7— in Q2.

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The quarterly report marks Colorado business leaders’ expectations for the state and national economies, industry sales, industry profits, hiring and business spending. CU researchers surveyed 410 business leaders between June 1 and June 19.

“We had a tremendous bounce back,” said Richard Wobbekind, executive director of the Leeds School Business Research Division and CU senior economist. 

But, he added, it is “particularly troubling” that survey respondents were least optimistic about capital expenditures and hiring, perhaps the “two most significant indicators of future growth in the economy.”

Looking further ahead, the index score for Q4 jumps to 51, indicating an overall optimistic outlook that “coincides with general expectations about reopening” the economy,”  said Brian Lewandowski, executive director of the Leeds Business Research Division. “It does certainly feel like we’ve bounced off the bottom.”

Despite the unprecedented nature of the economic shutdown from March to May, business leaders appear to believe the worst impacts will be short-lived, unlike the years-long Great Recession a decade ago. 

While the confidence index is by no means a guarantee of future economic performance, it has historically proven to be a fairly reliable indicator, the Leeds School researchers said.  

The confidence survey was conducted prior to a recent nationwide surge in COVID-19 cases, which led Gov. Jared Polis to re-close bars and nightclubs this week. 

But, Lewandowski said, “if we were to roll the survey out today, I wouldn’t expect a dramatically different result.” 

That’s because the impacts of the closures are mostly limited to the hospitality industry, he said. The re-closures of bars “could renew some pessimism among that cohort but it’s not really spilling into office-type professions yet.”

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