Economy & Economic Development  June 29, 2022

Business confidence plummets as inflation, fear of recession grow

BOULDER — Inflation unlike any seen in a generation, coupled with the sense that the economy is — are will soon be — in a full-blown recession, has Colorado business leaders on edge.

University of Colorado Boulder Leeds Business Research division’s quarterly Business Confidence Index released Wednesday indicates that optimism dropped by the second-steepest margin in the 20-year history of the index. 

The quarterly report marks Colorado business leaders’ expectations for the state and national economies, industry sales, industry profits, hiring and business spending.

Business Confidence Index

The BCI fell 12.8 points to 41.1 ahead of the third quarter 2022. A score of 50 is considered neutral, and the index stood at a record low 29.7 in the first quarter of 2020 before hitting a record high of 67.3 in the third quarter of 2021.

Looking ahead to the fourth quarter of 2022, the BCI is pinned at 38, fourth-lowest outlook CU has ever recorded. 

Surveying Colorado business leaders in recent weeks has “opened our eyes” to just how pessimistic many are feeling, Rich Wobbekind, senior economist and faculty director of CU’s Business Research Division, said Wednesday.

“This is the first significant inflation we’ve seen in 40 years,” he said, and many younger business leaders have never experienced this sort of economic phenomenon.

CU economists are projecting 7.7% inflation this year and 3.3% next year.

“I think there are a lot of reasons to believe that [inflation] will really trend downward,” Wobbekind said. 

Despite the opinion of some Colorado business leaders, Wobbekind also said that he’s not convinced the United States is already in the midst of a recession. 

“The vast majority of indicators are showing … [that there] is not a recession now, but there might be later,” he said.

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