Boulder 2023 forecast: Recession or ultra-slow growth? Does it matter?

BOULDER — In the early days of 2023, one economic question looms large: Will this be the year that the United States economy dips into a recession?

Some prognosticators in Boulder are asking a related question: Does it matter? Is there a huge difference between an ultra-slow growth economic environment and a slightly contracting one?

“It doesn’t really matter if it’s a light recession or really slow growth,” Brian Lewandowski, executive director of the Business Research Division at the University of Colorado Leeds School of Business, said Thursday at the Boulder Chamber’s annual economic forecast event. “It’s painful either way.”

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In CU’s 2023 Colorado Business Economic Outlook report, released last month, economists wrote: “While headwinds appear to be easing, the toll on 2023 will be measured in slow growth — just 0.2% based on Consensus Forecasts’ projections in November 2022. The Business Research Division is modestly more bullish, expecting 0.6% growth, with the U.S. economy teetering on a recession in the first half of the year followed by faster growth in the second half.”

The potential for a “painful” year in 2023 highlights the lack of clarity about the health of the Colorado economy, which has rebounded with gusto since the COVID-19 downturn. 

“There’s a ton of uncertainty,” Rich Wobbekind, faculty director and senior economist at the Business Research Division of the Leeds School, said at Thursday’s event in Boulder. 

What is certain is that Colorado — and Boulder, more specifically — has been a national leader in economic recovery. 

In 2022, the Centennial State ranked sixth nationally in year-over-year gross domestic product growth, second in personal income growth, and ninth in labor-force participation growth, according to CU data presented Thursday. 

Still, state leaders remain “a little confused about the whole recession thing,” Wobbekind said.

That confusion has translated into pessimism.

More than half (57.8%) of the Colorado business leaders surveyed as part of the University of Colorado’s first quarter 2023 Leeds Business Confidence Index think a recession is on the horizon in the first half of this year.

Among the top concerns for business leaders, according to the LBCI, were “high interest rates and inflation, labor shortages and fears about slowing consumer spending.”

Relative to economic tailwinds, “the headwinds list seems to be growing,” Lewandowski said. 

The other speakers at Thursday’s Boulder Chamber event were Boulder Economic Council executive director Scott Sternberg, Elevations Credit Union vice president Dennis Paul and Innosphere Ventures CEO Mike Freeman.