Slower growth could be ‘new reality’ for Colorado

DENVER — For the better part of two decades, Colorado has celebrated its position as one of the nation’s fastest-growing economies, but all parties, it seems, must come to an end.

“Slower growth … may be the new reality for Colorado as population growth, especially through net migration, remains slow, creating headwinds for labor force and job growth,”  according to the 60th annual Colorado Business Economic Outlook report, which was compiled by the Business Research Division at the University of Colorado Boulder Leeds School of Business and unveiled Monday at a forum in Denver. 

“Demographics are working against us … and we will see slower job growth” over at least the next few years, CU Leeds senior economist Richard Wobbekind said. 

Specifically, the demographic issue relates to Colorado’s aging population.

There is a “growing number of retirements even though workers are working longer” into their senior years, said Jessica Ostermick, CBRE Colorado’s market leader and a presenter at the Colorado Business Economic Outlook Forum. “Births have been declining since 2007 in both the United States and in Colorado,” and the state doesn’t have enough in-migration to make up for retirees leaving the workforce. 

“We have never had more people working or actively seeking work in this country,” but the aging population is pushing down the employment participation rate, Wobbekind said. Colorado has the country’s fourth-highest labor force-participation rate, “but yet we have a greater imbalance in terms of job openings and the unemployed than the nation does.”

The Centennial State “has demonstrated one of the strongest economies over the medium-term horizon. Comparing growth from 2008-2023, Colorado has the 5th-fastest real GDP and employment growth rates, 6th-fastest population and labor force growth rates, 3rd-fastest personal income and per capita personal income growth rates, and the highest home-price appreciation in the country,” the outlook report said. “Over the short term, though, Colorado’s performance has slipped in the rankings, demonstrating the difficulty in maintaining growth for a sustained period of time.”

Still, Colorado economists aren’t panicking or predicting an imminent recession.

“Many economists were projecting a recession” in late 2023 heading into 2024, Wobbekind said. That recession has so far failed to materialize and, despite a host of headwinds and uncertainties, isn’t likely to occur in 2025.

Economists with the University of Colorado expect job growth of around 1.2%, or 36,700 jobs, in the state next year.

“Inflation cooled in 2024 but remained above 3%, higher than the 2% target,” Wobbekind said

With a new president taking office in January, “there’s too much uncertainty with policy” to accurately predict future interest-rate cuts, he said, but “the financial markets are pricing in three rate cuts over the next year.”

Looking ahead toward the new administration taking over in Washington, CU economists said in the report that they expect “President-elect Donald Trump to follow through on his campaign promises, particularly around taxes, tariffs and immigration. Tax cuts could boost the economy in the short term by increasing demand, but the impact depends on their size and how they’re financed. Tariffs may create inflationary pressures, and the new immigration policy could have an impact on the labor force.”

In the Boulder Valley, “key sectors, such as life sciences, technology, and outdoor recreation, are driving economic activity, while remote work and office vacancies reduce much-needed foot traffic in areas of commerce,” the outlook report said. 

The region remains a national hub for advanced technology research and entrepreneurship, with quantum emerging as a particularly promising sector. 

Educational institutions, research facilities and economic-development groups have placed “specific emphasis on (advancing) quantum science and technology … and making sure Colorado leads the United States and the world in this critical, emerging field,” CU Chancellor Justin Schwartz said at the outlook forum. “It is truly thrilling for me to support the development of technologies that will transform our lives at the scale of the lightbulb, transistor or the internet did in past decades.”

In Northern Colorado, the “stable and resilient economy is driven by dynamic industry clusters, with key sectors including bioscience and medical devices, food processing and manufacturing, information technology and computer services, manufacturing (production technology and heavy machinery), plastics, and business services,” the outlook report said. “These clusters have strong ties to the region’s agricultural production, energy extraction, and strengths in animal science and translational medicine, enhancing Northern Colorado’s reputation as a regional distribution hub for agricultural and industrial products.”

Colorado ranks in the top 10 nationally in production for a number of resources, including natural gas, crude oil and petroleum liquids, and Northern Colorado — particularly Weld County — is the heart of the state’s energy industry. 

The natural resources and mining sector “experienced a 4.3% increase in employment in 2023 and is estimated to increase another 4.1% in 2024,” the report said. “In 2025, job growth is expected to continue in this sector by 4%-5%, but as always, uncertainties — geopolitical, economic, and regulatory — have the potential to stagnate job growth.”

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