A look at Colorado's 2023 economy reveals slowing but still signs of job growth | Bot To News
Colorado's overall economy has slowed this year, a trend that is expected to continue into 2023, according to a forecast compiled by dozens of economists and industry leaders across the state.
But while citing reasons such as the impact of the war in Ukraine, high inflation and the end of federal pandemic benefits, economists said the reality could change. This year, for example, Colorado added more jobs than predicted for 2022 — nearly 47,000 new jobs.
"After revisions to the data, we believe Colorado added 120,800 jobs this year, a 4.4 percent increase," Richard L. Wobbekind, director of the University of Colorado Leeds School of Business' division of business research, said during a presentation Monday in Denver. . . "That's well above what we predicted a year ago at this time."
Last year, companies complained that it was difficult to find enough workers, which contributed to why Wobbekind and his team underestimated job growth. Last year's report predicted about 73,900 new jobs, a record for employment in Colorado. The country still achieved a record, reaching 3,146,008 people in employment in August.
Richard Wobbekind, associate dean for business-government relations, senior economist and director of business research at the University of Colorado Boulder, before presenting the Colorado Business Economic Outlook 2023 report in Denver on Dec. 5, 2022. (Tamara Chuang, The Colorado Sun)
"Overall, we didn't think there were enough bodies" to fill more positions, Wobbekind said in an earlier interview. "Some sectors grew faster than we expected. There was strong growth in manufacturing, life sciences, and really strong growth in professional and business services, which exceeded what we imagined."
Anything can happen in 2023, so keep that in mind as you read on. Based on current economic data and insights from people on the ground, here's what's in the economic crystal ball for Colorado according to the Business Economic Outlook 2023:
Projected 57,100 new jobs — This is the number of new jobs expected in 2023, up 2% but slower than the 4.4% growth this year. The calculation comes from a review of the top 11 industry sectors, and all but two show job growth in the coming year. Higher interest rates are cooling construction projects, so jobs in the sector are expected to decline by 1.1% in 2023. Another industry hit hard by higher interest rates? The financial sector, as higher mortgage rates slowed home lending.
Leading the growth are professional jobs, which have flourished during the pandemic as workers have found it easier to commute home to work remotely. Growth is expected to continue because it's typically a highly educated workforce, and Colorado has the second-highest percentage of college graduates in the nation, at 44%, compared to the U.S. rate of 35%, said state demographer Elizabeth Garner.
The prediction "is supported by the state's ability to educate young adults and recruit a highly educated workforce from other states," Garner said during the event. "The percentage of people in Colorado with science or engineering degrees is 39.4%, compared to 33.9% for the state overall. … It's one of the strongest employment sectors in Colorado and is on track to add 20,500 jobs in 2022 (and) next year, which will add an additional 16,500 new jobs."
4.1% unemployment rate foreseen — Colorado's unemployment rate has been falling all year, though it rose slightly to 3.6% in October. But the rate is expected to rise to 4.1% next year. That's in part because so many working-age Coloradans who can work are doing so or looking for work. About 67% of Coloradans over the age of 16 are in the labor force, compared to 62% statewide.
"There is still a disparity in unemployment in Colorado, the range between the lowest and the highest has already narrowed," Wobbekind said.
That ranged from 2.5% in the Boulder area to 5.1% in Pueblo, according to September data from the U.S. Bureau of Labor Statistics.
Each year, Colorado economists and industry leaders compile a report on how the state's businesses performed and a forecast for the coming year. Led by the Leeds School of Business at the University of Colorado, Boulder, the Colorado Business Economic Outlook 2023 predicts a further slowdown in the state's economy. He also shared updates on different regions of the country to compare data such as unemployment rates and gross domestic product. (screen shot)
Updates and forecasts by industry
High agricultural prices: While 2022 was a record year for farm prices — wheat, corn and hog prices rose sharply from last year — that was offset by record costs for farmers, ranchers and others in the agriculture industry, Wobbekind said.
"Wheat, one of Colorado's staple foods, has seen significantly higher prices because of the war in Ukraine," he said. "However, this positive news was countered by higher production costs, rising costs of farm labour, trucking and shipping, repairs and equipment are expected to reduce profit margins in the sector."
And while production is expected to "reach record levels in Colorado in 2022 and 2023," he said, those record high costs will continue. With less government aid due to the pandemic this year, Colorado's net farm income will drop by $1 billion, or 58%, starting in 2021. And next year, he added, "it's expected to drop $772 million, a 9.4% decrease in 2023, the lowest Colorado farm net income in 20 years."
The value of Colorado's agriculture industry has increased during the pandemic, with production currently valued higher than in 2019, according to data from the Colorado Business Economic Outlook 2023. But net profits are expected to fall to a 20-year low next year due to dwindling aid governments.
Beer is still growing, pot sales are declining: A constant focus in the country's manufacturing sector is beer. Small and large brewers and other beverage producers contribute to non-durable goods, which account for about 30% of the nation's manufacturing jobs. The niche market has grown 5% in terms of jobs this year as customers have returned to breweries in person, although the price and availability of aluminum cans have been a challenge, the Brewers Association says. A 1.2% job growth is predicted for 2023.
The manufacturing sector, which includes aerospace and computer manufacturing and marijuana sales, is also generally slowing. Demand for goods – especially furniture, electronics and appliances – is falling, but there is also competition from other countries. Manufacturing is expected to add about 500 jobs in 2023, up 0.3 percent from 2022, Garner said.
A row of marijuana shops line a city block on North Commercial Street in Trinidad, Colorado. The town of just over 8,000 people has more than 15 dispensaries, seven of which are in the lower Commercial Street area. (Mike Sweeney, Special to The Colorado Sun)
A noticeable decline? Cannabis. Colorado was a pioneer, legalizing marijuana for medical use in 2000, one of eight states to do so at the time. There are now 37. Similarly, Colorado's early crackdown on recreational marijuana saw sales decline in 2012 as at least 20 other states also legalized weed.
"Marijuana sales are declining in 2022 as the pandemic subsides. Competition has increased and prices have come down," Garner said. "Total sales for the year to June were down 22% from 2021 levels of $991 million, but are expected to stabilize in 2023."
Oil and gas recovery: High gasoline prices over the summer boosted the value of the natural gas and mining sector, sending the sector's market value in Colorado up 55% from 2021 to $27.8 billion this year, more than double its 2020 value .The strong valuation is expected to continue in 2023 with more jobs added.
Oil production reached a record 192 million barrels in 2019. This fell to 154 million barrels in 2021, but is expected to rise modestly by 3% to 160 million barrels this year. Production is expected to be about the same next year.
Workers in this sector represent 1% of the country's workforce, but contribute 4% of the country's gross domestic product. Local industry is still rebuilding jobs lost at the start of COVID-19, so job gains are expected: 900 this year and potentially 3,000 next year.
"In 2023, employment is expected to grow to 23,700 workers, solely due to persistently higher oil and gas prices, both nationally and globally," Wobbekind said.
Real Estate and Financial Ups and Downs: It has been a busy year for everyone involved in real estate. Financial firms began laying off workers as interest rates rose and prospective homebuyers were spooked. The median price of a single home on the Denver market fell to $632,000 in September, compared to $680,000 in April. However, the report points out that the September price is still higher than in 2021, when the median was $576,000.
But with the financial sector hit hard, Wobbekind said he expects the financial services sector to lose 1,000 jobs this year and 4,000 in 2023.
The issuance of building permits is also expected to decrease by 6% this year due to the slowdown in residential construction.
Area expected to grow? Infrastructure construction, thanks to federal funding for roads, broadband, and other non-building construction. That could add an additional $4.4 billion in infrastructure investment in the state in 2023, Garner said.
Travel has almost returned to the nation's two largest airports. Passenger traffic at Denver International Airport was down just 1.2% in September from pre-pandemic 2019. By comparison, Colorado Springs Airport's September travel was up 30% over 2019, even though it added Southwest Airlines in March 2021.
Tourism and hospitality continue to grow and jobs have returned. However, there is still a staffing problem that will continue in the new year. Employers have had to raise wages to attract workers, especially in the restaurant industry, where 92% of restaurants raised wages, according to the Colorado Restaurant Association.
Incentives for the film and video game industries help grow this workforce and offset job losses in other information-related industries, such as print news. According to the Colorado Office of Film, Television and Media, 16 video game projects received $4.2 million in incentives since 2013, while $30.3 million went to 127 film projects.
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