DENVER – Colorado’s economy is expected to slow down by the end of the year and continue on this path through the beginning of 2024, but a deep or protracted recession is still not currently in the cards due to a strong labor market.
That’s the message from officials at the Governor’s Office of State Planning and Budgeting, who released their projections on the near-term health of the statewide economy Tuesday.
The quarterly economic forecast points to both a “marginally tighter labor market” and a higher proportion of service pending as factors that will buoy the projected slowdown as economic growth slackens due to an expected decrease in consumer demand starting later this fall.
Inflation, which is showing some signs of a cool down, is decreasing at a slower pace in Colorado than the national average – 4.7% compared to 4%, respectively – due to a resurgence in demand for shelter and services.
Officials noted that both the U.S. and the state of Colorado have seen declines in housing and rental property permitting levels, which will put upward pressure on home and rental prices.
The labor market has continued to outperform expectations, officials said, but price growth is currently higher locally than nationwide due to higher local demand for shelter and services.
The gross domestic product (GDP) is expected to continue growing, though at a slower pace than last year, to 1.4% in 2023. Economic growth is expected to return to 2.3% in 2025, officials noted, slightly outpacing potential growth.
Despite a slowdown through the beginning of 2024, the state economy is expected to recover later in 2024 and rebalance and stabilize in 2025.
General and cash fund growth for the 2022-2023 fiscal year is expected to generate $3.5 million in TABOR refunds, according to the economic forecast, and revenue subject to TABOR is expected to remain above this cap through 2025 – around $535.9 million for fiscal year 2023-2024 and $1.3 billion for fiscal year 2024-2025.
The general fund balance is also projected to be $295.5 million and $212.8 million above the statutory reserve level of 15% for the fiscal years 2022-2023 and 2024-2025, respectively.
Currently, Colorado’s unemployment rate sits at 2.8% – lower than the national average of 3.7%, both good signs of a strong economy.
