Economic Outlook Remains Weak, but Improved

Economy Shows Signs of Recovery

Nationally, evidence continues to mount that the economy bottomed out during the second quarter and that lower than potential growth will occur through at least next year. Because the state economy is closely linked to the national and global economies, recent economic data point to a slow recovery for Colorado.

In late September, the BRD convened the estimating committees for the 2010 Colorado Business Economic Outlook.  Results from a straw poll of committee members predicted that Colorado would again experience negative employment growth next year, -0.1%. The more formal, in-depth forecast will be released by the BRD at the 45th annual Colorado Business Economic Outlook Forum on December 7 at 1:00 pm in Denver at the Grand Hyatt.

In early October, the BRD released the Q4 Leeds Business Confidence Index (LBCI). The results point to improved economic conditions in Colorado. The forward looking index increased for the third consecutive quarter, from 47.5 to 49.7. Moderate gains were recorded in five of the six index components, and three of the components are now above the neutral mark of 50. The only index component to register a decline was expectations for growth of the state economy.

While there is justifiable optimism because of the improvement of the overall index, the LBCI remains below 50. The fact that business leaders expressed continued concerns about profits, hiring, and capital expenditures suggests that the chances have increased that Colorado will lag the national economy in its recovery, much as it entered the recession later than the nation. This prognosis reflects decreased optimism in the strength of the state's recovery based on data from the construction and energy industries.