The Colorado State Capitol.

(Hart Van Denburg/CPR News)

Colorado’s economy has picked up in recent months, but there are warning signs ahead.

Economic forecasters told a legislative budget committee Tuesday that Colorado’s third quarter saw the state’s strongest growth in years. That’s thanks to a rise in consumer spending and business investment.

Meanwhile, manufacturing and energy industry markets are on slightly better footing than they were a few months ago. 

“Everybody’s seeing some stabilization and things are picking up," said state budget director Henry Sobanet. "It was pretty slow this spring, gave some kind of dark signals. But now it seems like we’re back to a little more of a cautiously optimistic posture."

Forecasters did warn of an economic slowdown ahead. That could be exacerbated by things like labor shortages, high housing costs and more Coloradans retiring from the workforce.

Sobanet also warned that the Taxpayer Bill of Rights will cause a major budget shortfall for lawmakers. 

"We can’t keep all the money that we have," Sobanet said. "And we have to make some serious adjustments to make the budget work for schools for transportation, public safety and things like that.”

Lawmakers will tackle the budget when the legislative session begins next month.