Faced with the fresh start of a new year, Colorado’s business community is feeling a bit rosier about the state’s economic prospects, according to a new survey from the Leeds School of Business at CU Boulder.
The index surveys over 200 members of the business community. After months of wavering confidence, the numbers jumped slightly to 50.8 — just .8 points above neutral.
That's still lower than it has been in the years since the recession, when that number has often been closer to 55 or even higher.
Still, Richard Wobbekind, senior economist at Leeds School of Business, said the rise in confidence is an indication that fears of a recession have been somewhat dispelled.
“Some people six months ago were very much focused on, ‘Are we going in a recession in the first part of 2020?’” Wobbekind said.
But now, low rates of unemployment and growth in wages indicate things are heading in the right direction. The index also suggests businesses plan to do more hiring in the next few months than they have recently, although probably less than they did heading into 2019.
Wobbekind attributes the growth to the Federal Reserve lowering interest rates and the promise of an end to the trade war with China.
“We started to see those sort of signs of optimism from monetary policy,” he said. “I think that was really an important part of the index changing direction, going positive, but again, not hugely, hugely positive.”
Confidence in the state’s growing economy has proved more secure than the business community’s confidence in the country.
“The business leaders in Colorado really don't see the national economy as going great guns,” Wobbekind said.
That tracks with the actual economic performance of the state relative to the nation, although Colorado’s growth has slowed recently. Confidence in the national economy improved heading into 2020, but still remains negative overall.
While the index indicates hope among businesses is rebounding, it’s still tenuous.
“I want to see another quarter or two,” Wobbekind said.
That’s unlikely to change soon. Major election years are typically pretty muted for economic changes. Older, traditional businesses typically go into a holding pattern, waiting to see what kind of government they’ll be working under.
“They're going to keep their eyes open, try to be slow and steady with growth if they can be,” Wobbekind said. “But they're not looking to make an enormous change until they see the actual resolution of trade agreements, the actual resolution of the election, what kind of environment they're operating in.”