Colorado’s sharp plunge in economic activity because of the pandemic was followed by a substantial rebound this summer, according to state economics who said it was a stronger recovery than anticipated. Colorado's unemployment rate was 6.7% in August. At its peak during the pandemic it was 12.2%.
“Although the losses remained staggering, the US has gained almost 11 million of the 22 million jobs lost since February. Colorado has gained, actually updated today, 52% of the jobs lost since the pandemic began,” said Elizabeth Ramey, a state legislative economist, who helped prepare the most recent quarterly revenue forecast. She briefed lawmakers on the bipartisan Joint Budget Committee on Friday.
She said the recovery is still expected to be uneven and volatile, especially in industries that were the hardest hit like the energy sector, which has been impacted by a lack of travel.
“Colorado crude oil production is down 14% compared to last year. And active rig counts are at historic lows. Oil prices are expected to remain below $50 per-barrel, which is generally considered to be the break-even point in Colorado, through 2021,” said Ramey.
Other industries such as travel and leisure lost close to half of their employment base, whereas some professions with high-wage workers who transitioned relatively smoothly to work from home are basically at pre-pandemic levels.
She warned though that a resurgence of COVID-19, followed by additional waves of layoffs and reduced consumption and investment, could pose a risk for a healthy recovery.
“Today’s forecast has some good news for us, presenting a promising picture of an economy starting to recover from a huge economic hit,” said JBC Chair Daneya Esgar, D-Pueblo. “However, these promising indicators of recovery should be taken with a great deal of caution. The recovery continues to be sensitive to the pandemic, and the substantial increased need for critical services for Coloradans along with the need to restore one-time budget cuts made this year mean we’re not out of the woods yet.”
Ultimately state economists say how much money Colorado has to work with, after making severe budget cuts this fiscal year, is still up in the air; it will ultimately depend on the progress of the pandemic, the chance for any more federal stimulus money, and the eventual rollout of a vaccine.