2024 looking good for Colorado jobs, but interest rates will still be a sticking point, CU report says

Hart Van Denburg/CPR News
The Colorado Department of Labor and Employment offices in downtown Denver.

Colorado will continue to add jobs next year, but not as many as this year, according to CU economists.

The state’s employment is estimated to increase 2.2 percent in 2023, which equates to 64,500 jobs, researchers at the University of Colorado’s Leeds School of Business said in a new report on the economic outlook. The economists predict employment growth will slow to 1.4 percent in 2024, totaling 41,900 new jobs, according to the report.

Next year could be a crucial inflection point for the economy in Colorado and across the U.S. Inflation is slowing substantially, with the most recent data showing it’s the lowest it has been in two years. That means federal regulators could be done raising interest rates.

Higher interest rates slow price gains by making it more expensive to borrow money and eroding buying power. Interest rates have a big impact on how much people are willing to pay for big-ticket items like houses and cars.

But it’s too soon to say the fight against inflation is over, according to the CU economists.

“It continues to be at the forefront of economic headwinds in Colorado and the nation,” the authors of the report wrote. “Managing inflation will continue to be a priority for the Federal Reserve, and the health of the economy will be intrinsically linked with [interest rates].”

The central bank is attempting to strike a difficult balance by slowing the economy enough to bring down inflation, but not so much that it brings on a recession. So far, it’s working, but it’s not clear that it will last.

“The Fed is attempting to dance between the raindrops without getting wet,” the CU economists wrote. “One thesis that has been proposed is that the U.S. is experiencing a rolling recession. This is where some industries contract while the overall economy manages to stay above water.”

In 2023, higher interest rates were a drag on industries like construction and the mortgage business that are heavily reliant on borrowed money. The trend is likely to continue into next year, according to the CU economists. Colorado’s construction sector is forecast to lose 2,300 jobs next year, the report found. Other sectors poised for job losses include financial activities and information services, which include things like media organizations and software companies.

The government was Colorado’s biggest job creator this year and is expected to gain a lot of jobs next year, too, according to CU. The public sector will have added more than 18,000 jobs by the end of 2023, the report shows. It’s expected to grow by another 10,900 jobs next year.

“State employment is expected to steadily increase in 2024, driven by new state programs in the Department of Labor and Employment and Department of Public Health in Environment,” according to the report.

The leisure and hospitality sector has added tons of jobs in the past three years, but that’s because it was recovering from losing more than 70,000 jobs when the pandemic started in 2020. That job growth is expected to moderate in 2024 now that the industry is fully recovered, according to CU. In fact, Colorado saw record-high tourism spending in 2022, the report noted.