This is a part of an occasional series looking at aspects of Colorado’s faltering economy.
Colorado’s job market is on shaky ground, but it’s increasingly hard to measure the magnitude of this economic temblor.
The group that produces economic forecasts for the state legislature says problems with Colorado’s data make it difficult, if not impossible, to suss out the real story about the health of the job market. At the same time, there’s a big hole in the numbers because nobody was collecting information on jobs during the government shutdown.
If you’re not an economist, talking about jobs and the economy can be complicated. There are a lot of statistics from multiple sources to keep track of. The numbers are frequently revised and packaged in jargon. But most people understand the importance of having a job and a steady paycheck when it comes to financial stability. A healthy job market is the bedrock of a healthy economy.
So, is Colorado's economy healthy? The official data shows the state’s employment growth has been lagging the U.S. rate since early 2024. There’s no obvious reason for Colorado’s weak employment numbers, but there are a couple of theories.
Doubts in the data
One possibility is that the data is simply wrong. Colorado’s labor department rolled out a new unemployment insurance computer system in 2023 that introduced significant errors in data collection. Colorado’s jobs data was so unreliable that the U.S. Bureau of Labor Statistics, the federal agency that collects and publishes jobs data, briefly stopped publishing Colorado’s numbers earlier this year.
The problem has since been fixed, according to Colorado’s labor department. However, there are indications that the quality of the information submitted by employers may still be lower than it was before the system update, Tim Wonhof, Colorado’s director of the office of labor information, said in an emailed statement.
The state continues to “actively investigate whether, and the extent to which, employment and wages may not be represented in the data.”
It keeps the doubts lingering, according to Greg Sobetski, chief economist for Colorado’s Legislative Council Staff, a nonpartisan group that produces economic forecasts for the state legislature.
“I am skeptical of the details of those growth rates … because relatively small methodological problems can really tell a different story about the condition that the economy's in,” Sobetski said. “If we're saying, well, employment increased by 1 percent, versus 0.5 percent, versus 0 percent, versus it fell by 0.5 percent, those are relatively small differences in data quality … But they're radically different stories about the health of the economy.”
His biggest qualm with the state’s data is there’s no way to align current statistics with those that predate the computer system overhaul.
“I don't think there's a way to remediate the data to or rehabilitate the data such that they're consistent with the preexisting data,” he said.
Simply put, the experts that the state government rely on for economic information are skeptical of the labor department’s reports because there’s no way to match up the new data with the old data to track job growth in the long term.
Revisions reveal swings
Even under the best circumstances, it’s impossible to get a perfect snapshot of the job market in real time. The accuracy of the initial numbers depends in part on how long it takes for businesses to respond to government surveys. There are always revisions to the early estimates.
Lately, those revisions have been large, especially for Colorado. In September, the federal agency estimated that Colorado added 51,000 fewer jobs than previously reported during the 12-month period ended in March. The country overall created 911,000 fewer jobs than previously thought in the largest revision in U.S. history.
Among the states, Colorado’s downward revision stood out as the second biggest behind North Carolina. On a percentage basis, Colorado had the biggest drop in job growth relative to prior estimates at 1.8 percent.
The revisions are still preliminary and will be adjusted again before they are finalized. If the current estimates hold, the job picture in Colorado is bleak.
But according to Sobetski, information on wage withholdings in Colorado doesn’t line up with that grim forecast.
“I would just say our expectations for the economy are largely not rooted in these data because we don't take them very seriously right now … I still think the data are pretty significantly impaired and I'm hesitant to rely on them,” he said.
Downturn in tech
But what if the numbers are correct, and Colorado’s job market really is slowing dramatically? According to economists at the Federal Reserve Bank of Kansas City, Colorado’s job growth stalled at the start of 2023. In early 2024, the state’s unemployment rate surpassed the U.S. rate for the first time since the oil bust of the 1980s.
A wave of layoffs in the technology sector in recent years hit Colorado particularly hard, according to David Rodziewicz, an economist with the Kansas City Fed, which analyzes economic data across the Rocky Mountain region.
“We've seen a downturn in the tech industry, which Colorado is more concentrated in than the national average,” Rodziewicz said.
Technology accounted for roughly 12.5 percent of Colorado’s jobs from 2022 through 2024, compared with 9 percent for the U.S., he said.
The last time the state’s unemployment outpaced the nation’s in the 80s, it was because Colorado’s employment base was heavily concentrated in the energy sector, which was in the midst of a major bust at the time. Colorado’s economy is far more diversified than it was 40 years ago, but it’s a similar dynamic, according to Rodziewicz.
“We had an industry-specific shock where Colorado was more concentrated,” he said.
Some point to Trump
But that’s not the whole story. Other industries in Colorado are also lagging. For instance, construction hiring in the state is down, even as it’s growing in much of the country.
“We’ve witnessed a concentration of growth in a select number of industries and relatively flat growth across many industries,” the labor department’s Wonhof said. “The latter is somewhat concerning, but not surprising.”
Wonhof pointed to President Donald Trump’s trade policies, interest rate policy and political dysfunction in Washington as the reasons behind a lack of business activity in Colorado and nationally.
But if the numbers are to be believed, Colorado’s job engine started sputtering well before President Trump was sworn in for his second term. The questionable data makes it hard to know whether muddled signals point to a recession. Either way, Coloradans are hoping for the ground to stabilize.
Colorado’s economy is flashing warning signs. Job growth has slowed to a trickle. Layoffs are inching up. The housing market is in a slump. Both the state and its biggest population center are struggling to plug massive budget holes. On top of all that, the longest government shutdown in history was weighing on the economy.
The big question, though, is whether all the bleak data points to something more serious: recession. And the answer is complicated.
Colorado Public Radio takes a look at what those warning signs might mean through the new series Silent Recession. Read more stories in the series here.
