More than 100 experts in a variety of fields helped put together the Outlook, which is the most comprehensive look at the Colorado economy. The current expansion is on track to track to become the longest in U.S. history. It will eventually falter, but not next year, according to forecasters.
“Growth in Colorado is slowing because of a tight labor force, higher interest rates and a slowing U.S. economy,” said Wobbekind. He doesn’t see a recession in the cards until 2020 or later.
Employers in the state added 56,200 jobs last year, a growth rate of 2.2 percent, and they are on track to add 65,000 this year, a growth rate of 2.4 percent. Next year, the expectation is for 53,200 jobs, or a 2 percent rate of job growth.
The three big sectors driving job gains in 2019 will be professional and business services, with 11,400 jobs added; trade, transportation and utilities, with 8,700 jobs added; and leisure and hospitality, with 7,500 jobs.
In late 2016, Colorado’s economy slowed down to a 1.4 percent growth rate as it coped with a big drop in oil prices. But when oil prices recovered, growth last year came in at 3.6 percent, a pace likely to be matched this year.
Oil prices have started dropping again, down to around $53 a barrel, and that is an important commodity to watch, especially for Weld County. But natural gas prices are higher, and that is giving a lift to Grand Junction and the Western Slope, which have lagged in this recovery, Wobbekind said,
One concern forecasters had last year is who would fill all the job openings in a state with some of the lowest unemployment in the country. Colorado’s unemployment rate, which averaged 2.8 percent in 2017, is now running around 3 percent and should nudge up to 3.1 percent in 2019.
After adding more than 69,000 people from net migration in 2015, that important source of workers dropped to under 60,000 in 2016 and under 48,000 in 2017, according to the Colorado State Demography Office.
The Outlook is calling for the U.S. economy to grow 2.7 percent next year, down from 2.9 percent this year. But it cautions that several things could interfere nationally and locally.But it appears like net migration will rebound to 53,000 this year and hold around 50,000 next, according to the Outlook. Wobbekind said a larger than expected number of people on the sidelines, about 100,000, stepped back into the labor force and filled openings, allowing job growth to continue.
The stimulus from tax cuts passed in late 2017 is likely to wear off as more time passes and higher interest rates will weigh more heavily on the economy. Higher mortgage rates are already slowing down metro Denver home sales in a big way.
Permits for apartments are expected to fall, but more single-family permits will cover the gap, said Kelly Brough, president and CEO of the Denver Metro Chamber of Commerce, who presented the Outlook with Wobbekind.
Residential construction in the state will rise to $11.5 billion next year, up from $10.7 billion this year. And nonresidential construction will grow from $6.95 billion to $7.3 billion as several big projects get underway, including the $230 million expansion of the Colorado Convention Center, several building at the National Western campus, the new World Trade Center, and a third tower at the UCHealth Anschutz campus.
With transportation measures defeated at the ballot and funding tight, infrastructure spending is expected to fall from $3.5 billion this year to $2.8 billion next year.
Although trade tensions between the United States and Canada and Mexico have eased, they remain high with China and other countries. Farmers and manufacturers in particular are vulnerable to trade conflicts.
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