Colorado business leaders started the spring with a brighter outlook but have shed some of that optimism, according to the Leeds Business Confidence Index from the University of Colorado Boulder.
After two years in pessimistic territory, driven by concerns over inflation and a potential recession, the index surged from 45.3 for the first quarter to 53.7 in the second. But that momentum wasn't long-lived and is starting to slip again, with high interest rates and concerns about the upcoming elections top of mind.
A score above 50 on the LBCI indicates optimism about the future, while one below 50 denotes pessimism. The LBCI came in at 50.6 for the third quarter, just above neutral, and slipped to 49.9 for the fourth quarter.
The 201 business leaders who responded were most optimistic about the outlook for sales in their industries, which scored 54.7, followed by industry profits. That confidence about sales and profits, however, isn't translating into increased hiring plans.
The score for industry hiring was 48 and dropped to 45.8 for the fourth quarter, a sign that employment gains could slow as the year progresses. The only category to score lower was the outlook for the U.S. economy, which came in at 46.8 for the third quarter before rebounding to 48.1 in the fourth, when the elections will be decided.
The retreat on business confidence contrasts with a June update from Colorado State University's ColoradoCast short-term economic forecast. After predictions of more muted growth in 2024, the ColoradoCast for the second quarter picked up some pep and showed what its authors called "a somewhat surprising improvement in forecast economic growth for Colorado."
The outlook, which extends through October, projects the Colorado economy will grow at an annual rate exceeding 3.5% in the early fall. That isn't robust, but it is consistent with historical growth rates in Colorado and reverses the two earlier forecasts that had predicted more muted growth.
"This latest release comes at a time when nationally consumer confidence is rebounding, corporate earnings, in general, were stronger than expected and home prices nationally continue to increase, even in the presence of higher interest rates, making this ColoradoCast consistent with many of the most recent national economic indicators," said Phyllis Resnick, executive director of the Colorado Futures Center, in the report.
Last week, the Colorado Department of Labor and Employment reported a gain of 9,800 nonfarm between April and May, easing concerns following an anemic gain of only 500 jobs between March and April. The state's unemployment rate rose to 3.8% in May from 3.7% in April.