Colorado Economic Outlook: Job Growth Slows in 2023, Most Industries Strong

U.S. One Hundred Dollar Bills are strewn about.
Colorado made a strong economic recovery in 2022, but some industries are lagging. / Photo by Giorgio Trovato on Unsplash.

A recent study indicates the Colorado economy was strong in 2022 with many industries remaining secure in 2023.

The Colorado Business Economic Outlook, developed by the University of Colorado Boulder’s Leeds Business Research Division, projected next year’s economy statewide and many different industries connected to it. 

From this research, it predicts 57,100 jobs will be added in 2023 while about 120,000 jobs were added in 2022. Colorado lost more than 375,000 jobs due to the pandemic, the outlook indicated, but the state added nearly 456,000 back from April 2020 until October 2022. 

Many of the job categories are expected to remain strong. According to the report, out of the 11 industry groups studied, nine are projected to add jobs next year but “the exception is construction and financial activities, which are navigating the accentuated ill effects of rising interest rates.”

For construction in 2022, activity was estimated at $23.7 billion and is estimated at $22.9 billion in 2023, with the report surmising increased mortgage rates will slow the single-family housing market temporarily but “the future remains bright in Colorado as millennials are in the typical home-buying phase of life and Colorado remains an attractive destination for primary and secondary home options.”

The expectation is multifamily construction will decline in 2023, mainly because apartment demand will already be partially met by the units that are under construction, according to the research, while Infrastructure construction is expected to grow due to federal and state funding increasing.

In the financial activities sector the report said the industry underperformed others in 2022 mainly because of higher interest rates, supply chain issues, high consumer prices and geopolitical stress.

“Employment in finance and insurance industries is expected to decrease in 2023 as a result of higher interest rates,” the report said. “In addition, heightened inflation will moderate demand for commercial real estate, and the residential real estate market is expected to dampen as buyers become increasingly wary of economic and socioeconomic conditions.”

Professional and business services are expected to add the most jobs in 2023, the outlook added, while the fastest pace of job growth could be in the natural resources and mining industry.

The professional and business services category continues to be Colorado’s largest private sector, consuming 20% of total employment, the report continued. 

“In 2023, economic headwinds could moderate growth in this sector, but Colorado’s position as one of the most innovative, educated, and entrepreneurial states bodes well for the sector,” the report said.

As for natural resources and mining, that sector has an all-time high valuation due to the increase of oil and gas pricing in 2022, setting it at $27.8 billion this year which is a 55% increase from 2021 and more than double the valuation from 2020, according to the outlook. The report notes there’s a marginal increase in Colorado’s oil production and a decrease in natural gas. 

“Colorado ranked 11th nationally in coal production, and seventh in petroleum liquid reserves,” the report continued. “Colorado is also a leading producer of renewable energy, including wind, solar, biomass and hydroelectric energy sources.”

Nationally, the report concluded the real gross domestic product increased 5.9% in 2021 before slowing to 1.8% in 2022, a decrease that can be attributed to high inflation, rising interest rates, supply chain issues and a shortage of workers.

“While headwinds appear to be easing, the toll on 2023 will be measured in slow growth—just 0.2% based on Consensus Forecasts’ projections in November 2022,” the report added. “The Business Research Division is modestly more bullish, expecting 0.6% growth, with the U.S. economy teetering on a recession in the first half of the year followed by faster growth in the second half.”

As for Colorado, the report said the state will remain economically competitive in 2023 with an above-average growth in GDP, income and employment. It noted Colorado had the 10th-best employment recovery from the recession, but its unemployment rate is ranked 28th nationally. It’s estimated the unemployment rate will be 3.5% in 2022 and 4.1% in 2023 in the state. 

To put together the entire report, many universities, businesses, nonprofits and government entities partnered up. The information was presented at the 58th annual Colorado Business Economic Outlook Forum in Denver Dec. 5 and will be followed up by about 50 speeches throughout the state.

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