Colorado business leaders had a surge of confidence in the second quarter, but now that is fading

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.”