Colorado job, income growth shine even as inflation casts shadows

Colorado’s economy remains strong, with the state ranked 15th nationally in job growth the first few months of 2024, but persistent higher inflation and interest rates are taking a toll on small businesses and consumers.

A quarterly business report released Thursday by the Colorado secretary of state’s office and the University of Colorado’s Leeds School of Business showed jobs grew by 1.8% in April, adding 51,800 more year over year. That made the state No. 15 nationwide in terms of the pace of expansion.

Colorado’s unemployment rate edged up slightly to 3.7% but is below the national average of 3.9%. And the state’s 3.2% increase in gross domestic product ranked it 22nd nationally.

“The Colorado economy remains resilient, with continued growth in jobs and income and GDP,” Secretary of State Jena Griswold said in a call with reporters. “For 13 consecutive years, Colorado has ranked among the top 20 states nationally when it comes to job growth.”

The Denver area’s inflation rate is 2.8%, compared with 3.4% nationwide. The report shows that personal income in Colorado increased 4.8% from the same time period the previous year, which makes the state 22nd among all states.

Colorado’s per capita personal income in the fourth quarter of 2023 was $79,835, the seventh-highest in the country.

Both nationally and in Colorado, employment numbers are still strong “given the interest rate environment that we’re operating in,” said said Richard Wobbekind, CU’s senior economist and faculty director of the Leeds Business Research Division.

A caveat, Wobbekind added, is that job growth on the national and state levels is concentrated in a few sectors: government, leisure, hospitality and health services. “Going forward, we’d like to see more balanced growth, meaning more of the sectors with stronger growth rates.”

The gap between the number of job openings and the number of unemployed people has decreased but is still sizable, said Brian Lewandowski, executive director of research at Leeds.

There were 1.7 openings per unemployed person in Colorado in the first three months of this year, the fourth-highest rate in the country. The national average was 1.4.

“Job openings have come down, and the number of unemployed has come up a little bit. But the margin is still so wide that it doesn’t suggest that it’s a soft labor market by any means,” Lewandowski said.

One surprise in the data was growth in residential building permits, mostly for single-family residences, Lewandowski said. Although housing is sensitive to interest rates, Lewandowski believes there are signs  that the market has found “a new equilibrium,” allowing growth to continue.

However, lingering inflation and interest rates that don’t appear to be dropping soon — as the Federal Reserve is determined to keep tamping down inflation — are taxing the confidence of small businesses and lower-income consumers, Wobbekind said. A recent National Federation of Independent Business survey found that small businesses are more pessimistic than big businesses about the economic outlook.

Consumer surveys have revealed similar concerns, Lewandowski said.