Colorado Economic and Revenue Forecast

Colorado Economic Outlook

The economic expansion will continue to mature in 2017 and into 2018. In most urban areas of the country, low unemployment rates and other indicators are signaling that labor markets are at full employment. Colorado’s unemployment rate was a record low of 2.3 percent in May and the lowest statewide rate in the country. A tight labor market will make it more difficult for businesses to fill jobs, leading to increased wages and pressure on corporate profits in some industries. After a slowdown during the summer of 2016, business investments and new orders for goods and services have rebounded in the first part of 2017 in tandem with an improving global economy. The strength of the economy is expected to allow the Federal Reserve to slowly raise interest rates and taper the money supply without triggering a recession.

Risks that the forecast will be inaccurate lean more towards the downside than the upside. The economy is at or close to its capacity in most markets and is at risk of overheating. Once the economy begins to operate beyond its productive capacity, the potential that an economic shock will trigger a recession increases. Structural changes ― such as the aging population, new shadow markets, and automation ― make it difficult to discern both where the economy’s productive capacity is and how the economy is performing relative to it. If the economy is operating further beyond its capacity than assumed in this forecast, a recession is possible within or soon after the forecast period.

Read the JuneForecast