The Irish playwright George Bernard Shaw once joked that ‘if you laid all the economists end to end, they would not reach a conclusion.’ Shaw, like so many others, was simply stating that it’s often difficult for economists to reach a singular agreement. But, in the main, most economists do agree that Colorado’s economy is in much better shape—even good—compared to a lot of states.
“The Colorado economy is doing OK, in part because we have diversification. We have agriculture, technology, financial services, light manufacturing, hospitality and tourism…and one of the country’s biggest airports,” observed University of Denver economics professor Mac Clouse. The state’s ski industry, the Reiman School of Finance instructor added, also plays a big part.
Many of the challenges Colorado and the nation face in 2023 are residue from the COVID-19 pandemic. Ripples from the virus that killed more than one million Americans, changed the lives of millions of others and battered economies not only here but around the world are still being felt. Spending programs enacted by the federal government, including huge stimulus spending, pushed the economy toward recession.
It would not be hard to argue that the April 2020 decision to shutter millions of U.S. businesses as the virus scorched its way across America would be easy to emerge from. For untold numbers of small businesses, the pandemic turned Main Street into Boot Hill, the prototype cemetery of old West pulp fiction. “We may spend years repairing the damage from COVID,” said the conservative Forbes Magazine.
Two familiar economic benchmarks of an unsteady economy cited by conservatives are gasoline and grocery prices. Though gas has fallen from record highs, including nearly $7 dollar a gallon West coast pump prices, to a national average ‘three and change’ level, they remain higher than in previous years. But grocery prices continue to climb. Eggs, as an example, soared recently past the eight dollars a dozen mark in the metro area. They have since fallen to more affordable, but still higher than normal levels.
Colorado’s diversified economy, said Clouse, “is not dependent on only a few things.” The DU economist also said that the state is open for business, as attested by the number of available jobs. “We still have many job openings, but maybe not in areas some people want. The many hiring signs we see in business windows are not for “work from home” jobs.” To filling job openings, wages have also increased in many workplaces and even in fast food operations, new workers are commanding up to $15 and $16 an hour pay.
Other thing buoying Colorado’s economy include a highly educated workforce, one that is ready to fill vacancies in a diverse job market. The state is also one that is considered highly desirable for quality of life, a factor that keeps people moving here. But the Governor’s office said in late 2022 that “headwinds exist” in the state economy.
“Labor market inefficiencies due to skill mismatches and job preferences are limiting improvements in the job market,” the Governor’s office said. It also warned of a new COVID variant that could play a role in how the economy progresses.
A former legislator who asked his name not be used, said the state is not keeping pace with its housing demand and that rents continue to soar. Still, while these two issues continue to vex, they have not put the brakes on an oth- erwise positive economy. That, however, could change if events in Washington—addressing the debt ceiling—come to a head.
Economists, including Clouse, say failing to address the national debt limit could change everything. Politicians and talking head pundits have been warning of a looming recession, one that could be hastened if Congress fails to act on the debt limit, the cap on the amount of money the government can borrow to pay its bills.
“Congress will not agree on anything about the debt ceiling until close to the real June deadline,” said Clouse. “The Republicans want less government spending, which has been a huge contributor to the inflation,” said the DU economist.” A reduction in spending, he said, “will do more to reduce inflation than the Fed increasing interest rates.” Still, said Clouse, there is a recession on the horizon, but its severity is predicated on what the Federal Reserve does on interest rates which have steadily risen over the last several months. In December 2022, the Federal Reserve raised interest rates one half point to the highest level in 15 years. They rose to 4.5 percent. There is also every indication that interest rates will continue to climb until 2024.
Treasury Secretary Janet Yellen has called on Congress, particularly Republicans, to do what they did three consecutive times under the previous president—act on the debt ceiling. Failing to do so, she said, would be creating “a self-imposed calamity.”
It is a different world today than it was before COVID. And while its impact has lessened dramatically from 2020, the virus is still infecting anywhere from 34,000-41,000 Americans each week, according to the Centers for Disease Control. There is also a new Delta variant of the virus whose impact is still unknown.
The world, which suffered more than 15 million COVID deaths beginning in 2020, has learned how devastating an invisible microbe can be on lives and economies. It has also learned how people react to it can also impact lives and economies.
