Colorado business leaders are more optimistic heading into a new year, according to the latest results of an index tracking their expectations.

Leaders believe some of the biggest gains in the state and national economies will come later in the year, although there was less consensus about the specific reasons for their outlook.

“Many people were less targeted in their responses,” said Brian Lewandowski, executive director of the research division of the Leeds School of Business at the University of Colorado at Boulder. “While inflation and interest rates were still noted by some as economic headwinds, others expressed optimism about improving prices and rates.”

The Leeds Business Confidence Index stood at 45.3 for the first quarter. That’s up 1.7 points from the fourth quarter and 5.5 points from a year ago. Still, a reading below 50 still indicates more negative than positive responses to the survey upon which the index is based.

For the first quarter of 2024, five of six individual components of the index advanced and one retreated. Looking ahead to the second quarter, all six components increased — three of them to 50 or higher.

Expectations for the Colorado economy rose 1.7 points between the fourth and first quarters to 47.2. That was the highest level for any of the components.

Out of the 196 business leaders from across Colorado and industry sectors who responded to the survey upon which the first quarter index was based, 27.5 percent expected moderate or strong increases in the state economy. Another 37.2 percent anticipated no change and 35.2 percent forecast moderate to strong decreases.

Out of the 155 leaders who provided reasons for their expectations, 4.5 percent cited recession, and some noted decreasing concerns about recession. Interest rates was most cited as a concern at 26.5 percent, followed by general conditions at 23.9 percent and inflation at 18.1 percent.

Looking ahead to the second quarter, expectations for the state economy rose to 50, the first time leaders expressed that level of confidence since the second quarter of 2022.

Expectations for the national economy increased five points to 45.2 for the first quarter with 28 percent of leaders anticipating moderate or strong increases. Another 30.6 percent expected no change and 41.3 percent forecast moderate or strong decreases.

At two points, the gap between the state and national economic outlooks narrowed to its smallest difference in six years.

Gross domestic product, the broad measure of the production of goods and services, increased in the third quarter of 2023 at an annual rate of 5.8 percent in Colorado and 4.9 percent in the United States.

Expectations for profits rose a half point to 45.4 with 24.5 percent of leaders expecting moderate or strong increases, 33.7 percent no change and 41.9 percent moderate or strong decreases.

Expectations for hiring advanced three points to 44.8 with 19.4 percent of leaders forecasting moderate or strong increases in hiring, 46.4 percent no change and 34.2 percent moderate or strong decreases.

Between November 2022 and November 2023, the latest span for which estimates are available, nonfarm payrolls increased 31,100 in Colorado. That’s a gain of 1.1 percent, which lags a national gain of 1.8 percent. The research division at the Leeds School of Business forecast a net addition of 41,900 jobs in 2024.

Expectations for capital expenditures rose 2.3 points to 43.2, the lowest reading for an index component for the first quarter.

While 18.4 percent of leaders anticipated a moderate increase in expenditures, 45.4 percent expected no change and 36.2 percent forecast moderate or strong decreases.

“The suppressed capital expenditures index is not surprising in the current interest rate and funding environment,” Lewandowski said.

Expectations for sales fell 2.2 points to 46. While 29.6 percent of leaders expected moderate or strong increases, 28.6 percent no change and 41.8 percent moderate or strong decreases.

Personal consumption expenditures, a measure of consumer spending, rose at annual rate of 3.1 percent in the third quarter of 2023.

The entire report for the Leeds Business Confidence Index for the first quarter is available at https://www.colorado.edu/business/brd/publications/2023/09/28/leeds-business-confidence-index-lbci-q1-2024.