Economic growth that brought bigger payrolls and more homes sales to Colorado in 2013 is expected to continue through 2014 and beyond.
But even as economists remain mostly upbeat in their forecasts, they also remain wary of potential risks that could change the trend.
Moreover, the more frugal spending habits of a younger generation strapped with college debt and encountering difficulty in finding jobs could lead to decreasing sales tax revenues and budget shortfalls.
Three economists shared their outlooks during an annual breakfast event in Denver hosted by Vectra Bank Colorado: Phyllis Resnick, lead economist at the Colorado Futures Center at Colorado State University; Patricia Silverstein, president of Development Research Partners; and Richard Wobbekind, executive director of the business research division of the Leeds School of Business at the University of Colorado in Boulder.
The three agreed the growth that produced what they described as a “year of records” in Colorado in 2013 likely will continue at a healthy pace.
With an increase in nonfarm payrolls of 42,000, Colorado ranked among the top five states for job growth in 2013, Wobbekind said. And estimated job gains statewide could be revised up to 66,000. Job growth was strongest in Greeley, followed by Denver, Boulder and Pueblo.
Nearly every business sector grew during 2013. The oil and natural gas production sector should continue to fare especially well in 2014, as should the aviation sector.
Silverstein said home sales in the metro Denver area surged to record levels in 2013, while Colorado experienced its second-fastest year for growth since 2000.
Nonetheless, the state could face a reversal of fortunes if business and consumer confidence falters, Wobbekind and Silverstein said.
Potential risks include federal fiscal issues, taxes and regulation.
Retail sales have grown only nominally since large increases in 2010, and slowing growth in sales and sales tax revenues pose long-term implications, Resnick said.
Unless tax laws based on the sale of goods, rather than services, are changed, Resnick said the state could face difficulty by 2020 or 2030 in funding its largest budget expenditures, including education, Medicaid benefits and the judiciary system.
In addition to what she described as outdated tax laws, Resnick also cited changes in the spending habits of a growing millennial population in Colorado.
Increasing numbers of the younger generation strapped with college debt continue to live with their parents and have difficulty finding jobs, Resnick said. They’re not buying homes or cars, getting married or having children — events that tend to spur the purchase of goods. Their preferences to buy online and use sharing services portend would could be a decrease in sales tax revenues, she added.