Report details mixed indicators for Colorado economy

Phil Castle, The Business Times

Richard Wobbekind
Jena Griswold

A decline in new business filings and gains in labor are among the mixed indicators for the Colorado economy, according to the latest results of a quarterly report.

Jena Griswold, Colorado secretary of state, said she remains optimistic.“We’re still moving in the right direction.”

Griswold joined officials with the Business Research Division of the Leeds School of Business at the University of Colorado at Boulder to review the latest report on business and economic indicators. The division prepares the report in conjunction with the secretary of state’s office.

Rich Wobbekind, senior economist and faculty director of the division, said Colorado continues to outpace the United States for employment, income and the broad measure for the production of goods and services. “The overall picture is very positive for the overall economy.”

Some industry sectors lag behind others, and business owners remain cautious heading into the second half of the year, Wobbekind said.

According to the report for the second quarter, a total of 39,464 new business, nonprofit corporations and other entity filings were recorded with the secretary of state’s office. That’s up a half of a percent from a year ago, but down 9.7 percent from the first quarter of 2022. 

A total of 157,021 new entity filings were recorded over the year ending in the second quarter of 2022. That’s down two-tenths of a percent from the same span last year.

New entity filings constitute a leading indicator of subsequent business and job growth.

A total of 172,106 renewals for existing businesses and entities were recorded for the second quarter of 2022 — more than 114,000 of those for domestic limited liability companies. Renewals increased 11 percent from the second quarter of 2021, but decreased nearly 10.3 percent from the  first quarter of 2022.

For the year ending in the second quarter of 2022, 692,647 entity renewals were filed. That’s up 10.4 percent from the same span a year ago.

Dissolution filings also increased in the second quarter of 2022, however, up 27 percent from the same quarter last year to 11,753. A total of 45,089 dissolutions were filed during the year ending in the second quarter, up 17.4 percent from the same span a year ago.

A total of 868,065 businesses, nonprofit organizations and other entities were in good standing in Colorado as of the second quarter of 2022. That’s up 4.5 percent from a year ago.

Griswold said the second quarter decrease in new filings constituted a seasonal decline from the first quarter. Year-over-year gains in renewals and entities in good standing signal business health, while dissolutions signal business stress.

A state law that took effect July 1 reducing filing fees saves businesses and entrepreneurs money and makes Colorado more business friendly, Griswold said. Filers pay only $1 for initial limited liability company formations and initial trade name registrations — previously $50 and $20, respectively. 

“When you’re starting a small business, every dollar counts,” she said.

Other economic indicators monitored in the report also were mixed.

Wobbekind said Colorado added 417,800 jobs between May 2020 and July 2022, more than offsetting the 374,500 jobs lost in the early months of 2020 because of the COVID-19 pandemic and related restrictions. The state is projected to add 104,000 jobs in 2022.

Gross domestic product decreased in the United States at an annual rate of 1.6 percent in the first quarter of 2022 and nine-tenths of a percent in the second quarter  — two quarters of consecutive declines in GDP that by one definition constitutes a recession.

The situation in Colorado is different, Wobbekind said, with a 3.9 percent increase in GDP in the second quarter. “We’re not in a recession at this particular point in time.”

The pace of inflation has accelerated to its highest levels in 40 years. But the Consumer Price Index held steady between June and July as the Producer Price Index retreated, Wobbekind said. “There’s good news out there on the inflation environment.”

Still, employment remains below pre-pandemic levels in three industry sectors in Colorado, he said — education and health services, leisure and hospitality and natural resources and mining. Government payrolls are lower as well. Businesses and government agencies report difficulty filling job openings in a tight labor market, he said.

Colorado business leaders who responded to the latest survey pushed the Leeds Business Confidence Index down to 41.1 heading in the third quarter. That’s the fifth-lowest reading ever for the index.

Labor shortages, inflation and rising interest rates all pose concerns, Wobbekind said.