Phil Castle, Business Times

Colorado business leaders remain more shaken than stirred heading into the new year, according to the latest results of a quarterly survey.

It remains to be seen whether or not the economy officially will slip into recession, but any growth likely will come at a snail’s pace, said Rich Wobbekind, a senior economist and faculty director of the business research division of the Leeds School of Business at the University of Colorado at Boulder. “It’s gonna be a really slow economy.”

The Leeds Business Confidence Index remained unchanged at 39.8 for the first quarter. That ties the fourth-lowest reading in the 20-year history of an index the division based on surveys of business leaders across Colorado and industry sectors.

Looking ahead to the second quarter, the reading was slightly more upbeat at 43.2 Still, readings below 50 reflect more negative than positive responses.

Individual scores for two of six metrics the index tracks increased between the fourth and first quarters with improving expectations for the state and national economies. Scores for the other four indicators decreased on less upbeat expectations for hiring, capital expenditures, sales and profits. All six scores remained below 50.

While leaders base their expectations for the state and national economies on external factors, Wobbekind said they base their expectations of other conditions on internal factors that inform them their businesses are slowing. Inflation, higher interest rates and uncertainty also affect the outlook, he said.

Colorado continues to outperform other areas of the United States, Wobbekind said, especially in terms of personal income and the production of goods and services.

Job growth continues as well, he said. Colorado payrolls increased 103,400 between November 2021 and November 2022, the latest span for which estimates are available. All seven metropolitan statistical areas in Colorado posted year-over-year job growth, including a nearly 1.6 percent gain in Mesa County.

Employment growth is expected to slow in 2023, however, with a projected increase of 57,000 jobs, he said.

Inflation poses the biggest concern for business leaders, with the rate for the Denver, Aurora and Lakewood area expected to hit 4.5 percent this year, he said.

Among the 143 leaders who responded to the December survey upon which the first quarter index was based, nearly 58 percent expected the U.S. to enter a recession in the first half of 2023 even as 21.6 percent believed a recession remained very unlikely.

Expectations for the Colorado economy for the first quarter rose 1.8 points to 41.8 with 49 percent of respondents predicting moderate or strong decreases and 19.6 percent anticipating moderate or strong increases. Another 31.5 percent forecast no change.

Expectations for the national economy rose 3.7 points, but remained the lowest of the six components at 34.4. While 64.3 percent of respondents anticipated moderate or strong decreases, 21.7 percent expected no change and 14 percent forecast a moderate increase.

The reading was highest for hiring at 42.1 despite a 1.2 point drop from the fourth quarter. For the first quarter, 42 percent of respondents anticipated no changes in staffing, a total of 39.9 percent expected moderate or strong decreases and a total of 18.2 percent predicted moderate or strong increases.

Expectations for capital expenditures fell 1.1 points to 39.7. A total of 46.2 percent of respondents forecast moderate or strong decreases. Another 36.4 percent expected no change and a total of 17.5 percent anticipated moderate or strong increases.

The score for sales fell 1.3 points to 42.2 with 51.1 percent of respondents forecasting moderate or strong decreases, 28.7 percent no change and a total of 20.3 percent moderate or strong increases.

Expectations for profits fell two points to 39.7 with 51.1 percent of respondents anticipating moderate or strong decreases, 30.8 percent no change and a total of 18.2 percent moderate or strong increases.