State forecasts show Colorado’s economy faces uphill recovery
(The Center Square) – State economists expect Colorado’s economic recovery from the COVID-19 pandemic to stretch into 2022, according to two forecasts released Friday.
The Office of State Planning and Budgeting (OSPB), which is under Governor Jared Polis’ purview, said despite gains during the fall, “the outlook for the winter months has weakened as higher COVID caseloads have resulted in more public health restrictions on businesses, while winter weather limits outdoor dining.”
OSPB expects general fund revenue to dip by 3% in 2021, before growing by 7.9% the following year. In September, the office estimated a growth of 4.7% between 2021 and 2022. It said the revised outlook is the result of “higher than anticipated revenue collections in recent months as well as improved economic expectations for 2021 with the availability and distribution of a vaccine.”
Polis on Friday touted the forecast as good news for Coloradans but cautioned the data doesn’t capture the extent to which low-income earners in Colorado have suffered during the pandemic.
“Here in Colorado, we have worked to save lives while protecting livelihoods and we can see the light at the end of the tunnel with the arrival of the vaccine in our state,” he said in a statement. “It will take time to vaccinate enough Coloradans to end this crisis, and the state will face more challenges and loss before we see improvements.”
Most job losses in Colorado have come from low-wage industries, OSPB said Friday. Many workers have left the job market, and women’s participation in the labor force has dropped to its lowest since 1986.
Unemployment data from Colorado’s Department of Labor and Employment (CDLE) shows the state is recording its highest unemployment claim totals since the summer. Most of the claims filed over the past three weeks have come from restaurant workers.
Similarly, the Legislative Council Staff (LCS) released a forecast saying state revenues are expected to decline 5.6% in 2021. LCS credited lawmakers for making deep budgets cuts over the summer to make up for the anticipated revenue shortfall.
“This forecast shows Colorado’s economy is starting to bounce back, but it’s clear low-wage workers in our state are hurting and still have a difficult road ahead,” Rep. Julie McCluskie, D-Dillon, said in a statement.
As the vice chair of the Joint Budget Committee (JBC), the bipartisan committee that writes the state budgets, McCluskie said she and her colleagues are prepared to “use every tool at the state level to help Colorado build back stronger.”
One of the few economic bright spots LCS identified is Colorado’s savings. Currently, general fund reserves are $2.25 billion above state requirements. In turn, LCS expects lawmakers to have $3.75 billion more to spend or save during next legislative session.
“Though we passed bipartisan legislation to help bridge the gap for those who are at the most risk of falling further behind, individuals, small businesses, restaurants and schools desperately need more federal assistance to get through the months ahead,” she added.