Colorado’s economy may need several months to regain the jobs it lost during the pandemic, but in terms of production or GDP, it returned to pre-pandemic levels by September, according to ColoradoCast. A new short-term economic forecast.
“We’re certainly in growth mode in the Colorado economy. We don’t expect that to change,” said Phyllis Resnick, executive director of the Colorado Futures Center at Colorado State University, which produces ColoradoCast.
The model, developed by Resnick and economist Steven Fisher, calls for Colorado’s economy to grow at a 6.45% annual rate in April. That’s down from an estimated 10% rate currently, but still strong by historical standards and high enough to keep recruiting strong.
ColoradoCast tries to fill the gap left by annual forecasts, such as the Colorado Business Economic Outlook, released Monday by the University of Colorado Boulder, by forecasting monthly changes in the state’s GDP over six months.
In contrast to the jobs and unemployment figures, the state’s GDP figures are several months behind. To bridge that gap, the Federal Reserve Bank of Philadelphia produces a coincident economic activity index for Colorado and other states that tries to predict where GDP growth is headed.
ColoradoCast tries to estimate what leads to that coincidence index by studying six indicators: the yield curve, the risk premium in corporate bonds, job counts in temporary agencies and other employment service providers, Denver’s Case-Shiller Index. As measured by home prices, initial unemployment claims, and changes in the Wilshire 5000 stock index.
Half of those indicators are national, not local, but they hold predictive power when it comes to the Colorado economy. The Colorado Futures Center hid its model for five years, waiting for the true test of any economic forecast — a recession.
This came in the spring of 2020 when the economy fell much more severely than the two previous recessions from the pandemic and related shutdowns. While ColoradoCast did not anticipate the pandemic or the damage it caused, it has accurately tracked the strong recovery, Resnick said.
Resnick, who is ColoradoCast’s chief economist, said the new Omicron version poses risks to the forecast. The enduring pandemic, emerging supply chain issues and worker shortages all headwind for a “modest” recovery.
ColoradoCast will come out with forecasts for Colorado GDP growth in February, May, August, and November.
