Colorado ended 2022 with continued strong job growth and is outperforming the nation in many areas, according to a report released Monday by the University of Colorado Boulder and Colorado Secretary of State Jena Griswold.
The report, Griswold said at a news conference, shows that the state ranks 10th best in the nation for economic recovery from the COVID-19 pandemic since May 2020, and that Colorado remains “a great place to start a business and stay in business.”
The 48,806 new-business filings in the fourth quarter was the largest number in the quarterly report’s history, Griswold said. Those filings increased 11.8% over the third quarter of 2022 and 37.2% over the fourth quarter of 2021.
The Quarterly Business and Economic Indicators report is prepared by the Business Research Division at the University of Colorado Boulder Leeds School of Business, in conjunction with the Colorado Secretary of State’s Office.
Delinquencies and dissolutions also were up year-over-year, with 3,293 dissolutions in Q4, up 17% year-over-year and 14.5% from the previous quarter. However, Griswold noted Monday that “if you have more businesses, the number of businesses that are going to dissolve goes up also,” and Brian Lewandowski, associate director of Leeds’ Business Research Division, added that he viewed that number as “relatively small” and “not alarming.” He said some of them could be attributable to “late on renewals or paperwork.”
Richard Wobbekind, senior economist and Leeds faculty director, added that “people do fund their businesses with credit cards, so I don’t see any cause for alarm in this data,” and Griswold said her office would begin offering text-message reminders about business filing deadlines.”
The report said existing renewals remained positive, increasing 2.9% in Q4 year-over-year and 4.5% quarter-over-quarter.
“Colorado has continued our upward economic trajectory,” said Griswold. “With another strong year of employment gains and continued job growth, new business entity filings growing at a record pace and inflation diminishing faster than the national average, Colorado continues to lead when it comes to owning and operating a business.”
The 104,700 new jobs reported in the state in December, a 3.7% increase year-over-year, ranked the state eighth best in the nation, the report said, with the largest annual percent increases in professional and business services, leisure and hospitality, and “other services.”
“Businesses have been vocal about a worker shortage for years,” Wobbekind said. “What the current data is showing us is that, while Colorado has the second-highest labor force participation rate in the country, employers are latching on to most available workers. These current conditions are perpetuating the semblance of a worker shortage from the employer perspective.”
The state’s high labor force participation rate is driving down the unemployment rate and pushing up wages. Colorado’s unemployment rate fell to 3.3% in December, below the national rate of 3.5%.
The state’s per capita personal income of $75,557 ranked seventh nationally, the report said, and per capita personal income growth of 7.9% ranked first for the second consecutive quarter.
Real gross domestic product in Colorado grew 3.2% year-over-year in the third quarter, sixth highest in the nation. Real GDP in the nation also grew 3.2% in Q3.
Retail gasoline prices continue to yo-yo in the state, the report said. Prices began to normalize in late 2022 after spiking earlier in the year, according to the Energy Information Administration. Prices were down $1.22 per gallon in the state this month compared with the June peak, but are up 92 cents a gallon from the end of December.
Declaring that the state’s Business Fee Relief Act “has created a more business-friendly environment” in the state, she said a new tool to be announced Wednesday would help businesses to “go after people who are stealing their business identity without going through expensive attorneys.”
Lewandowski noted that the state saw “negative growth from residential investment for the seventh quarter in a row” and a slowdown in fixed business investment, largely attributable to an environment of higher interest rates.
He predicted that consumer spending may be weaker this year, which “teeters us between recession and a soft-growth year. There’s only so much we can squeeze out of the consumer to keep the economy moving forward.”
A bright spot, however, is the labor market, he said. “Jobless claims continue to be relatively low — the lowest period for jobless claims over the past few years. “Coupled with the high rate of job openings, it’s still much in favor of employees,” he said.
“Even though we’re expecting a slowdown,” Lewandowski said, “we continue to expect Colorado to outperform.”