DENVER – Colorado’s economy continues to recover fairly quickly from the worst of the pandemic as a result of strong consumer activity, but disparities remain between various socioeconomic groups, and the delta variant and supply-chain issues are causing some uncertainty, according to forecasts released Tuesday.
Retail sales at hotels and restaurants exceeded February 2020 levels in June for the first time since the pandemic started, and while the accommodation and food services sector that comprises most of those jobs has gained back the most number of jobs lost during the pandemic, the industry is still lagging by 25,000 jobs compared to pre-pandemic levels, according to the September forecast released Tuesday by nonpartisan Legislative Council Staff (LCS) and presented to state lawmakers.
As Colorado Department of Labor and Employment officials said last week, the LCS presentation showed Colorado has gained back 78.1% of jobs lost since last March, but that recovery slowed slightly in August as the delta variant spread. However, Colorado has still seen the 15th-fastest recovery rate in the U.S., CDLE officials said.
The LCS forecasts $14.24 billion in General Fund revenues for FY20-21 and $15.11 billion in FY21-22 and the governor’s Office of State Planning and Budgeting (OSPB) is forecasting identical revenues for FY20-21 and a slightly higher amount for FY21-22 of $15.76 billion. The LCS forecast for FY20-21 was revised down by $96.1 million from June and the OSPB forecast was revised down by $182 million. Both FY21-22 forecasts were revised upward by more than $240 million.
Lawmakers and budget forecasters said the improving forecasts are buoyed by stimulus money from the federal and state government that have led to more consumer spending because of increased incomes for many Coloradans during the pandemic.
“Today’s strong forecast shows Colorado is roaring back. We are seeing a strong recovery in 2021 as more Coloradans get vaccinate and return to work but our economic success is tied to our public health so we continue to encourage Coloradans to get vaccinated to protect themselves, our economy, and jobs,” Gov. Jared Polis said in a statement.
The LCS forecast shows General Fund revenues continuing to grow, though at a slightly slowing clip, over the next three fiscal years, while the OSPB forecast shows continued growth through at least FY23-24.
If the September LCS forecast holds, lawmakers would have about $3.3 billion more to work with in next year’s budget. The LCS forecast and the OSPB forecast both estimate revenues to exceed the Taxpayer’s Bill of Rights cap by at least $1 billion over this and the next two fiscal years, with the OSPB forecast showing faster growth than the LCS’s.
Lawmakers and forecasters said that if Congress passes their infrastructure bill and the reconciliation bill, there could be additional upsides to the forecasts presented Tuesday. But there remain risks surrounding inflation in various industries, uncertainty about how the pandemic will change moving into the fall and winter, and questions about the supply chain and how the economy will change once the stimulus money wears off and depending on what additional spending actions Congress takes, the LCS said.
And though Colorado’s unemployment rate fell to below 6% in August for the first time since March 2020 and there have been fairly strong jobs gains, there remain disparities both regionally – and especially racially – in terms of job recovery.
Black Coloradans are seeing an average unemployment rate of 14.5% from September 2020 to August 2021, compared to 7.2% for Hispanic Coloradans and 5.3% for white Coloradans. Black Coloradans are seeing a much higher unemployment rate over that time period than they saw in 2020 (9.2% average) and 2019 (4% average), according to nonpartisan legislative staff.
“The forecasts also show an uneven recovery for lower-income Coloradans and small businesses, particularly people of color and minority owned businesses who are disproportionately impacted by the pandemic, so that’s where our focus should be,” said Joint Budget Committee member Rep. Leslie Herod, D-Denver.
Unemployment rates also change depending on a person’s education, according to the forecast from LCS. The September 2020 to August 2021 average unemployment rate for people who did not finish high school was 8.9%, compared to 7.4% for people who finished high school, 5.2% for people with an associate degree or some college experience, and 4.1% for people with a bachelor’s degree or higher, according to the LCS.
“Today’s forecast is promising news for our state, and the progress we’ve made to bounce back is something to be proud of, but we cannot let up,” said Joint Budget Committee Chair Sen. Dominick Moreno, D-Commerce City, in a statement.