Colorado’s employment totals are expected to reach pre-COVID-19-pandemic levels in 2022, but top economists say the state is likely to lose its top-10 position for jobs growth.
In 2021 Colorado added a projected 73,900 jobs and is expected to grow employment across all sectors and regions, according to the state’s Business Economic Outlook, an annual report developed by the Leeds Business Research Division at the University of Colorado that uses insights from more than 140 people in business, education and government to measure the economy and make estimates and projections for the upcoming year.
The report was presented Monday in Denver at the Colorado Business Economic Outlook Forum.
“It’s been a rough two years for a lot of people,” CU senior economist Richard Wobbekind said at the event, held both in-person and virtually. “It’s great to be back.”
While the 2020 recession was “extremely severe,” it was also the shortest on record due to the presence of strong economic fundamentals when the pandemic hit, he said.
Wobbekind predicts Colorado will fall out of the top 10 for state economic growth, but remain close to the top 15.
While Colorado’s unemployment rate is slightly higher than the national average, the state ranks fourth in the nation for workforce participation.
Despite the across-the-board growth, key Colorado industries such as leisure and hospitality will take much longer than others to bounce back fully.
The pandemic represented the “most challenging environment in our lifetimes” for bars and restaurants, Wobbekind said.
“We forecast employment numbers to grow in all 11 industries in 2022, but the hole left by the COVID-19 pandemic in the leisure and hospitality industry is huge,” Wobbekind said in a prepared statement that accompanied the outlook report. “We don’t anticipate the leisure and hospitality industry to return to pre-pandemic levels until 2023 or 2024.”
Still, with a deeper floor comes a steeper recovery rate. The leisure and hospitality industry was by far the fastest growing sector, adding 10.4% in 2021.
The natural resources and mining sector, a comparatively small employee pool but with very high salaries, saw a growth rate in 2021, boosting employment by 3%. This is the first growth in the sector in two years.
Construction added 2.3%, manufacturing 1.7%, trades and transportation 1%, information 0.7%, financial activities, 2.9%, professional and business services 1.8%, education and health services 1.7%, other services 3%, and government 1.6%.
Looking ahead, state economists predict manufacturing, data centers and hosting, biopharmaceuticals, aerospace and warehousing and storage will be major economic drivers in Colorado in 2022.
With sturdier economic footing, forecasters believe Colorado will add 61,000 people next year, 40,000 of whom will come from in-migration.
That represents lower population growth than pre-pandemic levels, Colorado State Demographer Elizabeth Garner said.
The vast majority of growth will occur in metro areas, particularly those along the Front Range.
Despite the sustained, albeit slowing, comeback, headwinds such as supply chain snares, inflation and labor shortages will continue to threaten growth in 2022, the outlook report said.
“We’re pretty bullish on the macro economy but there are many things that are causing concern,” Wobbekind said.
While there is an overall positive outlook, economists and business leaders still don’t have a good handle on which pandemic-related changes to the economy and workplace will be permanent and which will be temporary.
The recovery has not lessened the impact of poverty and homelessness, with three out of four metro regions in the state reporting rising concerns, Garner said.
”There are things that make us have pause and … a confidence interval” regarding prediction of the strength of the Colorado economy in the coming year, Wobbekind said.
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