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The national, state and local economies have mostly rebounded from the mid-pandemic nadir of 2020, but challenges such as inflation, supply-chain disruptions, and aging population and hiring difficulties are likely to slow growth in the new year.

Prominent economists and the Colorado state demographer broke down the economic situation heading into 2022 on Thursday during the Boulder Economic Forecast.

Demographics

The bottom line, according to Colorado state demographer Elizabeth Garner, is that Colorado’s population growth is slowing, while the state is aging and becoming more diverse.

From 2010 to 2020, Colorado was in the top 10 states for population growth, but still “there is nothing exponential in our growth,” Garner said.

Fewer births, more deaths and slowing in-migration have combined to further dampen growth in recent years.

Residents 65 years and older are the fastest-growing demographic in Colorado. That cohort is expected to account for 45% of total growth in Colorado, a figure that is likely to be even higher in Boulder County.

“Aging is something that everyone should be watching because it impacts everything” from the labor market, to housing to the types of jobs that will be more common in the future, Garner said.

One of the main reasons in-migration has stalled is the increasing cost of living in Colorado, especially along the Front Range. Housing accounts for much of the cost increase.

There were 126,000 fewer homes built in the last decade compared with the prior decade, despite more population growth from 2010 to 2020.

Anti-growth factions in some Colorado cities have limited housing options and therefore restricted the ability of companies to fill open positions with in-migrants, Garner said.

Too often, communities adopt a philosophy that “I love jobs, but I hate people,” she said. “That doesn’t work.”

National economy

The United States gross domestic product has returned to pre-pandemic levels, indicating a strong comeback since mid-2020, Rich Wobbekind, associate dean and economist at the University of Colorado Boulder, said.

The rebound is thanks in no small part to government stimulus, which also helped create the current environment of inflation. Inflation is expected to be around 4% in the coming year and could continue into 2023.

The growth rate will remain positive, but much slower, in the first quarter of 2022 — likely between 3% and 4%, Wobbekind said.

The national unemployment rate of 3.9%  “looks pretty impressive” but could be contributing to inflation, a phenomenon driven both by supply-chain problems and increasing demand as a result of stimulus, he said.

State and local economy

Colorado is expected to be 18,000 jobs above pre-pandemic levels by the end of the year, according to Brian Lewandowski, executive director of the research division at CU Boulder’s Leeds School of Business.

The Boulder metropolitan area, which encompasses the entirety of Boulder County, is 60th in the nation for job growth, well above the 50th percentile.

Statewide, 40% of new jobs in 2022 will be in the hospitality industry, but the sector, which was hit the hardest by the pandemic, will likely still remain below pre-pandemic peak.

In the Boulder area, all sectors had positive growth in 2021, but many remain below pre-pandemic peaks. That across-the-board growth is expected to continue, but more slowly in the new year.

Sales-tax collections in the city are up double-digits year-over-year and have surpassed pre-pandemic peak, but Boulder collections are lower than most other cities along the Front Range. This suggests that Boulder is lagging behind its neighbors in terms of retail rebound.

CU hit an enrollment high-water mark in 2021, up 2.6% year over year.

“Despite all of the concerns that are out there, business leaders are still registering optimism,” Lewandowski said.

This article was first published by BizWest, an independent news organization, and is published under a license agreement. © 2022 BizWest Media LLC.

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