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Colorado’s economy may need several more months to regain the jobs lost during the pandemic, but in terms of output or GDP, it bounced back to pre-pandemic levels as of September, according to ColoradoCast, a new short-term economic forecast.
“We are certainly in a 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 robust by historical standards and enough to keep hiring strong.
ColoradoCast tries to fill in the gap left by annual forecasts, such as the Colorado Business Economic Outlook, which the University of Colorado Boulder released on Monday, by predicting monthly changes in state GDP six months out.
Unlike statistics on jobs and unemployment, state GDP numbers lag by several months. 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 at.
ColoradoCast tries to predict where that coincident index is headed by studying six indicators: the yield curve, the risk premium carried in corporate bonds, job counts at temporary agencies and other employment service providers, home prices as measured by the Case-Shiller index for Denver, initial unemployment claims and changes in the Wilshire 5000 stock index.
Half of those indicators are national, not local, but they carry a 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 forecasting measure — a recession.
That came in the spring of 2020 when the pandemic and related closures caused the economy to plunge much more severely than it did in the prior two downturns. While ColoradoCast didn’t forecast the pandemic or the damage it would cause, it has accurately tracked the strong recovery, Resnick said.
Resnick, who is the lead economist on ColoradoCast, said the new Omicron variant poses a risk to the forecast. The enduring pandemic, emerging supply chain issues and worker shortages all pose “modest” headwinds to the recovery.
ColoradoCast will come out with a forecast of Colorado GDP growth in February, May, August and November.