COLORADO ECONOMY
Colorado Economic Update: The COVID Edition BY NATALIE ROONEY
Data confirm what we already know: The Colorado economy has been hard hit by COVID-19. Yet, some good things are happening when you dig in, take a look at the numbers and hear what the Centennial State’s economic experts have to say.
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s the Associate Dean for Business and Government Relations, Senior Economist, and Faculty Director of the Business Research Division at the University of Colorado, Boulder, Richard Wobbekind oversees the quarterly release of the University of Colorado Leeds Business Confidence Index. Typically, economists rely on monthly data to make their forecasts and predictions, but COVID19 has changed how they examine data and make their forecasts due to rapidly changing scenarios. “This has been so unusual,” Wobbekind says. “The government never shut down the economy before.” Forecasts based on monthly data became useless as the situation changed daily. “We began doing ‘COVID economic discussions’ instead,” Wobbekind says. “There is so much uncertainty. All we can continue to do is say what we think is happening from what the data tell us.” 8
“This has been so unusual.” Economists began relying on high frequency data, which is anecdotal and not as comprehensive but provided a better snapshot. “We were trying to see how bad things were getting, but on the flip side, as things were recovering, that high frequency data was helping us see weekly when things were recovering without waiting for monthly numbers,” Wobbekind says. While the Q3 data from the Leeds Business Confidence Index looked dramatically better than Q2, the Q3 index score of 44.3 still indicated an overall pessimistic outlook. For comparison purposes, a score of 50 is considered neutral. The index was at 50.8 in the first quarter of 2020, the last quarter recorded before the pandemic. The index
NewsAccount | September/October 2020
declined to its lowest recorded level in its 17-year history — 29.7— in Q2. Q3 Index respondents didn’t feel positive about capital expenditures or hiring. In fact, they were the two lowest readings in the survey. Capital expenditures are showing negative growth nationally for 2020 and are even down in 2021 models, Wobbekind notes. “Capital expenditures and hiring are where you get future growth. Those two things and the magic of them working together are where you get your GDP growth. Sales and profits are good in Colorado and nationally, but the survey says companies aren’t going to invest and hire. They’re going to wait and see.” COLORADO’S DRAMATIC JOB LOSS Prior to COVID-19, the only weekly data economists examined came from initial unemployment claims, which are released each Thursday for the prior week. Typically, Wobbekind studies a four-week moving average of those numbers. “You don’t want to hang your hat on one week,” he says. But the virus changed that thinking. “Weekly numbers showed us how quickly things went bad and how much better they’re becoming over time.” Weekly unemployment data also show continuing claims. “That gives us a sense of how many people continue to be on unemployment,” Wobbekind explains.
