Feeling more productive lately? You aren’t alone. The nation had an increase in production of goods and services over the summer that offset declines from earlier in the year. It swung into positive economic territory, according to the federal agency that measures the nation’s economic growth.
Gross domestic product grew 0.6% in the third quarter or an annualized 2.6%, according to the estimate from the U.S. Bureau of Economic Analysis. That’s thanks to the U.S. upping trade by increasing oil exports while consumers spent more on health care and other services though at a slower pace than before. The federal government raised defense spending. Wages were up.
But you may not have even noticed that growth, which was adjusted for inflation. Economic sentiment was mixed because not everything grew. Residential investment fell 26.4%, with investment in nonresidential buildings declining 15.3%. The Associated Builders and Contractors calls it “the calm before the storm.”
While there is still plenty of uncertainty, Colorado is likely to see a similar growth in GDP, said Brian Lewandowski, executive director of the Business Research Division at the Leeds School of Business, University of Colorado. They’ve been tracking Colorado’s GDP since 2005, and Colorado’s economic change has been very similar to the nation’s.
“Colorado directionally moved with the U.S. 86% of the quarters (up or down),” Lewandowski said in an email. “I do expect Colorado’s GDP to be up in Q3, and I expected the growth to exceed the nation.”
He also charted 17 years of GDP data for The Colorado Sun, comparing quarterly changes by the state and U.S.:
“Our job growth and income growth has been outperforming,” he added.
As What’s Working readers may recall from last week’s report, Colorado continues to add jobs, even if it’s at a slower rate than earlier in the year. Historically, the state’s labor force is one of the largest it has ever been.
Income continues to rise, according to monthly estimates from the U.S. Bureau of Labor Statistics. Colorado’s average hourly pay has increased 10.9% since January 2021 to $34.43 in September. In the same period, U.S. wages have grown 8.4% to $32.46.
Area economists however have already said job growth will continue to slow in Colorado.
“The annual employment totals for 2022 will be deceptively stellar,” said Gary Horvath, a Denver-based economist at Cbre.co in his monthly economic update. “During Q1, Colorado employment was strong and broad-based. By Q4, minimal growth or job losses will be more common as the country moves into a recession. The slowdown will carry into 2023.”
➜ Colorado is not without job losses. In the past two months, three companies have filed notices with the state warning that layoffs are on the way, as part of the federal Worker Adjustment and Retraining Notification.
- Starry Inc., an internet provider, began laying off 41 workers on Oct. 21 due to “changes in its business,” according to the notice sent to Colorado Department of Labor and Employment. The company said the cuts are at its Centennial office on Arapahoe Street. Starry earlier told shareholders it would cut half of its workforce “to conserve capital,” or 508 jobs, reported FierceWireless.
- Chord Energy, the result of Denver’s Whiting Petroleum Corp and Houston’s Oasis Petroleum merger in July, will lay off 104 workers in December due to its decision to close the office at 1700 Lincoln St. in Denver.
- Planterra, a plant-protein food maker owned by JBS, is closing its corporate office in Lafayette and manufacturing plant it opened in Denver less than a year ago, The Denver Business Journal reported. Approximately 121 employees will lose their jobs after meatpacker JBS decided to end its foray into plant protein. The layoffs are expected to be completed in December, according to its WARN letter.
Colorado inflation gets political
Inflation has become a political issue, which I tackled in a story earlier this week. It investigated the data behind one candidate’s claim that Colorado has the nation’s highest inflation rate, at 16%. The number came from a Republican committee report that looked at the 21 months since President Joe Biden took office. It also put Colorado in an eight-way tie with Arizona, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming for the highest inflation over that period.
But the U.S. Bureau of Labor Statistics, which tracks inflation via the consumer price index, does not track the rate by each state. It doesn’t have the budget to be that detailed, apparently. Instead, BLS tracks inflation by subregion — and that includes splitting up the U.S. into nine census divisions or by 23 metro areas. The Republican report used the nine census divisions.
In checking with area economists on how they calculate the Colorado rate, they lean toward the Denver-Aurora-Lakewood rate, which is one of the 23 metro areas where more detail is provided.
“In Colorado we can rely on the Denver-Aurora-Lakewood CPI, but for states like Utah and Wyoming they may have to defer to regional or census division CPI,” said Ryan Gedney, senior economist with the state Department of Labor and Employment. “To the best of my knowledge, there are no real substitutes for state-level measures of inflation.”
By using the Denver inflation rates since January 2021 and calculating the index change through September 2022, area inflation came in at 13.25%. That put the region near the middle of the pack of 23. It was also slightly higher than the U.S. inflation rate of 13.18%. Ultimately, though, prices are higher now than a year ago. The BLS calculated that the Denver area’s inflation rate had slowed to 7.7% in September, which is still up from a year ago.
Nabbing that statewide rate will always prove to be tricky. Lewandowski, with CU’s Leeds Business School, said he, too, uses the Denver rate for projections. However, he added, “What is difficult, though, is (that) many of our mountain resort communities are likely experiencing higher prices and price changes, but they aren’t reflected in the Denver estimates.”
➜Personal inflation: Colorado State University economist Phyllis Resnick said everyone has a unique inflation rate because we buy different things. Some people traveled less this year because of higher gas prices, but others may not have driven anyway. Some stopped eating meat to save money at the grocery store, but vegetarians didn’t. The New York Times built a personal inflation calculator last spring. While it hasn’t been updated, it provides users a sense of how your inflation rate differs from a neighbor’s. >> Calculate your inflation rate
Take the poll:
Other working bits
➜State invests in first Black-owned fund: New Community Transformation Fund-Denver raised $5 million from the Colorado Venture Capital Authority, the state’s very own venture fund. The state’s venture capital authority must focus on Colorado startups and expects a return. New federal funding expanded its mission to invest in underrepresented communities and this is the first time it has invested in a Black-owned and woman-led company. NCTF-Denver, started by Danielle Shoots, former Chief Financial Officer for Colorado Trust, seeks out startups in under-resourced communities in the information technology, advanced manufacturing, aerospace and other key industries. >> Details, NCTF-Denver
➜Amazon hiring 3,500 in Colorado: Amazon officially began its seasonal hiring this week with food, music and swag at its job fair in Englewood. But there’s still room for jobseekers who couldn’t make the shindig, according to the company. It has 3,500 openings in Colorado, with 2,550 in the Denver area and 850 in Colorado Springs. These are primarily warehouse gigs that offer “up to $21.25 an hour.” >> Openings
➜$4 million available for veterans: The Small Business Administration has $4 million in grants available to small business owners who are veterans. Grants are intended for training programs and counseling through the SBA’s Veterans Business Outreach Center. It’s also part of National Veterans Small Business Week, which starts on Halloween. >> Details on applying
➜Need office space? Denver office space is piling up, according to real estate firms Savills Research and CBRE. Specifically, it’s sublease space, which a client already rented but doesn’t need anymore and hopes someone else will take it over. CBRE reports that subleases increased 24.9% in the third quarter compared to the second quarter while leasing activity slowed 30.6%. While the threat of a mild recession has caused larger firms to “hit pause on office space growth” or move to smaller hybrid spaces, Savills said other tenants are upgrading to newer digs, which raised rents by about $1 to $32.44 a square foot. >> CBRE, Savills
➜ U.S. mortgage rates pass 7%. The Federal Reserve’s increase of interest rates all year has pushed 30-year fixed mortgage rates just above 7% on Thursday, according to Freddie Mac. That’s the highest since 2002 though nowhere near the 18% in 1981, The New York Times reported.
This story was corrected on Oct. 31, 2022 to say that internet provider Starry laid off workers at its Centennial office but did not close the facility, according to the notice sent to state officials.
Miss a column? Catch up:
- What’s Working: What Colorado’s flat 3.4% unemployment rate means
- What’s Working: Denver inflation slows to 7.7%, which is still historically high
- What’s Working: Colorado workers push back against the retirement age
- What’s Working: Colorado business leaders grow more pessimistic about the local economy
- What’s Working: Colorado home prices are still up even as real estate market experiences sales slump
What’s Working is a Colorado Sun column about surviving in today’s economy. Email email@example.com with stories, tips or questions. Read the archive, ask a question at cosun.co/heyww and don’t miss the next one by signing up at coloradosun.com/getww.
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