Business/Technology Reporter
Quick links: Local manufacturing not immune to tariffs | Lots of condos for sale | Reader poll | Poll results | Colorado quantum news | Visionary Broadband expands
Colorado business leaders are the most pessimistic they’ve been about the economy in years, according to the latest Leeds Business Confidence Index — and that was before new tariffs on nearly all of America’s trade partners were announced this week.
The index, produced by the business school at the University of Colorado, offers a glimpse into what local business leaders expect for the next quarter. Approximately 218 Colorado business leaders took the survey in early-to-mid March. Their second-quarter outlook?
“We saw the second-largest drop in the index (in 23 years) and I think that’s reflecting uncertainty,” said Brian Lewandowski, executive director of the Business Research Division at the University of Colorado. “There’s a lot of uncertainty out there when it comes to the impact of tariffs and restructuring of the federal government and other things.”
At 31.9, that was the worst the business community has felt since the second quarter of 2020, when COVID-19 struck and pandemic shutdowns disrupted commerce. The only other time it was lower? During the Great Recession. The latest numbers had dropped from the first quarter’s 50 points, which is considered neutral. Participants were surveyed in December before President Donald Trump took office.
The Trump administration’s new reciprocal tariffs, announced Wednesday, shocked the stock market, causing retirement plans like Empower to note Friday for users logging in, “In light of recent market volatility, remember that your retirement account is intended for long-term investment.” China, a recipient of a new 34% reciprocal Trump tariff, responded Friday with an additional 34% on U.S. imports.
Colorado imported $17 billion and exported $10.5 billion in goods last year. A lot of the imports or exports are from small businesses and numbered around 6,000 who imported or exported back in 2021, according to U.S. Census Bureau data. And for small companies, they can’t easily build a manufacturing plant here in the U.S.
Colin McIntosh, founder of sustainable bedding brand Sheets & Giggles in Denver, took to Instagram to share his discontent. The company’s sheets are made in India, which now has a 27% reciprocal tax. That means the company is on the hook for an extra $1.3 million on a $5 million order, which U.S. Customs won’t release at the port until it’s paid.
“Businesses can’t just ‘find’ that extra cash, especially small businesses,” McIntosh wrote. “I’m desperately trying to explain to you that American companies pay tariffs — not China — and many will close because they don’t have the cash to get their goods released by U.S. Customs to pay these new tariffs.”
Not immune to tariffs even with manufacturing in Denver
Tariffs weren’t unexpected. Trump promised high reciprocal tariffs long before he took office in January. And he had a history of them in his first term.
Back then, Colorado company System76, a Linux-based computer builder, had moved some of its manufacturing to Denver during the last Trump administration due to tariffs as well as quality concerns and rising costs in China. But it’s taken awhile to move everything. And the company still must order some computer parts from other countries.
“We’re not immune to the tariffs and they are particularly harsh toward Asia where most electronics are made,” Carl Richell, CEO and founder of the computer company, said in an email. “The scramble in our industry is intense. Our team worked through the night Wednesday to determine cost changes based on country of origin and the tariff rate applied to each. Every vendor and distributor is recalculating prices, cancelling orders, cancelling previously agreed pricing, and in one extreme, returning in-transit US bound product to Asia.”
Today, System76 manufactures desktops, workstations and keyboards in Denver. But its laptops, servers and Meerkat mini desktops are made in Asia.
“We’ve been bringing more products manufacturing to Denver,” Richell added. “It’s a long process.”
If the business leaders’ sentiments seem radically different between quarters, a lot happened between December and March. Tariffs were started, paused and restarted to impact fewer American businesses, at least those that trade with Mexico and Canada.
“It’s not just our survey. It’s consumer confidence. It’s consumer sentiment, the National Federation of Independent Businesses. It’s even the ISM Purchasing Managers Index. All of these took a step back,” Lewandowski said. “It’s not like the idea of tariffs were sprung on us but I think they are just becoming the reality.”
The latest round of reciprocal tariffs start Saturday.
➔ CU Leeds business sentiment report >> Read
➔ ICYMI: Coloradans rushed to buy cars before wave of Trump tariffs take effect >> Read
➔ Colorado’s federal worker layoffs: As of March 31, Colorado Department of Labor and Employment received 675 unemployment claims from federal workers since Jan. 19. The Department of Agriculture had the biggest share of Colorado layoffs, at 19.3%, or 130 employees. >> See dashboard
Colorado’s condo force
High prices, high condo fees and high insurance premiums have hurt the local condo industry. According to the Colorado Association of Realtors, the number of Denver-area condos and townhomes for sale in February was up 17.5% from a year ago.
“I’m going to tell you that right now in Aurora, we have over 1,000 condos listed on the market,” Realtor Sunny Banka told me last month. That was a mix of listings for sale, under contract and recently closed, she added. Most were townhomes.
While there are a number of potential buyers who can’t afford them, Banka said she’s also seeing that more condos are nonwarrantable. In other words, mortgage lenders won’t make loans on properties that don’t meet Fannie Mae’s guidelines. The top issues are complexes with deductibles above 5% on their master insurance policy, too much deferred maintenance and too-low reserves.
That has left buyers disqualified for conventional loans and owners unable to sell their units, and it’s ranked Colorado the third state nationwide on Fannie Mae’s so-called mortgage blacklist. I tackled the issue in a story this week about why Colorado has a growing number of unsellable condos. The biggest culprit appears to be rising insurance premiums. Homeowners associations opt for higher deductibles to minimize condo fees, and many remain unaware that puts the entire complex on the blacklist.
We’re continuing to follow this topic since housing affordability remains a top issue in the state, even as there are thousands of condos for sale in the Denver metro area, according to Zillow listings.
But do you have a related story? Take this week’s reader poll and help us continue to report on this and other topics critical to Coloradans.
Take the reader poll
The frenetic changes from the Trump administration along with existing financial chaos caused by rising insurance premiums and slowing job growth has created an inundation of economic news. It’s a challenge to keep up! So help us figure out what’s going on by taking the What’s Working reader poll. Your comments could wind up in our next story.
➔ Here you go: cosun.co/WWtariffs
Sun economy stories you may have missed
➔ Trump administration releases $3.2B in federal funds for Colorado’s electric co-ops. There may be a catch. Funds granted under former President Biden’s Inflation Reduction Act have been transferred, but come with an option to modify plans to fit President Trump’s “Unleashing American Energy” executive order >> Read story
➔ Trump planning to use NREL land near Boulder for private AI data center and power plant, building on prior Biden order. The plan for 16 sites similar to the National Renewable Energy Lab could lend computing power to researchers as the U.S. looks to be competitive in the AI race >> Read story
➔ Crested Butte’s 4,000 residents could lose their post office amid federal government upheaval. The mountain town’s post office lease expires in less than a year and the Postal Service has not responded to the possibility of lost mail service for 4,000 residents >> Read story
➔ Colorado’s marijuana tax revenue keeps falling from its pandemic high, spurring new calls to rein in spending. As of last year, marijuana tax collections had declined about 41% from their pandemic peak, falling to $252 million from $424 million. Now, state budget writers are calling for a line-by-line review of the Marijuana Tax Cash Fund. >> Read story
➔ Future of union organizing in Colorado remains fuzzy as legislative session enters home stretch. Senate Bill 5 would abolish a requirement in the Colorado Labor Peace Act that 75% of workers at a company sign off before union security negotiations can begin. The bill is a priority for unions and loathed by business interests. Gov. Jared Polis is in the mix, too. >> Read story
Colorado SunFest is coming Get your ticket today (member discounts)!
➔ Colorado utility bills could rise, emissions cuts would be slowed if Trump ends clean energy tax credits. GOP Reps. Gabe Evans and Jeff Hurd have joined the fight to protect the federal energy tax credits behind $3.7B in projects and investments in their congressional districts >> Read story
➔ Members of Colorado Springs’ City Council are paid $100 a week. Do they need a raise? Some say raising pay for the elected leaders of Colorado’s second most populous city could broaden the diversity of potential candidates >> Read story
Reader poll results: 2024 job growth revisions
Other working bits
➔ 3 Colorado quantum companies picked for federal competition. U.S. Department of Defense’s Defense Advanced Research Projects Agency, or DARPA, named 18 quantum computing companies for its first Quantum Benchmarking Initiative test in a goal to build a “transformative, fault-tolerant quantum computer in under 10 years,” according to the announcement.
The three from Colorado are Quantinuum in Broomfield and Atom Computing and Oxford Ionics in Boulder. All are part of the state’s quantum-computing hub, a federally recognized Tech Hub that received $40.5 million in federal grants last year.
The first stage in the DARPA competition provides $1 million to each company to detail their concept. If they make it to further rounds, they stand to get $300 million to build it, though not without DARPA “doing whatever we can to show that these companies’ plans won’t work,” said Joe Altepeter, DARPA QBI program manager, in a video. If any make it past the critical reviews and testing, added Altepeter, it’ll be proven that “the U.S. government should get one of these because it’s going to change the world.”
➔ Visionary Broadband expands in Buena Vista. A grant from Colorado Broadband Office’s Advance Colorado program is supporting the expansion of Visionary Broadband’s fiber internet service to 1,305 homes around Buena Vista. Construction begins this month and will span “nearly 15 miles from north of Buena Vista to the west of the town, and southward to the community of Nathrop,” according to the company. According to Advance Colorado, funding for the $6.9 million project is split between the state’s $5.2 million and local matching funds of $1.7 million. A Visionary spokesperson said the project will be completed in phases and is expected to be wrapped up in late November.
➔ Free workshop in Denver on federal student loans. Capital One is hosting workshops at its cafe in downtown Denver to help students and parents figure out the process of applying for federal student aid. It’s through a partnership with the National College Attainment Network. Snacks and beverages provided, as well as laptops, as needed. No registration is required to attend the session, from 3 to 6 p.m. April 7. The workshop is at the bank’s Café at Union Station LoDo, located at 1550 Wewatta St., where there will be one student aid session a month through June 2 (see the schedule). >> Details
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Thanks for sticking with me for this week’s report. As always, share your 2 cents on how the economy is keeping you down or helping you up at cosun.co/heyww. ~ tamara
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