Bleak Economic Numbers Due To Coronavirus

Not surprisingly, the coronavirus is hitting the Colorado economy hard.

In a report released by Colorado Secretary of State Jena Griswold and the Leeds School of Business at CU, the numbers are grim right now and indicators are things will likely be tough in the short-term, with the outlook for six months out a little better.

"We know many Colorado business owners are struggling," said Dr. Richard Wobbekind, Senior Economist for the Leeds School of Business. "The Leeds business confidence index, our quarterly survey of Colorado business confidence, was released earlier this month and showed the lowest level of confidence we have ever recorded."

The report says business filings were down 5.6 percent from a year ago and business disolutions were up six percent.

"The stimulus has been a good first step," Secretary of State Jena Griswold said. "I'm glad they passed four stimulus [packages] but the aid is insufficient and the money isn't reaching the businesses it's always intended for."

Going into the crisis, Colorado's economy was strong and that is one reason for optimism in the longer-term.

"Colorado's economy was strong going into this pandemic," Dr. Wobbekind said. "We see business leaders hoping that will bolster our chances of a rebound. In our confidence index, the six-month-out number was less pessimistic that the three-month-out number."

Despite the strength of the Colorado economy, no state is immune from the impact coronavirus is having across the United States.

"The Q1 GDP report was just released this morning and shows first quarter dropping 4.8 percent [nationally]," said Brian Lewandowski of the Leeds Business Research Division. "We can learn something from that national report and project in Colorado we'll see a similar decline."

Bars and restaurants and tourism have been hit particularly hard in Colorado. Dr. Wobbekind says those sectors will likely be the last to recover.

"Tourism is the last to come back. It's dependent not just on Colorado's economy but it's dependent on the national economy and the international economy. When you have an engine of growth like Denver International Airport that was growing at seven percent annually or more, and now all of a sudden it's operating at five percent, or whatever, of its previous capacity, a lot of people are not coming into the state. We think that has a longer lag in terms of the recovery, in terms of the national and international tourist."

Lewandowski says the numbers prove the point.

"Places like Pitkin, Summit, Eagle counties, it's [tourism] about 40 percent of their total employment. It really is their primary employer within those communities."

Lewandowski contrasted that number with places such as Boulder, Broomfield and Denver where tourism makes up 10-12 percent of the employement base.

"That's highlighting the diversified economies of the metropolitan Front Range versus those mountain resort communities," Lewandowski said. "Those mountain resort communities are much more dependent on the tourists."

But a slowdown in tourism also affects the Front Range in a major way.

"About 80 percent of of tourism jobs are in the metropolitan area in Colorado," Lewandowski said. "And that's because that's where most of the hotels are and most of the restaurants are and most of the tour operators are."

"It doesn't mean that it's not painful when tourism drops in places like the Front Range because we have so many jobs along the Front Range. I'd say it feels more painful for those mountain resort communities because they're so dependent on it," Lewandowski.

"We think restaurants will recover faster along the Front Range because those restaurants are serving so many locals versus the mountain resort communities.Those communities have built their restaurant infrastructure and their tourism infrastructure to serve not only a Colorado audience but a national and international audience," Lewandowski added.

One way that Colorado communities that heavily rely on tourism can bounce back more quickly is if locals visit those places once travel returns to a more normal level.

"One of the things we've been pushing hard is the concept of staycations once places are safe," Dr. Wobbekind said. "Can we get more Coloradoans to do more Colorado vacationing? We're hoping as Colorado recovers as least we can help the tourism industry recover within the state."

The full audio from the teleconference is below.

The full report from the Leeds School of Business is here.