Majority of Colorado business leaders still expect recession in 2023
Colorado business leaders are less pessimistic about the future than they were at the end of 2022, but a majority still expect a recession to hit later this year, according to the latest Leeds Business Confidence Index from the University of Colorado Boulder.
The LBCI measures confidence on six different items for the upcoming two quarters, with an index score of 50 neutral and anything below that contractionary. From a reading of 39.8 for the first quarter, the overall index jumped to 45.1 for the second quarter and 44.8 for the third.
That represents an improvement from late last year, but it marks the fourth quarter the LBCI has been under 50, the third-longest pessimistic streak in the index’s 20-year history.
Business leaders are least confident about the U.S. economy, which had the lowest score at 37.1, and they feel better about the Colorado economy, which had a score of 46.4. Of the six items examined, only industry sales managed to crawl back into neutral territory. The negative outlook comes despite a strong economic showing in the second half of the year, one that looks to continue into the first quarter.
A majority of panelists, 57%, indicated that they believed the U.S. economy was headed into recession, with 15% expecting it to happen in the first half and 42% in the second, said Richard Wobbekind, a senior economist at C.U. Boulder.
Wobbekind in December argued that the Colorado economy was likely to track with the U.S. economy and slow. But whether it technically entered a recession would be immaterial, unless some unknown issue emerged that triggered a deeper recession.
That unknown may have arrived in the form of the failure of Silicon Valley Bank and Signature Bank. The 230 panelists participating responded between Feb. 1 to 20, before the bank failures, but they cited higher interest rates and ongoing inflation as contributing to their expectations for a recession. A tightening financial market will likely weigh on confidence.
“I don’t think that is so crazy in light of the potential impacts from the banking system issues,” Wobbekind said on Friday while commenting on the view that a recession was ahead.
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