Latest ColoradoCast shows accelerating economic growth
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In a break from previous releases, the second quarter ColoradoCast forecasts the state’s economy gaining considerable momentum by October, with growth rates forecast between 3.5% and 4% – an uptick over the previous projections more in the range of 2.5%.
“The current ColoradoCast somewhat surprisingly projects accelerating economic growth for the state,” said Phyllis Resnick, the executive director and lead economist for the Colorado Futures Center at Colorado State University. “While this forecast is consistent with the most recent national economic news, it is a more optimistic forecast than the most recent ColoradoCasts.”
She added: “This gives me increased confidence in what has been the consistent message from previous outlooks – the Colorado economy is unlikely to experience a recession during the remainder of 2024.”
The ColoradoCast’s findings are consistent with the most recent national economic indicators, which show consumer confidence rebounding, corporate earnings and housing remaining strong, and labor markets continuing to expand and sustain near-record unemployment rates.
All of the state’s economic drivers remain positive or neutral, which has been the case with recent ColoradoCast updates. Colorado’s economic drivers continued to be buoyed by the equity and bond markets, with the continued flattening of the still inverted yield curve and a considerable reduction in the risk premium.
While local economic drivers continued to have a more muted impact on the ColoradoCast, housing prices remain the most important local indicator. After reaching a recent high in fall 2023, Colorado house prices, as measured by the S&P CoreLogic Case-Shiller Home Price Index for Denver, have been bouncing in a small range with a slightly downward trend, making housing a less significant driver of statewide economic activity than in earlier ColoradoCast outlooks.
Read the full report at col.st/Z5viR.
About the ColoradoCast
The ColoradoCast is a short-term (approximately six months ahead) economic forecast for the Colorado economy developed by the Colorado Futures Center, a 501c3 organization dedicated to informing about economic, fiscal and public policy issues impacting community economic health and quality of life.
It is designed to forecast a well-known contemporaneous measure of statewide economic activity, the Coincident Economic Activity Index for Colorado, developed by the Federal Reserve Bank of Philadelphia. The Coincident Economic Activity Index includes four indicators: nonfarm payroll employment, the unemployment rate, average hours worked in manufacturing and wages and salaries. The trend for the index is set to match the trend for gross state product.
The ColoradoCast predicts the value and annualized growth rate in the coincident index using six factors whose predicted relationship with economic activity are as follows (relationship in parentheses): the yield curve measured by the spread between two and ten month treasuries (positive), the risk spread between high quality corporate and ten year treasury returns (negative), employment in the employment services sector (positive), home prices as measured by the Case-Shiller index for Denver (positive), initial claims for unemployment insurance (negative), and the value of the Wilshire 5000 stock index (positive).
The ColoradoCast is released quarterly for the months of February, May, August and November. Thank you to Steven Fisher, PhD for his collaboration on the initial development of the ColoradoCast.