The last year has been anything but kind to the economy of the globe. The COVID-19 pandemic pushed the economy into one of the worst recessions ever, and we still have no apparent way out. The International Monetary Fund predicts that the global economy could shrink to 4.4%. However, not all is bleak: from October 2020, the global economy is seeing stabilizing trends, and the IMF predicts that by 2021, it might bounce back to 5.2%. However, it is a long and challenging ascent.
The two most significant factors towards a better tomorrow are increased consumer spending and a slow but steady rollout of vaccines across the developing and developing nations. The latter also includes policies modifying lockdowns to get the economic uplift places such as Denver, Colorado, USA need.
Even before the pandemic, Denver, CO, had an unemployment rate of 2.7%. The US average is 3.7%. Up till 2019, the economic trends looked promising: the job market increased by 2.8%, and if the same trends remained steady, this percentage was to go at 45% for the future job growth statistics. Unfortunately, things are not the same for Denver’s economic growth outlook.
The Colorado Business Economic Outlook (CBEO) compiles a yearly forecast with Leeds Business Research Division’s help, and it is one of the most comprehensive outlooks on the Colorado economy. The report comprises thirteen business sectors and seven regions around the state and the Metro Denver area. The report forecasts a regain of 40,500 jobs (1.5%) in 2021, even though the whole recovery journey would take much more time. It is also true that the regained positions will be only a third fraction of the number of jobs lost last year.
Denver Industries and Economic Areas
Denver’s key economic strongholds include the following industries and economic areas:
- Private education and Health
- Information Sector
- Tourism, Leisure, and Hospitality
- Energy resources and Mining sector
- Professional and Business services
- Civic Organizations
Denver prides itself on having one of the diversified economies in the US. Its central location makes it a natural distribution hub for the American West. Its geographical location, just east of the mineral-rich Rocky Mountains, makes it an excellent mining hub, making the energy sector a staple for Denver’s economic trends.
The future economic growth trends should be promising in health care, high tech, and energy, strong points of Denver’s economic flex. Denver accounts for nearly $11.4 billion annual return in the energy sector alone, putting the city on the third spot in the world for oil and gas. Denver is famous for its sustainable cleantech industries as well. These rank the Denver metropolitan region as the fourth national cleantech employment concentration hub.
Assuming that scientists can mitigate the virus effects within the next fiscal year, it is expected for these trends to push Denver back on the path of sustainable, rapid economic growth.
Denver Economic Growth Trends Forecast
The largest job gains will happen in the tourism industry, with 19,200 people joining various leisure and hospitality jobs. That represents a 7% change from 2020. With tourism, economists are waiting to see the local restrictions enforced in different counties of Colorado. According to official records, as near as January 5, 2021, all Colorado counties have some limits, except Hinsdale. Pitkin County is even termed a “red zone,” i.e., it is completely cordoned off with stricter health guidelines. This scenario might linger until proper vaccination starts. Even then, the tourism sector’s return of jobs is the largest expected Colorado trend in 2021.
The tourism sector is closely followed by trade and transportation sectors to see a gain of 14,700 jobs. It is a 3.1% gain than last year. A fresh inclusion of 4,500 new jobs for the education and healthcare sector will boost the economy up to 1.3%. CBEO also expects an increase of 1.5% in financial activities, which will earn 2,500 new jobs in the metropolitan area. Around 200 new jobs are expected to open in the natural resources and mining sectors, which amounts to a 2% gain.
Manufacturing industries are expected to open up with 2,300 jobs, i.e., 1.5% gain. Professional and business services, including professional, scientific, technical assistance, waste management, telecommunication, and remediation services, can expect 4,400 new jobs (1%). Other public and civic organizations will see about 500 new jobs (0.5%).
On the other hand, the information sector is gearing up to lose 1,100 jobs, a 1.5% decline from 2020. Government sector jobs will follow suit, shedding an alarming 6,900 jobs for a loss of 1.6%.
When it comes to the construction sector, there is not much increase in the job opportunity curve. It is going to remain flat mostly, with zero new jobs. It will affect the 7% population of Denver that rely on construction businesses for a living.
Colorado State Economic Growth Trends Forecast
Mesa County is the most outperforming state with COVID-19 recovery. Unemployment rates fell from 12.6% in April to 5.7% in September 2020. The Rural Jump-Start program will continue to bring in economic development for the near future.
In Northern Colorado, area business leaders are shifting to an educational focus on industry. Relevant pieces of training are being set up for the taskforce. Many of the pandemic’s worst economic effects might have been avoided because of a diverse industry mix in the county.
Similarly, in Pueblo County, an employment increase from 4.1% in 2019 to 11.7% by April 2020 was noticed. After lockdowns, it fell to 7.5% by September, but it remained higher than many other counties. High-tech development projects and tourism projects are expected to drive the county’s significant share of economic drive trends. Employment rates remained higher than in many other counties in Kit Carson County.
On the other hand, in El Paso County counties, unemployment rates more than doubled (from 2.8% to 5.9%). In Southwest Colorado, a drought is slowly creeping up in areas affected by the pandemic. The industries such as talent development and broadband access services are expected trends to play critical roles in economic recovery. Boulder County’s economy was hit with more than 15,000 job losses. Even then, they are expected to aid in pandemic recovery efforts, owing to their robust and collaborative efforts to bring an economic equilibrium.
Experts claim that even though the recession in Colorado state might be temporary, its recovery might be a slow and painful endeavor. It might take years on some levels to get back to where the economy stood in February 2020, when everything peaked last year.
Effects of Recession: How To Manage the Economy?
What is fascinating with these unprecedented events is how people behave due to this rough economic patch. Economists are noticing that manufacturing industry owners are complaining that they cannot make products fast enough. Mining and resource industries are seeing gold rates at $2,000 per ounce to increase their earnings. On the same spectrum, telecommunication industries cannot grow enough bandwidth to get everything done. Financial advisers observe these patterns and make assumptions for the next year based on these changing trends.
With over thirty years of public accounting experience, Kreg Brown hopes that people, like companies, will not get too swayed by these recent economic hits. He says that one of the most common coping mechanisms in times of economic uncertainty is liquidity and the confidence in liquidity; people look to cash in return for all the valuable assets they have to keep afloat. It is a crucial concern. He claims that companies must be ready to adapt to any possibility in 2021. Economists will have to look at a company’s revenues, expenses, cash on, and the potential need for liquidity to give the best guess at what the future holds for that particular company.
Companies are looking for ways to help their clients because of the 80/20 rule: companies get 80% of their revenue from 20%. Companies are assisting other companies to, e.g., a recent wave of manufacturing Personal Protective Equipment (PPE) by many different industries is an insight into how the economy balances itself when it is driven to pivot.
What advisers such as Brown are telling companies is to look for the fundamentals of their businesses. People will have to assess which facets need immediate revamping to avoid certain adverse risks. As a result of the recession, relying on liquidity alone can be short-termed—a more significant part of the trends changes on the vaccination and nation-wide relief packages. With the changes in the establishment in Washington, D.C, a particular uncertainty holds. However, the next couple of months will be extremely crucial in identifying which industries can make a comeback and which need to diverge to certain degrees to change the economic trends in Denver, CO, in 2021.
What Can Future Hold?
Colorado’s unemployment rate is among the lowest in the nation, and the percent of Coloradans aged 16 and older looking for work is the third-largest in the country. The population of Colorado is getting older. As people age, their incomes drop, and their spending patterns change. As they retire, labor force participation levels, and there occurs a shortage of skilled labor. Hence, population outlook is one of the key trends to look out for in 2021.
Other trends to look for shortly, assuming we successfully beat the pandemic, are examining Denver’s output alongside the global economic outcome. Both international and US economies are slowing down, even before the advent of the pandemic. Even as Colorado’s overall economy will continue to grow, some parts of the state will feel like they are in a downturn. Finding ways to ensure all aspects of the state benefit from the economic growth will be a significant challenge in the coming years.