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Colorado’s business leaders are feeling increasingly hopeful about the state’s economy heading into the second quarter of 2021, with levels of optimism hitting record highs looking further into the year. Business confidence is spiking as people across Colorado line up to receive COVID-19 vaccines.

The findings are part of the latest report from the Business Research Division at the University of Colorado’s Leeds School of Business. The quarterly Leeds Business Confidence Index (LBCI) reflects Colorado business leaders’ expectations for the state and national economies, industry sales, industry profits, hiring and business spending. For its second quarter results, the research team surveyed 278 qualified panelists from March 1 to March 22, 2021. 

“It will still take many months for the jobs lost during the COVID-19 pandemic to come back to Colorado,” said Richard Wobbekind, senior economist at the Leeds School of Business. “But these latest findings suggest that we’re heading in the right direction.”

Business confidence increased across six economic categories (state economy, national economy, industry sales, industry profits, industry hiring and capital expenditures) from the first to second quarter of 2021. Panelists on the current report gave an overall LBCI of 64.4, up from 47.9 the quarter before. An LBCI score of 50 indicates a neutral outlook. Scores below 50 indicate pessimism and scores above 50 indicate optimism. 

Looking ahead to the third quarter, those numbers jumped to 68.8—the highest overall score in the 19-year history of the index.

Confidence in the state economy showed the strongest gains, increasing from 46.9 to 68.3. The national economy ranked slightly lower with 65.7. Panelists were least optimistic about capital expenditures, but even that scored above neutral at 59.9.

Positive news surrounding the COVID-19 pandemic was the biggest factor behind the optimistic sentiments. One-third of respondents cited the pace of vaccinations as the main driver for their outlook, while one-fifth pointed to the easing of social distancing restrictions around the state.

Many of Colorado’s business leaders, however, still don’t expect to return to their in-person offices for some time. Roughly 38% of panelists expected to return in the second or third quarters of 2021, while more than 25% have already gotten back to the office.

Jobs increasing—slowly

Despite these positive outlooks, employment in Colorado remains down compared to pre-pandemic levels. The state’s non-farm employment dropped by 13.3% between January and April 2020, amounting to a loss of 376,300 jobs, but increased by 9% (219,100 jobs) from April 2020 to February 2021. Employment rates remained down 5.6% in February 2021 compared to the same time last year, reflecting 156,700 fewer jobs.

The plurality, or just over 35%, of panelists expect that employment in Colorado won’t return to pre-pandemic levels until 2022. Currently, the state’s unemployment rate is 6.6%, and the national unemployment rate is 6.2%.

All seven of Colorado’s metropolitan statistical areas saw employment fall over the last year, with Greeley (7.8% decrease) and Boulder (7.6% decrease) showing the biggest declines. The state’s industries with the heaviest losses were mining and logging (27.5% decrease) and hospitality (20.9% decrease).