BUSINESS ECONOMIC OUTLOOK

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F I F T Y - S I X T HA N N U A LCOLORADOBUSINESS ECONOMICOUTLOOK2021

Additional copies may be ordered from:Business Research DivisionUniversity of Colorado Boulder420 UCBBoulder, CO 80309-0420colorado.edu/business/brdISBN 978-0-89478-034-9Copyright 2020 by theBusiness Research DivisionLeeds School of BusinessUniversity of Colorado BoulderBoulder, CO 80309-0420The University of Colorado Boulder is an equal opportunity/nondiscrimination institution.Information in this book is correct at the time of printing but may be subject to change.Material contained within the accompanying tables is in the public domain and, with appropriate credit, may be reproduced without permission. Please reference,“Business Research Division, Leeds School of Business, University of Colorado Boulder.”Printed on recycled paper.

Leeds School of Business Corporate PartnersANGEL INVESTORSPRINCIPAL INVESTORSLEAD INVESTORSPROGRAM INVESTORS

Table of ContentsLeeds School of Business.2Other Services. 122Introduction .3Government. 124Colorado Then and Now.4International Trade.133U.S. Economic Outlook.6Summary.142Colorado Economic, Employment, and Population Outlook.8Around the Region.144Agriculture. 20Around the StateBoulder County.146Kit Carson County.148Mesa County.148Northern Colorado.153Pueblo County.154Southern Colorado.155Southwest Colorado.157Natural Resources and Mining. 25Construction. 35Manufacturing. 40Trade, Transportation, and Utilities. 47Information. 54Financial Activities. 63Professional and Business Services. 86Education and Health Services. 98Leisure and Hospitality. 107Steering Committee Members.160Estimating Groups.161

2021 Colorado Business Economic OutlookLeeds School of BusinessDear Business Colleagues,#1It’s been an unprecedented year. The outbreak of COVID-19 caused a very dramatic disruption to highereducation; within a matter of days, we transformed the delivery of our curricula to remote learning andreimagined the traditional business school experience at the Leeds School of Business.Over the summer, we worked very hard with our own campus experts to develop and implement strategiesfor a healthy and safe fall experience. This semester, our students have been able to continue their degreeprogress through a variety of in-person, distance, and hybrid courses. While we do not yet know what 2021will bring, we are continuing to do everything we can to ensure the quality and consistency of our businesseducation and lead our faculty, staff, and students through this uncertain time.Despite the challenges presented by the pandemic, our undergraduate business program was recently named #21 among publicuniversities in U.S. News & World Report’s 2021 Best Undergraduate Business Programs, and our undergraduate class of 2020achieved more than 85% career placement—a remarkable feat in the current, highly uncertain economic climate. This was possiblebecause of the many ways the Leeds community came together to lift up our new graduates, helping them identify opportunitiesand navigate the process of landing a position in this new reality.These achievements are the result of our unique combination of academic excellence and connection to one of the nation’s mostvibrant business communities. In terms of academic excellence, we have continued to attract top faculty talent from universitiessuch as Stanford, Berkeley, Duke, and Northwestern to inspire and educate our students and create impactful research that ishelping businesses like yours.Strong partnerships with our nationally recognized, innovative business community are mission-critical to us. Our goal is providinghigh-quality talent to be your organization’s next generation of leaders. For example, our Career Impact initiative works withkey business leaders, locally and globally, to understand the essential skills and attributes that future business professionals need.The insights we’ve learned have informed new innovations in our curriculum and programs. Additionally, we have made greatmomentum in our End the Gap initiative, aimed at achieving 50% female enrollment across all programs, which helps us contributethe finest, diverse candidates to drive your organizations forward.Our joint building expansion and partnership with the College of Engineering and Applied Sciences is another example of ourefforts to deliver the talent our region needs. This first-of-its-kind physical connection between Business and Engineering, andthe direct link it facilitates to our dynamic business community, positions us to better prepare future generations of leaders todrive meaningful change in the world. This unprecedented partnership will shape interactions between the worlds of business andtechnology in a way that will differentiate us and elevate our schools and campus for decades to come. We opened spaces in the newTandean Rustandy building this fall, and the grand opening will be in spring 2021.We are delighted to share this 56th annual economic outlook with you as part of our commitment to provide you with importantaccess to our world-class research. We hope the forecast is positive for your business in the year ahead.Best regards,Sharon Matusik, Ph.D., Dean, Leeds School of Business2#1 Business Schoolin Colorado#15#21Top 25#15 in EntrepreneurshipFull-Time MBA ProgramBloomberg Businessweek(2019-20)#21 Best PublicUndergraduate BusinessProgram U.S. News &World Report (2021)#24 in the worldLeeds’ faculty per-capitaresearch rankingClass of2024Our freshman class:29.63 ACT average,46.17% women,30.05% students of color77%77% 4-year graduationrate (undergraduate)Launched new ExecutiveMBA program (2020)MBA & MS11 MBA and specializedMS programs for workingprofessionals

2021 Colorado Business Economic OutlookIntroductionThe Business ResearchDivision (BRD) in the LeedsSchool of Business is proudto present our 56th annualColorado Business EconomicOutlook. This 2021 consensusforecast is a product of partnerships with individuals spanningnumerous universities, businesses, nonprofits, and government entities. These individualsgenerously gift their time, sharing their unique expertise andperspectives about people, industry, and policy relatingto the state of Colorado.this series of meetings, the sector write-ups and forecastsare prepared and submitted to the BRD in early November, when they are edited and published in this book. Thefollowing July, the Steering Committee, which is madeup of the sector chairs, meets to review their forecastsand identify factors that will positively or negatively drivechange in their industry’s economic performance duringthe second half of the year. These updates are published inthe summer issue of our quarterly newsletter, the ColoradoBusiness Review.Related Economic ResearchThis forecast analyzes changes that have occurred in alleconomic sectors during the past year and looks at theopportunities and challenges that will shape population,employment, and the overall economy in the comingyear. The information in this book is initially presentedat the 56th annual Colorado Business Economic OutlookForum in Denver, followed by approximately 50 forecastspeeches that are held throughout the state during theyear, ranging from presentations to industry associationsand nonprofit organizations to the Federal Reserve Bankof Kansas City.The BRD conducts customized business and economicresearch that expands the knowledge base of decisionmakers throughout the state and region. The annual Colorado Business Economic Outlook provides the foundationfor all research the BRD conducts within the state. Amongthe other BRD research tools available to businesses andorganizations is the Leeds Business Confidence Index,a forward-looking index that gauges Colorado businessleaders’ opinions about national and state economictrends and how their industry will perform in the comingquarter, and the Colorado Business Review, which explorescurrent topics important to the state’s economy. Visitwww.colorado.edu/business/brd for more informationabout BRD offerings.MethodologyAcknowledgmentsWe are fortunate to have more than 100 individuals fromthe business, education, and government communitieswho serve on 13-sector estimating groups. These groupsconvene at a kickoff meeting in September where members discuss trends and issues that are likely to affecteconomic growth during the upcoming year. During thesecond half of September and into October, the committees apply this information to their industries. The BRDsimultaneously generates an econometric forecast byindustry, which is given to each industry committee. FromWe are humbled and thankful to have dedicated partnersin producing this forecast. A complete list of committeemembers appears at the back of this book. Their effortsare very much appreciated. We also thank the staff of theColorado Department of Local Affairs and the ColoradoDepartment of Labor and Employment who supply uswith much of the employment and population data usedin the forecast.Finally, I would like to thank the many Leeds School ofBusiness and CU Boulder personnel who worked hard atpreparing, presenting, and promoting this project. My sincerest thanks go to Brian Lewandowski, executive director; Jacob Dubbert, research economist; Shannon Furniss,project editor; Kristin Weber, graphic designer; DeniseMunn, senior manager of print production management; and James Donahue, Max Olson, Rachel Long, andAnna Sernka, student research assistants, for their help inassembling and presenting the 2021 Colorado BusinessEconomic Outlook Forum. The assistance provided byLeeds School staff member Laurel Page, assistant directorof Advancement Event Experiences, and Trisha McKean,assistant dean of advancement, is greatly appreciated. TheLeeds Marketing and Communications team—executivedirector Amber Hickory and team members Justin Forbis,Anneli Gray, Tiffany Harbrecht, Brad Haynes, Erik Jeffries,Danica Johnson, and Jennifer Schuman—contributedmarketing and promotion assistance.I also appreciate the help provided by Andrew Sorensenand Julie Poppen with CU Boulder Strategic MediaRelations.Colorado Economic Forecast for 2021The sections that follow provide a summary of 2020, aforecast for 2021, and industry-specific data analysis andinsight into the key factors influencing each sector. Webelieve this information will prove useful in your businessand policy decision-making process.Richard L. Wobbekind, Ph.D.Associate Dean Business and Government RelationsFaculty Director, Business Research DivisionLeeds School of Businesswww.colorado.edu/business/brd3

2021 Colorado Business Economic OutlookColorado Then and NowThe timeline to the right provides a glimpse into thepast, showing the annual change in state employment. Changes in employment have been accompaniedby numerous social, economic, educational, and political changes. Colorado events are listed above the line;national events are noted below.Over the past five decades, Colorado has experiencednumerous economic booms and busts, dynamicallychanging industries, and (mostly) unrelenting population growth. The timeline puts the current COVID-19recession into perspective, comparing the job lossesin 2020 to those of prior economic recessions throughwhich Colorado has persevered.In 1970, just over 1 million individuals were employed inColorado, and the average annual earnings were under 6,700. Since then, wage and salary employment inthe state peaked (prior to the COVID-19 pandemic) atalmost 2.8 million, not including proprietor employmentin the state, and average annual pay for covered wage andsalary earners grew to 61,820.Goods-producing industries accounted for 24% of jobsand made up 26.7% of the Colorado GDP. By 2019, thosesectors accounted for 13.8% of total jobs and 19.2% ofthe state’s GDP. While proprietor employment represented less than 17% of total employment in 1970, it nowrepresents 26.2%. The share of women in the state’s laborforce has increased to 45.9%, nearly a 10-percentagepoint increase from 1970.Throughout the 1970s, the Colorado economy benefited profoundly from booms in petroleum and miningproduction as both industries experienced peak employment for the time. The state has undergone an enormousincrease in college-educated population as the percentof Colorado residents 25 years or older with four ormore years of college nearly tripled, from 14.9% in 1970to 42.7% today. With a larger base of highly qualifiedemployees, high-tech industries have added significantlyto Colorado’s economy and the state’s key industry clusters, specifically aerospace, biosciences, telecommunications, and IT software. 4

2021 Colorado Business Economic Outlook5

2021 Colorado Business Economic OutlookU.S. Economic OutlookAfter the onset of the COVID-19 pandemic and theensuing recession it created, the United States endedits longest economic expansion in post-WWII history,which exceeded the record set during the technologyboom of the 1990s. Real gross domestic product (GDP)is estimated to have fallen 3.7% in 2020—down fromincreases of 2.2% in 2019 and 3% in 2018—marking thefirst annual decrease in GDP after 10 consecutive yearsof positive economic growth in the United States. Priorto the economic decline witnessed in 2020, the economyhad begun to decelerate in 2019 as the labor market tightened, business investment tapered, and the fiscal stimulusfrom the 2017 tax cut waned. The slowdown eventuallycascaded into a recession when businesses were mandated to temporarily shut down and consumer spendingdeclined 6.9% in Q1 2020 and 33.2% in Q2 2020.The halted pace of economic activity decreased upwardpressures on prices despite the Federal Reserve’s massiveinjections of liquidity in the banking system. Consumerprices rose only 1.2% in 2020 compared to 1.8% in2019. Core personal consumer expenditure (PCE) priceinflation also ticked up modestly to 1.5%, well below theFederal Reserve’s 2% target pace. Employment costs rose2.5%, a rate commensurate with prior years. Personalincome rose 5.9% in 2020, a product of the stimuluspayments that many Americans received in the earlymonths of the pandemic.The pace of economic activity in 2020 fell relative to2019, with year-over-year decreases in GDP expected forall four quarters. Personal consumption growth grew40.7% in Q3 2020 after the sharp declines in the firsthalf of 2020; fixed business investment grew 20.3% inREAL GROSS DOMESTIC PRODUCT, 2011-2021(In Billions of Chained 2012 Dollars)6Q3 2020 compared to a fall of 27.2% in Q2 2020. Thesecomponents of GDP all fell heavily relative to the firstthree quarters of 2019.The forecast for 2021 anticipates real GDP growthincreasing to 3.8% as the pace of the U.S. economyrecovers from its largest percent decline in GDP since1946. This level of U.S. GDP growth can be attributedto several factors: first, the behavior of consumers sincethe onset of the pandemic has led a disproportionate amount of dollars to be allocated to goods ratherthan services; for context, services account for nearlyhalf of total GDP. Growth in consumer spending onservices in a post-vaccine environment will likely buoytotal consumer spending and aggregate GDP. Second,equity markets that have been effectively backstoppedby the balance sheet of the Federal Reserve will lead to

2021 Colorado Business Economic Outlookexpanded business investment as the capital marketsremain accessible to large firms. However small businesses (defined by the Small Business Administration ashaving fewer than 500 employees) account for roughlyhalf of all private employment in the United States. Theydo not enjoy this level of capital market accessibility andwill likely dampen the recovery in private investment.Third, government spending will likely fall as lawmakers hope to wrangle a record 3.1 trillion budget deficitin 2020, the product of multiple stimulus bills aimed ataiding American consumers and businesses alike struggling from the economic ramifications of the pandemic.Finally, the rise in consumer spending will likely be aboon for foreign producers that supply goods to individuals in the United States. A slow recovery in domesticbusiness investment and manufacturing will likely fuelgrowth in net exports in 2021 after they fell in 2020 dueto the aforementioned decline in U.S. consumer demand.Total OutputThe pace of U.S. economic activity fell in 2020, with areal GDP decline of 3.7%. Most components of aggregatedemand contributed to the fall. Gross private domesticinvestment was especially hit, falling 5.1% (compared toan increase of 2.9% in 2019), though real governmentspending grew 1.4% in 2020 (compared to an increaseof 2.3% in 2019). Net exports continued to be a drag oneconomic growth in 2020 as key trade partners experienced significant declines commensurate with that of theUnited States.Consumer ExpendituresConsumer spending on goods and services generallyaccounts for nearly 70% of total GDP, and it declined anestimated 4.1% in 2020, a fall from the increase seen in2019. The sharp decline in consumer spending can beattributed to consumers’ adjustments in their spending habits as demand for services fell at an annualizedrate of 41.8% in Q2 2020 (before increasing 38.4% inQ3). Demand for goods also fell at an annualized rateof 10.8% in Q2 2020 (before rebounding 45.4% in Q3).Expenditures on services account for roughly twothirds of al

economic sectors during the past year and looks at the opportunities and challenges that will shape population, employment, and the overall economy in the coming year. The information in this book is initially presented at the 56th annual Colorado Business Economic Outlook Forum in Denver, followed by approximately 50 forecast

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