Colorado is on track to lose nearly 149,000 jobs in 2020, and digging out of that that pandemic-induced hole will take a couple of years, even with the promising vaccines rolling out in the weeks ahead, according to the 2021 Colorado Business Economic Outlook.
“We are looking at 2023 or later before we really get back to par. We don’t think it will be 2022,” said Brian Lewandowski, executive director of the Leeds Business Research Division at CU Boulder, which prepares the Outlook every year with the help of more than 100 experts.
The forecast calls for employers in the state to add 40,500 nonfarm jobs next year, which won’t be enough to plug the deficit from the loss of 148,800 jobs this year. Every sector lost jobs in 2020, with natural resources, leisure and hospitality, and other services among the hardest-hit areas on a percentage-basis.
Colorado’s unemployment rate started the year at 2.5% and peaked out at 12.2% in April. After restrictions eased, the unemployment rate fell sharply, reaching 6.4% in September and October.
The Outlook is calling for the state unemployment rate to average 6.7% next year. In 2019, unemployment averaged 86,700 people in Colorado. This year, the average will be closer to 221,600, and next year it will only fall to 210,500, even with the addition of 40,500 more jobs, according to the Outlook.
On the surface, that might look like an economy that is stuck or even slipping. But Lewandowski said that isn’t the case. For one, workers who dropped out of the labor force because of health concerns will likely return as conditions improve. To be considered unemployed, a person must be actively looking for work.
Richard Wobbekind, senior economist and faculty director at Leeds, adds that working women, who have been especially hard hit by job losses during the downturn, will benefit as schools return to in-person teaching and childcare becomes easier to arrange.
“The increase in the labor force as things start to improve will mute any improvement in the unemployment rate as we go through that transition back to a better employment environment,” said Lewandowski.
The Outlook, the most comprehensive forecast available for Colorado’s economy, is in its 56th year and each year brings different challenges. But Wobbekind said trying to predict what would happen in 2021 was hard on a whole other level.
“This is a really difficult environment to do an economic forecast. We are dealing with several unknowns,” he said on a call with reporters Thursday. There are unknowns about how bad the current wave of COVID-19 infections will get and how long it will take for vaccines to turn the tide and for people to get comfortable again.
And it is unknown what changes in behavior this year will be temporary, permanent or somewhere in between. For example, will consumers continue to give preference to online retailers, and can independent businesses regain the market share they lost to large corporations during the shutdown?
A key trend to watch is whether employers continue to favor remote work arrangements into 2021 and beyond. If they can hire anyone from anywhere, that will have implications for migration into the state, population growth and housing demand, not to mention all that office space sitting unused right now.
Despite all the talk of quarantine babies, births in the state are expected to fall next year after a slight uptick in 2020. Net migration into Colorado, which totaled 43,300 in 2019, is expected to drop to 35,100 this year and only 30,000 in 2021, according to the Outlook.
And in a grim marker, the state is expected to record 3,900 more deaths this year than last, with deaths falling by 3,200 in 2021 as the pestilence passes.
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