Colorado experts predict what the state’s economy will look like in 2025

The Herculean effort of predicting how the current year has gone and what will happen to Colorado’s economy in next year took 140 local experts from every major industry sector, meetings since September and dozens of staffers at University of Colorado’s business school putting in roughly 1,000 hours of work. 

On Monday, it was summed up with a sentence: “The economy is on stable footing.”

The full 171-page report is also available online for those who prefer to dive deeper, but on Monday, senior economist Richard L. Wobbekind, the faculty director of the Business Research Division at the Leeds School of Business, shared highlights during the annual Colorado Business Economic Outlook & Forum event.

• Colorado added 46,800 net new jobs in 2024, up 1.6%, and will end 2024 with an estimated 2,988,700 jobs
• In 2025, a 1.2% job growth of 36,700 new jobs would raise the number to 3,025,400 jobs
• This year, three out of 11 major sectors lost jobs: information, construction and manufacturing
• In 2025, only the manufacturing sector is forecast to see job loss due to less consumer demand for goods as well as employers moving to more automation

“The state is hovering at an all-time high for the number of people in the labor force and we, unlike the country, have the fourth highest labor force participation rate,” Wobbekind said during the event held at the Grand Hyatt in downtown Denver. “And yet, we have a greater imbalance of job openings to the unemployed than the nation does. If you were able to match every unemployed person in Colorado (to available jobs) there would still not be enough workers in the state.”

He was joined by Jessica Ostermick, senior managing director at commercial brokerage CBRE, who pointed out that Colorado is still growing in terms of people and jobs. That’s expected to continue next year, she said, thanks to an increase in births that has the state adding 51,400 people, she said, “the largest growth since 2019.” 

But the uptick is nearly half what it was in 2015, when the state’s population added 98,900 people. The slowing growth rate has been a concerning trend that employers won’t find enough workers in the near future. And according to the State Demography Office, an average of 40,000 workers will retire every year for the next decade. That means employers must find replacements for retiring workers plus hire new recruits.

“Demographics are working against us both nationally and locally,” Wobbekind said. “In a constrained labor force environment, we should expect and we will see slower job growth.”

But, he acknowledged, he’s never forecasted negative job growth other than after the pandemic devastated the economy in 2020. And he’s been doing this for a long time. “This is my 37th,” he said. Some years, he was wrong but those years were typically associated with an unexpected economic upheaval. 

“Well, the 2001 forecast was a disaster for us and we weren’t the only ones,” he recalled. “The tech sector kind of imploded in Colorado. … And then 2008, when you have the big banks, it wasn’t particularly good. But like last year’s forecast, we were pretty close. We were really thinking there’d be a slowing national economy. We didn’t have a recession built in (but) we undershot. The state did better than we had forecast in 2023.”

Leeds’ analysis for the annual report, now in its 60th year, relies on state, local and federal data, which is combined with feedback from local experts in 11 industries, to estimate how 2024 will end up and what is coming in 2025. 

“We tend to be really, really close and we check this. We’re high half the time, we’re low half the time. You’re never going to be exactly right,” Wobbekind  said. “What’s more challenging about this report is doing a sector-by-sector forecast.” 

A few predictions

Agriculture — Ag “faces a complicated environment,” Wobbekind said, because of factors outside of farmers’ control, such as commodity prices, weather and ballot initiatives that can limit production practices or reintroduce predators. “It literally costs some farmers more to plant and harvest their fields than they can make selling their crops.”

Prices for Colorado field crops like corn and wheat dropped this year and are expected to remain grim in 2025. But there have been better beef, egg and dairy markets that will help the state’s net farm income, which is estimated to decline 10.5% this year, but to grow 12.2% in 2025. 

Construction — The number of construction workers declined this year but that’s mostly due to attrition. Companies aren’t laying off workers but rather “actively retaining good workers as focus shifts to quality,” Wobbekind said. 

The state, which ranked first in the nation for home-price growth over 15 years, saw its rank drop to 47th as price growth slowed to just 2.5% year over year in the third quarter. 

Total building permits will be about 20% lower this year than 2023. But after this year’s lag, building permits are expected to increase in 2025 as builders anticipate lower interest rates and see growth in nonresidential construction. Overall, the construction industry is expected to add 6,000 jobs in 2025.

Manufacturing — This industry has struggled after growing in the first two years of the pandemic. Consumers may be consuming less, but it’s also because raw materials cost more. A slower housing market means reduced demand for durable goods and “employers appear to be hesitant to add workers, or are adjusting their employment needs based on changing market dynamics and an ongoing push towards automation,” Ostermick said.

As for marijuana sales? That’s down too. Last year’s $1.6 billion total was a 12% decrease from the prior year and sales are expected to drop 10% again this year. The number of retail outlets licensed to sell marijuana also dropped 2.5%, she said.