Colorado business leaders are gloomy about their future prospects amid stubborn inflation, according to the latest Leeds Business Confidence Index from the University of Colorado.
Rising interest rates and ongoing supply chain issues are also weighing on economic sentiment, according to the latest quarterly report from the University of Colorado’s Leeds School of Business. The survey collected 163 responses from September 1 to 21.
Respondents expect weak sales, earnings, hiring and capital spending heading into the final quarter of 2022, according to Richard Wobbekind, senior economist and faculty director of CU’s business research division.
“These business leaders … are clearly signaling that they see weakness in the economy looming,” Wobbekind said on a conference call with reporters.
The bad mood of business leaders across the state mirrors the general mood of the public as the highest rate of inflation in more than 40 years outpaces wage gains and eats away at consumers’ purchasing power. The Federal Reserve is rapidly raising interest rates to drive down prices, making it costly for businesses and consumers to borrow money and further clouding the outlook.
Mortgage rates have more than doubled from a year ago and just hit their highest level in more than 15 years, dampening home sales.
“Clearly the slowing housing market puts another set of concerns on the table,” Wobbekind said.
Despite economic jitters, job growth in Colorado and nationally remains strong — for now. Anecdotally, companies are starting to wait to fill vacancies, Wobbekind said, although that’s not yet showing in the data.
More than three-quarters of companies surveyed by CU said inflation had a moderate or extreme impact on their business operations. About half said they will have to raise wages, cut spending and pass on rising costs to consumers by raising prices.
Yet, in a somewhat optimistic sign, most expected inflation will start to moderate by next year.
“They see light at the end of the inflation tunnel,” Wobbekind said.