By John Finefrock
The governor’s office has released an economic and fiscal outlook which details how the Colorado economy has been hit by the COVID-19 pandemic.
“The economic recession that began in March is unprecedented in both speed and scope. More than 20 million jobs have been lost [nationally] as businesses close and consumers stay home in an effort to slow the spread of the virus,” the document reads.
The forecast states that Colorado is “more vulnerable in this recession” because of the state’s dependence on tourism and energy.
It also notes that more than 16 percent of workers in the state have filed unemployment claims since mid-March.
The state’s General Fund is expected to fall by billions.
“The General Fund revenue forecast was revised down from the March forecast by a total of $3.4 billion through June 30, 2021 and by $5.5 billion over the forecast period through June 30, 2022.
“This decline is due not only to the impact of the pandemic-induced recession, but also due to federal tax policy changes in the CARES act that will reduce the state’s income tax collections by more than $400 million over the forecast period,” the forecast reads.
The forecast also notes:
• More than 400,000 Coloradoans have filed for unemployment insurance benefits since mid-March.
• Park County has the highest unemployment claim rate in the state, with more than 36 percent of the county’s employment base filing for unemployment benefits.
• Lower-paying industries have a higher share of layoffs than higher-paying industries. Industries with average wages less than $20 an hour represent more than 60 percent of total unemployment claims in Colorado.
• Arts, entertainment and recreation, and accommodation and food services have been “the two hardest hit industries” and represent 44 percent of all unemployment insurance claims in Colorado.
“While the COVID-19 pandemic created challenges for the energy sector due to reduced demand, the industry faced a simultaneous supply shock as Saudi Arabia and Russia flooded the market with oil in efforts to win a price war. These market-disrupting events have driven domestic oil prices to historic lows, even falling below zero for the first time on April 20th as global storage capacity was nearly exceeded, before returning to positive prices in recent weeks,” the forecast reads.
The forecast also states:
• New oil well permit submissions were down 96 percent in April compared to last year.
• Colorado oil producers have reduced the number of active oil rigs in the state to eight, down from 33 a year ago.
• “According to a survey by the Federal Reserve Bank of Kansas City, regional energy firms estimated that only 61 percent of their competitors could remain solvent for at least one year if prices remain below $30 per barrel,” the forecast states.
Retail trade accounts for 5.1 percent of Colorado’s gross domestic product and employs 8.9 percent of the state’s workforce.
March retail sales were down 8.7 percent from February, the largest monthly decline ever recorded since the series began in 1992.
In March, retail stores selling auto parts, electronics, clothing, sports equipment and food services were all down, though grocery stores reported increased revenue.
“There are more than 630,000 small businesses in Colorado (defined as those with 500 or fewer employees), representing 99.5 percent of all businesses and 87 percent of all employees in the state,” the forecast reads.
The bank JP Morgan reported that only 25 percent of small businesses have enough cash buffer to last more than two months.
“As of May 1, the federal Paycheck Protection Program had issued $10.5 billion in loans to about 14 percent of Colorado small businesses. This accounts for 2 percent of the overall share of available loans — more than Colorado’s share of U.S. population and GDP,” the forecast reads.
The full economic forecast document can be accessed at https://drive.google.com/file/d/1vm18HJBU3nTo7fhdcM5osOA4OTnhoH-u/view.