By Will Cornelius
The Surveyor

Business confidence is improving across Colorado but is still below average according to the latest Leeds Business Confidence Index (LBCI) released at the start of the year.

The LBCI increased from 43.6 in the last quarter of 2023 to 45.3 for the first three months of 2024. Released quarterly by the Business Research Division (BRD) at the University of Colorado at Boulder, the index captures businesses’ views and expectations on the economy at both the state and national levels.
While the index level of 45.3 for the beginning of 2024 shows that outlooks are improving, there is still more pessimism than optimism overall. An index level of 50 implies a neutral outlook.

Six sub-indexes make up the LBCI, giving more insight into the dynamics driving the economy. Index levels for the state economy (47.2) and industry sales (46.0) were the two highest components of the LBCI. Nationally and at the state level, robust consumer spending has consistently surpassed market expectations for an economic slowdown over the past couple of years.

The two lowest components were capital expenditures (43.2) and industry hiring (44.8). These readings confirm other observations in the economy, high interest rates constraining business spending and a cooling labor market.

The National Federation of Independent Business (NFIB) Small Business Optimism Index (SBOI) showed similar results. Released on Jan. 9, the SBOI also showed optimism among businesses improving, but still below a neutral rating. The last time the index was above neutral was in August 2021.

“Small business owners remain very pessimistic about economic prospects this year,” said NFIB Chief Economist Bill Dunkelberg. “Inflation and labor quality have consistently been a tough complication for small business owners, and they are not convinced that it will get better in 2024.”

Inflation in the Denver-Aurora-Lakewood statistical area was 4.5% annually in November 2023, the most recent data available. BRD researchers project that inflation will be 3.2% in 2024 for the same area, highlighting the pernicious nature of price increases. The Federal Reserve’s policy is to maintain inflation at 2% annually. A 3.2% inflation rate is 60% higher than their stated target.

On the labor front, BRD researchers forecast that employment in Colorado will grow 1.4% in 2024 after growing 2.2% in 2023.