Colorado business leaders are feeling nervous about their future prospects amid stubborn inflation, according to the University of Colorado’s latest Leeds Business Confidence Index.
Rising interest rates and ongoing supply chain issues are dragging down economic sentiment, according to the latest quarterly report from the University of Colorado Leeds School of Business. The survey received 163 responses from September 1st to September 21st.
Respondents anticipate weakness in sales, profits, employment and capital spending in the final quarter of 2022, according to Richard Wobbekind, senior economist and faculty director of CU’s Business Research Division.
“These business leaders … clearly see weakness in the economy going forward,” Wobkind said on a conference call with reporters.
The bitter sentiment among the state’s business leaders reflects the broader public sentiment as inflation, the highest in more than 40 years, has outstripped wage gains and strained consumer purchasing power. The Federal Reserve is rapidly raising interest rates to ease prices, making it more expensive for businesses and consumers to borrow money and further clouding the outlook.
Mortgage rates are more than double what they were a year ago and are at their highest level in more than 15 years, putting the brakes on home sales.
“Obviously the slowing housing market is putting other concerns on the table,” Wobbekind said.
Despite the economic ups and downs, job growth in Colorado and nationally remains strong — for now. Incidentally, businesses are beginning to avoid filling vacancies, Wobbekind said, although that is not yet reflected in the data.
More than three-quarters of businesses at CU said inflation is having a moderate or severe impact on their business. About half said they would have to increase wages, cut costs and pass on higher costs to consumers through higher prices.
Still, in a somewhat hopeful sign, it is widely expected that inflation will begin to moderate next year.
“They’re seeing the light at the end of the inflationary tunnel,” Wobbekind said.
