Strong economic headwinds are creating enough volatility that the country is headed toward a recession in 2023, if it is not already in one, a top local economist said. 

Tatiana Bailey, director of the University of Colorado at Colorado Springs Economic Forum, will discuss that outlook and the current conditions facing the nation, state and local economies at Thursday’s forum – the first in-person forum since the COVID-19 pandemic began in early 2020.

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Bailey said historic transitions, which typically come once every several hundred years, are challenging global and local economies when it comes to food, energy and demographics.

“Part of the reason I’m putting so much emphasis on that is because it impacts not only the short-term economic picture but also the long-term economic picture,” she said.

Bailey said climate change, with its pendulum of extreme drought and severe flooding, is likely to create persistent instability when it comes to food prices. Those prices are also inextricably linked to energy prices, which, depending on the transition to renewable resources, will dictate the affordability of transportation.

As for demographics, Bailey said the workforce pool in the U.S. is shrinking as the population wanes toward a retiree-aged demographic with fewer children and more stringent immigration policies.

“I do think there are ways to combat it,” Bailey said. “But the thing is that it’s happening quickly.”

The economy also faces challenges tied to the COVID-19 pandemic and its recovery, from supply chain issues to inflation.

The savings rate, for example, is lower than it was pre-pandemic, Bailey said. That is largely because of the effect of inflation on lower- and middle-income households who are now taking on more credit card debt.

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“I think all of those things are part of the reason I’m a bit concerned about an economic slowdown.”

That slowdown isn’t predicted to be as severe as the Great Recession, Bailey said, but the remedy of hiking interest rates, designed to curb demand, won’t be as effective as it was in the past because of dire challenges on the supply end of the equation.

“They (the Fed) can’t change the fact that China still has lockdowns, or that Europe is probably going to hit a very hard recession this winter,” Bailey said. “That’s part of why I am more in the camp that we either are in a recession or we’re going to hit one in 2023.”

Workforce issues, such as employers having difficulty hiring, will be a key focus of Bailey’s report. In addition to her presentation, the forum will host a panel about workforce development featuring Bailey and Ron Fitch, president of Grandview Hospital and Pikes Peak Regional Hospital; Joe Garcia, chancellor of Colorado Community College System; Kimelyn Harris, senior vice president and ESG program director for Bank of America; Katherine Keegan, director of Colorado Office of the Future of Work; and Kimberley Sherwood, moderator, coach, consultant and facilitator.

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