Economic indicators point to a nation poised for recession, Colorado Springs economist Tatiana Bailey said Wednesday during a presentation to area business leaders at The Pinery.

Similar to most economists, Bailey expects a shallow recession in the second half of 2023 and early 2024. The recession likely will be mild, she said, because of the country’s strong labor market, among other factors, although the labor market poses its own challenges, too.

Colorado appears positioned to fare slightly better than the nation overall, and El Paso County’s workforce situation seems to be on better footing than most of the state, Bailey said.

“It’s somewhat a tale of two economies,” said Bailey, executive director of Data-Driven Economic Strategies, a Colorado Springs nonprofit, and former director of the University of Colorado Colorado Springs Economic Forum.

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Inflation, higher interest rates and decreased consumer and business spending are the main culprits for the expected economic downturn, she said.

Still, other factors including a strong housing market, high employment levels and legislation such as the The CHIPS and Science Act, a bill designed to incentivize domestic semiconductor manufacturing, could ease the intensity of a recession.

With high employment levels come high wages, causing business growth to slow along with global competitiveness.

And the nation’s tight labor market is not predicted to change anytime soon thanks to demographics that show an aging population, lower birth rates, a decline in male labor participation and shrinking legal immigration.

“The linchpin to sustainable economic growth and increased global competitiveness is an increase in labor participation,” Bailey said.

In other words, more people need to work for the U.S. to be successful.

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That’s where El Paso County has the upper hand with a population likely to grow by more than 200,000 between 2020 and 2050 to more than 1 million (one of the biggest increases in Colorado), a slightly younger population with an average age of 35 as opposed to the state’s average of 38, and opportunity within high-demand sectors such as health care.

“We’re projected to have about 60,000 new jobs in El Paso County between now and 2030,” Bailey said.

“And we have been meeting the number of new jobs needed to match population growth.”

That’s why training and attracting workers for proper jobs are essential. Bailey noted that with student loan debt near $2 trillion, second only to mortgage debt, and only a 50% graduation rate, college students are collecting bills without a degree.

In El Paso County, students living in the lowest earning brackets of the city’s school districts have the lowest high school graduation rates, Bailey said.

But families and individuals in the lower income brackets could see the wealth gap lessen with wage increases due to the tight labor market. Wage increases also could spur labor force participation, homeownership and business growth, Bailey said.

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“We have an increasing population and continued in-migration, including educated people and people of all skills,” Bailey said of the county.

“(And) decreasing inflation and higher wages, so inflation is slowly but surely coming down, and wages are not going to come down. The worst that’s going to happen is they’re going to stay where they are … and that’ll help keep up personal consumption expenditures. That’s part of the reason I also say it’s a mild recession.”