Over the past year, Bill Craighead has found himself in the unfamiliar position of telling people to cheer up about the economy.

“We economists have a reputation for being curmudgeons who, if somebody has an idea, might rain on people’s parade by pointing out hidden costs and unintended consequences,” Craighead told an audience of more than 350 business and civic leaders at Thursday’s University of Colorado Colorado Springs Economic Forum.

“So I really didn’t expect to find myself, over the past year, playing the role of Mr. Sunshine.”

The economic outlook in the Pikes Peak region and beyond is not without its negatives, Craighead said. But there’s a disconnect between public perception of the economy and the data-driven measures of economic growth — a phenomenon known as a “vibecession.”

“I keep hearing people saying that the economy is lousy, and I keep having to gently say that if you look at the data, it tells a somewhat different story.”

UCCS forum to outline economic bright spots, challenges in Pikes Peak region

Inflation and wages

The rate of inflation in the U.S., which is often the metric a layperson uses to gauge the state of the economy, was 2.5% as of August, according to the U.S. Inflation Calculator. Median wages are up about 4.5%.

“Inflation is pretty clearly in the rearview mirror, when I look at the data,” Craighead said.

The median annual wage in the Pikes Peak region is about $49,310 slightly higher than the U.S. average of $48,060. In Colorado, the median annual wage is well above the national average, at just over $54,000.

“The economy is people,” Craighead said. “If people are doing OK (financially), then the economy is doing OK.”

Colorado Springs Chamber looks to continue the momentum of new business, job growth in 2024

Interest rates

A telling indicator of economic growth, Craighead said, is the construction industry’s share of the gross domestic product. In the Pikes Peak region, the construction share of the GDP is 6.8%, compared with 4.2% across the U.S.

The number of real estate agents in a particular area is a measuring stick for population growth. The Pikes Peak region, composed of the Colorado Springs metropolitan area, and El Paso and Teller counties, has 4 real estate agents per 1,000 jobs.

Both those metrics, Craighead said, are sensitive to interest rates.

“Now I’d like everybody in the room who’s a real estate agent to close your eyes and cover your ears for about 30 seconds,” Craighead said, to laughter.

New mortgage rates have been on the rise since the end 0f 2021, and outstanding mortgage rates are relatively low. The higher rates not only deter buyers, but they also deter many prospective home sellers.

“A lot of people who have existing mortgages at 3.5%, don’t want to sell their houses, move to a new place, and take out a mortgage at 7%,” Craighead said.

As a result, home sales are down in the first eight months of 2024, compared with recent years. That affects activity in other industries including furniture sales, appliances and electronics.

UCCS Economic Forum: Colorado Springs positioned well for bright future, wild card factors complicate economic outlook

Bright spots

“Probably the coolest thing I see in the data, that seems to have totally flown under the radar, is that nationwide we’ve seen a huge surge in entrepreneurship since the pandemic,” Craighead said.

The rate of new business formation, which is measured by the number of business applications nationwide, has seen a significant jump in recent years, according to data from the U.S. Census Bureau. In 2019, there were 1.3 million applications; in 2023, there were 1.78 million.

The Pikes Peak region has seen a 10% increase in new businesses over what was expected based on the trends of the past decade.

“(The increase) wasn’t a pandemic phenomenon,” he said. “It remains elevated even to this present day.”

After a low point caused by the COVID-19 pandemic, travel and tourism are again on the rise. Colorado Springs saw a whopping 25 million visitors in 2023, according to a study commissioned by VisitCOS. Additionally, Colorado Springs residents are using their local airport more; about 700,000 passengers have boarded planes at the Colorado Springs Airport through July than during the same time frame last year, data show.

“So not only are more people coming to Colorado Springs, but the airport has done really well in attracting new air service and getting the people who live here to use our airport.”

Challenges

Colorado boasts one of the most highly educated populations in the U.S., according to the Census Bureau. More than 46% of Coloradans age 25 or older hold a bachelor’s degree or higher, trailing only Massachusetts and Washington, D.C.

However, when it comes to high school graduation rate, Colorado ranks 40th in the U.S.

“I know our schools, educators and district are doing a lot of fantastic work,” Craighead said. “But what this suggests to me is that we are not doing as well as we could at preparing a high percentage of the kids who grow up here to take full advantage of the economic opportunities the Colorado economy is creating.”

Child care, or early childhood education, is another area of potential concern, Craighead said. According to the Bureau of Labor Statistics, the Pikes Peak region had 3.4 child care workers per 100 children under age 5, well below the state and national averages.

About 62% of Pikes Peak region families with children under 6, in which both parents work, compared to 69% nationally. If this is due to parental choice, then it isn’t an economic problem, according to Craighead.

“But to the extent that it reflects constraint, where a lack of (child care) availability is holding people back from opportunities, it is an economic issue, and one that we could potentially address in a way that would allow us to get more out of the talents of the people who are already here.”

Overall outlook

Despite some areas that need improvement, Craighead said, the overall economic outlook is one of optimism.

“I know what the data looks like when the economy is terrible,” he said. “And this isn’t it.”