Despite economic uncertainty across many global economies, national GDP, or gross domestic product, continues to be strong.

Current estimates are that third-quarter GDP grew at an annualized rate of 2.7%, slightly down from the 3.0% growth in Q2. For context, these figures significantly exceed the long-term trend of 2% or less, placing the U.S. ahead of many other developed nations, as I discussed last month.

Inflation in October ticked up with the Consumer Price Index, or CPI, for all items rising 2.6% year-over-year from 2.4% in September (not seasonally adjusted rates). With this increase alongside the Purchasing Manager’s Index increase (what producers pay for their inputs), there is now legitimate concern that the Federal Reserve will not decrease interest rates as quickly and by as much as previously thought.

Now the Fed Funds rate is estimated to settle at closer to 4% versus previous estimates of 3%–3.25%. The election results added to this prognostication because of President-elect Donald Trump’s proposed tariffs. The most recent Nov. 7 0.25% cut proceeded as planned (to 4.75%), but with inflation progress seemingly stuck over the past couple of months, and the possibility of 60%/10% tariffs with China/all other trade partners, the average 30-year mortgage rates ticked up to 6.43% in October, reflecting a market expectation for higher inflation and (as a response), higher interest rates.

Our office estimates that a roughly 4% Fed Funds rate translates to a 30-year mortgage rate of 6.84%. We calculated this by running a correlation between the Fed Funds and 30-year mortgage rates going back to 1971 (with a 91% correlation coefficient, very low standard deviation, and average 2.84% difference between the two rates).

Regarding the possible upcoming policy changes, I recently did a news segment summarizing reports from the nonpartisan Peterson Institute for International Economics and Wells Fargo that analyzed some of the impacts of tariffs, deportations and changes in Federal Reserve autonomy on GDP growth and inflation. By far, the largest impacts were from tariffs and deportations. The Peterson Institute found that the combination of these policies would result in a CPI between 6% and 9.3% by 2026 (as opposed to under 2%) costing typical American households under $2,600 per year. The CPI would “settle” around 4% in 2029.

A more moderate estimate from Wells Fargo suggests inflation would rise to 4% in 2025. Most economists are revising all their forecasts due to what they deem a high probability of higher inflation and higher interest rates as a result of tariffs, as I discussed in a previous article. Similarly, employment is expected to be lower in these studies in the medium and longer term after a short-term boost in employment.

The lower employment projections result from consumers having lower purchasing power (due to inflation), which reduces consumption thus hurting U.S. businesses that may in turn lay off workers.

If and when trade partners retaliate with tariffs of their own, that further decreases consumption due to higher prices also hurting U.S. business growth and employment. A way out, however, is if the tariff threats are enough of a deterrent to bring countries with nefarious trade practices to the negotiating table. I think we should know in in the first six to 12 months of the new Trump presidency where tariffs (and the economy) will go.

On the labor market side, U.S. job openings fell to 7.44 million in September, a 5.3% decrease from August. Despite this report, consumer sentiment, a leading indicator of economic activity, has shown surprising strength. The University of Michigan Consumer Sentiment Index for November rose to a preliminary reading of 71.8, up from 70.5 in October. Republican households drove the overall upswing in sentiment with an increase of 15 points, while Democratic households saw a downward swing of about 10 points in the same index (that’s how it always goes).

The labor market in El Paso County saw a slight softening in October, with the unemployment rate rising to 4.5%, up from 4.2% in September. In line with this, the ratio of local workers per available job increased from 0.87 to 0.94, reflecting a looser labor market although job openings remain robust at 18,611. The local unemployment increase aligns with the statewide trend, as Colorado’s unemployment rate climbed notably to 4.4% (from 4.1% in September). Nationally, however, the unemployment rate remained steady at 3.9%. At the Colorado council of economists’ meeting I recently attended, we once again heard from the state’s economists and demographers that there are serious state budget issues right now with some tough decisions made for the next fiscal year. There are future concerns particularly around Medicaid and our slowing population growth rate, which is compounded by our state’s aging population.

The U.S. had 5.4 working people per retiree in 2003. Now, we have 3.5 workers per retiree and in 2033 it will be 2.9 workers per retiree. The Conference Board ran the numbers and found that the U.S. would need 4.6 million new workers per year between now and 2033 just to stabilize what we currently have (3.5 workers per retiree). We will need more workers (not less) as the U.S. population continues to grow.

Updated projections from the Colorado State Demography Office reveal interesting shifts in long-term population growth. El Paso County’s 2050 population is now projected at 1,001,087, down from the previous estimate of 1,008,489. The state of Colorado also saw a downward revision, with its 2050 population now projected at 7.4 million, compared to the previous estimate of 7.5 million. I remember a few years ago our state was projected to surpass 8.0 million by 2050, and as I mention above, this has state revenue implications. Although our region has been downwardly revised as well, our county is one of the highest growth counties and that is in our favor. The words “affordable housing” quickly come to mind when I think about this topic (and how important attainability/affordability) are. As of now, the local population by age group does show higher growth among residents aged 30-49, but Denver and other first-tier cities are case studies on how quickly this assumption can change if we don’t adequately address affordability.

Home sales single-family permits increased modestly while multi-family permits remained subdued, with only two issued during the month. There is a lot of new (apartment) product available, but vacancy rates have declined, and rents have stayed relatively steady indicating a stable multi-family market. In this month’s DDES economic progress report, note that the HUD apartment vacancy rate for Q3 has not yet been released, but the segment uses more recently available data for Q3 from state sources and Apartment Insights. Median home prices in Colorado Springs also rose modestly in Q3 2024 to $473,200, a 1.5% increase from Q3 of last year. Interestingly, Denver’s Q3 median home price of $654,600 decreased from Q3 2023 by 2.7% likely attributable to less demand in the Denver region due to affordability challenges. However, both Denver and Colorado Springs still remain above the U.S. median home prices at $418,700, showing continued affordability challenges in Colorado compared to the rest of the country.

Enplanements at the Colorado Springs Airport in October were down compared to October of last year, but the general trend is up, up, up. There is also the good news including the return of Allegiant Air and the first international flights to Mexico through Southwest, which my family is irrationally exuberant about! These wins will likely continue to make Colorado Springs a competitive option compared to DIA.

Tatiana Bailey is executive director of the nonprofit Data-Driven Economic Strategies. To see this monthly report with a full dashboard of graphics, go to ddestrategies.org.