{"id":459822,"date":"2025-12-20T10:26:13","date_gmt":"2025-12-20T10:26:13","guid":{"rendered":"https:\/\/www.europesays.com\/us\/459822\/"},"modified":"2025-12-20T10:26:13","modified_gmt":"2025-12-20T10:26:13","slug":"colorado-state-economists-warn-of-recession-risk-in-murky-forecast","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/459822\/","title":{"rendered":"Colorado state economists warn of recession risk in murky forecast"},"content":{"rendered":"

Colorado faces a heightened recession risk heading into 2026, state economists said Friday, as recent data \u2014 still murky due to the recent federal government shutdown \u2014 cast broad uncertainty over the state economy\u2019s health<\/a>.<\/p>\n

Consumer spending from lower- and middle-income households has slowed, according to legislative economists. They said job growth this year in Colorado, through September, has been roughly a third of what it was before the pandemic \u2014 about 0.6%, compared to 2.2%. But mass layoffs haven\u2019t materialized, and the effect of President Donald Trump\u2019s extensive tariffs this year has been \u201cpretty muted,\u201d said the legislature\u2019s senior economist, Emily Dohrman, on Friday morning.<\/p>\n

However, a disruption in data collection caused by the government shutdown this fall significantly clouded the overall economic picture, legislative Chief Economist Greg Sobetski told the legislature\u2019s Joint Budget Committee as officials delivered the final quarterly forecast of 2025.<\/p>\n

\u201cI just have less knowledge right now that the U.S. economy is in the position that available data says that it is \u2014 because I have a lot less available data,\u201d Sobetski said. \u201cThat means that, for example, if the economy is actively receding now, I would have less information to suggest that to me because of the data not being published.\u201d<\/p>\n

The committee, which will write the state\u2019s budget for the next fiscal year that begins July 1, also received more bad news about the state\u2019s financial footing. The forecast for the current fiscal year now has the state dipping $90 million deeper into its cash reserves, for a total of about $399 million, as the state navigates repercussions from the federal tax bill that passed this summer \u2014 money that the committee will be tasked with replenishing with the next budget.<\/p>\n

Forecasters already predicted that budget writers will need to find $1 billion in cuts compared to this year\u2019s spending to keep up with rising costs, particularly in Medicaid spending. It will be the latest in a series of cuts made by lawmakers in recent years<\/a> to make room for soaring costs.<\/p>\n

The 2026 legislative session begins Jan. 14. The committee will continue meeting in coming months and use the next forecast, scheduled for March, to write the budget for the next fiscal year.<\/p>\n

\u201cThat just starts us off even more in a hole,\u201d state Rep. Rick Taggart, a Grand Junction Republican on the committee, said of the new forecasts. \u201cThat\u2019s worrisome, to say the least.\u201d<\/p>\n

Clint Saloga, a senior analyst for the governor\u2019s budget office, warned of \u201cgrowing signs of distress\u201d in the economy, even if overall economic growth was higher than expected. Much of the economic growth has been driven by huge investment in artificial intelligence technologies across the country.<\/p>\n

If that investment proves unprofitable, it could have wide economic consequences.<\/p>\n

In a statement Friday, Gov. Jared Polis blamed Trump\u2019s trade wars and the summer overhaul of federal tax policy for the economic woes in the forecast.<\/p>\n

\u201cThe White House\u2019s destructive trade wars continue to hurt our economy, skyrocket costs, and worsen inflation ahead of the holidays,\u201d Polis said. He said state reserves remain flush enough to help weather the worst of economic uncertainty, however.<\/p>\n

Overall, the Office of State Planning and Budgeting<\/a> expects slowing consumer demand and a weakening job market.<\/p>\n

Job growth has been uneven, Saloga told lawmakers on the Joint Budget Committee. Large companies, with 500 or more employees, have been adding jobs, while small businesses are shedding workers, apparently to afford the rising tariff costs.<\/p>\n

The new state budget forecast predicts that next year\u2019s deficit will be $47 million worse than the September forecast, which was used for the governor\u2019s November budget proposal<\/a>. The state\u2019s general fund budget is about $18 billion.<\/p>\n

This year\u2019s budget shortfall will result in some marquee tax credits being put on hold when Coloradans file their taxes in 2027.<\/p>\n

The expanded Earned Income Tax Credit and Family Affordability Tax Credit<\/a>, both of which can give hundreds of dollars to low-income families, are projected to be shut off for the next tax year.<\/p>\n

\u201cConsumer growth is being driven by the top 20 percent earners, while low-income earners struggle to make ends meet and dig into their savings,\u201d Rep. Emily Sirota, a Denver Democrat and the chair of the JBC, said in a statement. \u201cWhile our legislative efforts have successfully reduced housing costs in Colorado, cuts to federal clean energy tax credits and rising tariffs are leading to higher bills. This will be a very challenging budget year.\u201d<\/p>\n

She added that lawmakers will aim to \u201cprotect funding for our schools and core services and seek responsible solutions to address the shortfall.\u201d<\/p>\n

Stay up-to-date with Colorado Politics by signing up for our weekly newsletter, The Spot.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Colorado faces a heightened recession risk heading into 2026, state economists said Friday, as recent data \u2014 still…\n","protected":false},"author":3,"featured_media":459823,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[64,4439,94630,9577,9561,79,4440,1370,50,80,67,132,68],"class_list":{"0":"post-459822","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-colorado","10":"tag-colorado-legislature","11":"tag-colorado-news","12":"tag-colorado-politics","13":"tag-economy","14":"tag-front-range","15":"tag-latest-headlines","16":"tag-news","17":"tag-politics","18":"tag-united-states","19":"tag-unitedstates","20":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115751418994664412","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/459822","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=459822"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/459822\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/459823"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=459822"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=459822"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=459822"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}