May 4—Colorado's economy crept forward during the first quarter of 2023 albeit at a slower rate than the second half of 2022, signaling to economists an earlier than expected economic slowdown this year.

Economists with University of Colorado Boulder Leeds Business Research Division anticipated an economic slowdown during the second half of 2023. But a slow rise in GDP, personal income, retail and employment, as well as a decline in home prices and construction, proved premature.

The United States' GDP grew 3.2% in the third quarter of 2022 and 2.6% in the fourth quarter, according to Bureau of Economic Analysis data in a Colorado Secretary of State's Office and the University of Colorado Boulder Leeds School of Business report.

"It was somewhat of a disappointing first quarter," said Brian Lewandowski, executive director of the Leeds Business Research Division, during a press call Thursday. "We went from reporting pretty robust growth in the third and fourth quarter of 2022 to really slowing down to 1.1% growth nationally in the first quarter of 2023."

While consumers face headwinds nationally such as negative wage growth, inflation, debt, higher interest rates and depletion in savings, many people seemed to continue to spend with a 3.7% increase in consumption, Lewandowski said.

In Colorado, the labor market also showed some signs of weakness with the state's job growth up 1.2% year-over-year in March, the slowest rate increase since late 2021, bringing Colorado down as one of the nation's top 10-15 states for job growth, to the second slowest state in job growth in the country behind West Virginia, Lewandowski added.

Job growth alone doesn't tell the whole story though.

While Colorado's job growth rate increased at a less intense rate, the market was still in demand of workers with Colorado ranking as one of nine states to report an increase in the number of job openings. Colorado also continued to have a tighter labor market than the U.S. with 2.4 job openings for every available worker, whereas the national ratio is 1.6 openings for every available worker.

So are these factors pointing to an upcoming recession in the U.S. and Colorado?

The economy is teetering between slow growth and a light recession, Lewandowski said, with the future dependent on hiring and job growth.

But an economic slowdown coupled with bank failures in states outside of Colorado are not cause for panic, Richard Wobbekind, senior economist and faculty director of the Business Research Division and at the University of Colorado Boulder, said.

"I don't think this is going to be a financial crisis anywhere like 2008," Wobbekind said. "... This is not going to be a broad-based banking crisis by any means."

Here are some of the other key findings in the report:

— In March, Colorado's labor force participation rate measured as the fourth highest in the U.S. at 68.3%. The labor force increased 0.7% year-over-year, and Colorado's per capita personal income ranked eighth at $75,206.

— The state's real gross domestic product (GDP) kept outpacing the nation. Colorado's output rose at an annualized rate of 2.7% from the third to fourth quarter and 1.7% year-over-year, the eight highest nationwide.

— Colorado set a record with the most number of business filings in state history with 55,787 new entity filings during the first quarter. Filings increased year-over-year by 27.6% and 14.3% quarter-over-quarter.