Colorado Businesses Are Optimistic For Q3-4: CU Analysis

From the University of Colorado Boulder: Colorado businesses optimism is increasing for the third quarter in a row according to the latest Leeds Business Confidence Index from the Leeds Business Research Division at the University of Colorado Boulder.

The LBCI measures business optimism by surveying business leaders on six topics: the state economy, the national economy, industry sales, industry profits, industry hiring and capital expenditures.

Business leaders are increasingly optimistic about most measures of the LBCI.

"Five out of the six are at very high levels. Even the national reading is at a very high level," said Richard Wobbekind, executive director of the Leeds Business Research Division.
Although business optimism for the national economy is still positive, it fell slightly ahead of the second quarter of 2018.

Looking at the third quarter, businesses responded they were slightly less optimistic about all six LBCI measures, though the index stayed comfortably in positive territory.

The majority of panelists (roughly 54 percent) believed the state economy will expand in the second quarter of 2018. About a third were neutral.

Fewer than half of the panelists (47 percent) expected a national expansion in the second quarter. Roughly 19 percent expect a decline.

When asked how panelists would use tax savings from the recent tax overhaul, panelists most frequently said their households would increase savings or they do not expect a personal tax cut. Company leaders most frequently said they were unsure what their businesses would do with tax savings or that they planned to invest in equipment. That’s a good sign according to Wobbekind.

"We really need higher capital investment to get more productivity and higher wage growth. That’s something that’s really been missing from the economy," he said.

Strong economic numbers in Colorado appear to be supporting the optimism. Colorado ranked fifth nationally in year-over-year personal income growth in 2017 according to the Bureau of Economic Analysis with a strong increase of 5.3 percent.

As of February 2018, Colorado continued to post strong job growth as well. Jobs increased 2.4 percent from February 2017 to February 2018.

The survey took place from March 1-March 20. While President Donald Trump initiated efforts toward steel and aluminum tariffs during the survey period, new details, including exemptions for U.S. allies, were not available during the survey period.

Image by ASDF_MEDIA on; chart image via the University of Colorado Boulder

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