Economists analyze Colorado's economic risks and revised GDP growth forecasts

The Boulder City Council Study Session on May 8, 2025, focused on the current economic landscape, highlighting significant shifts and emerging risks affecting both the national and local economies. The session featured discussions led by economic experts who emphasized the need for a new approach to understanding economic resilience, now termed "attention to the risks."

Key points included a recent decline in the Gross Domestic Product (GDP), which fell by 0.3% in the first quarter of 2025. This downturn was attributed to a slowdown in consumer spending, which grew at its slowest rate in nearly two years, alongside a decrease in government spending. However, there were notable increases in investment and net exports, although the latter negatively impacted GDP growth due to a significant rise in imports.

The labor market remains a bright spot, with employment levels reaching historic highs. The last six months have seen the highest labor force participation rates in U.S. history, although job growth is expected to slow as the labor supply tightens. Personal income continues to rise, with real wage growth sustained over the past year and a half.

Inflation trends were also discussed, with the national rate dropping to 2.4%. Colorado's inflation rate is slightly lower at 1.9%, attributed to slower housing price growth compared to national averages. However, consumer confidence has sharply declined, reflecting uncertainty driven by national policies and economic conditions.

The session concluded with a focus on Colorado's economic performance, noting a slip in rankings for GDP, employment, and personal income growth. Despite these challenges, the state remains a top performer over the long term. The council emphasized the importance of monitoring these economic indicators closely to address potential hardships and support continued growth in Boulder and beyond.

Overall, the discussions underscored the complexities of the current economic environment and the need for proactive measures to navigate the risks ahead.