Legislative council downgrades Colorado economic outlook; federal policy uncertainty tops risks

David Hansen, principal economist for Legislative Council Staff, told the Joint Budget Committee on March 17 that U.S. economic growth has cooled and that the council had lowered its near‑term outlook.

"We continue to expect the U.S. economy to expand at a moderate pace through our forecast, but we have downgraded our economic expectations since December," Hansen said, presenting the March 2025 Legislative Council forecast.

The LCS baseline projects real U.S. GDP growth of about 1.3 percent in 2025, 1.7 percent in 2026 and close to 1.9 percent in 2027. Hansen said Colorado is likely to follow that slower national pace and that labor markets will soften: employment growth has decelerated and the Colorado unemployment rate, while still low, "has been climbing," he said. Hansen also warned forecasters see measurement error in some Colorado labor market data after a change to the state's Department of Labor and Employment reporting system.

Why it matters: the forecast underpins state revenue estimates and budgeting decisions. Slower growth and higher unemployment typically reduce income and sales tax receipts and increase pressure on safety‑net…