Colorado business leaders aren’t ready to sing Happy Days just yet, but they are in a much better mood heading into this year than they were last, according to the latest Leeds Business Confidence Index from the University of Colorado Boulder.
“Entering 2024, business confidence remains suppressed but is on the rise,” according to the report, which is published quarterly.
The LBCI looks at six different categories and asks respondents what they expect over the next two quarters. An index score of 50 indicates an expansionary or positive outlook, while one below 50 is negative, indicating expectations for a contraction.
The overall index came in at 45.3 for the first quarter of this year, which is up 43.6 in the fourth quarter of 2023. The outlook for the state economy was 47.2, up from 45.5 in the last report, while the outlook for the U.S. economy came in at 45.2, up from 40.2.
That two-point gap between the U.S. and Colorado outlook is the smallest measured in the past six years.
The greatest pessimism measured in the six components surrounds capital expenditures, which may reflect more expensive borrowing costs and the tighter underwriting standards now in place. That index came in at 43.2, up from 40.9.
All six categories in the first quarter were below 50, which is considered neutral, and they remain below the long-term average. But optimism picks up looking ahead to the second quarter, where all six components increased and three went above a neutral outlook.
The overall index came in at 49.6 for the second quarter, while the Colorado index reached 50, the first time a neutral level has been reached since the second quarter of 2022, as inflation was going into overdrive. Business leaders were most optimistic about industry sales, which came in at 53.4, and about industry profits, at 51.7.
Those responding to the quarterly survey gave multiple reasons for the improved outlook, but lower interest rates, easing fears of a recession and slowing inflation were the most common reasons provided.
The panelists were asked about their expectations for business air travel this year and about half didn’t expect any change. But 28.2% said they and their employees planned to fly more, while 22.4% expected it would be less.
