2018: A Strong Year for Colorado
Now, the volatility has arrived
Looking at key data through November (employment) and the third quarter (transportation and housing), we see Colorado's economy performed as expected in 2018. The tax cuts helped, especially in areas like light truck purchases. Both passenger and freight traffic at Denver International Airport maintained a strong pace along with the national economy. These factors and strong growth in single-family home construction helped push employment growth above rates experienced in 2016 and 2017. Despite the strong growth, the unemployment rate increased thanks to even higher rates of labor force growth as more people were drawn back into the labor force seeking jobs.
The surprises for the year were a slowing rate of population growth and the Denver-Aurora-Lakewood Consumer Price Index increasing at a lower rate than the nation. This may be reflective of a cooling off in housing cost increases. Housing cost cooling may also be reflected by the decline in multi-family building permits in the third quarter of 2018 compared to 2017.
We expected increasing national economic volatility in the second half of 2018. It took a while to get here, but now that the tax cut stimulus has subsided and Washington politics are hot as ever, the volatility has arrived. How will this play out in 2019? Stay tuned for our 2019 forecast in the coming weeks.