Economic Outlook and Economic Trendsto Date During the COVID-19 Pandemic

Presentation to the Economic Recoveryand Relief Cash Fund Task Force Committee

September 24, 2021

September 2021 Legislative Council Staff

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The economy continues to recover, with consumeractivity driving growth

Real U.S. Gross Domestic ProductDollars in Trillions

Source: U.S. Bureau of Economic Analysis and Legislative Council Staff September 2021 projections.Real GDP is inflation-adjusted to chained 2012 levels and shown at seasonally adjusted annualized rates.

2020 : -3.4%2021 Forecast: +5.7%

2008: -0.1%2009: -2.5%

We are here

Projectedgrowth

3

Retail sales at restaurants and hotels exceedpre-pandemic levels for the first time in June 2021

Source: Colorado Department of Revenue.

Colorado Retail SalesIndex January 2020 = 100

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Food & Beverage (at home)

Motor Vehicles & PartsTotal Retail SalesNonstore Retailers

AccommodationRestaurants & Bars

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-20

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Monthly Retail Trade & Food Services SalesDaily Consumer Spending on Retail

Spending on retail appears to slow, recedes by the endof August for restaurants, hotels, and entertainmentColorado Monthly Retail Sales & Daily Consumer SpendingPercent Change from January 2020

Source: Colorado Department of Revenue. Affinity via Opportunity Insights, Economic Tracker.OpenTable.

-40

-30

-20

-10

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10

01Jun

15Jun

29Jun

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24Aug

Entertainment & Rec.Spending

Seated Diners

Restaurants & Hotels Spending

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Residential

Trips for retail & recreation dip in August, time spent athome remains elevatedColorado Daily Trips & Average Hours Spent at HomePercent Change from January 2020

Source: Google COVID-19 Community Mobility. Data represents seven-day moving average.

-60

-50

-40

-30

-20

-10

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10

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Retail & Recreation

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-100%

-80%

-60%

-40%

-20%

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DIA TrafficU.S. TrafficU.S. Daily TSA Travelers

Leisure & hospitality sector still challenged in part bylower travel and tourist activityMonthly Domestic Passenger Traffic and Daily TSA Traveler ThroughputPercent change from 2019 levels

Source: U.S. Bureau of Transportation Statistics; Transportation Security Administration (TSA).TSA data represents 7-day averages.

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Colorado has regained 78.1 percent of jobs lost sincethe pandemic began, with a slowing recovery in August

Source: U.S. Bureau of Labor Statistics. Data are seasonally adjusted.

Change in Colorado EmploymentThousands of Jobs

-375,800-375

-325

-275

-225

-175

-125

-75

-25

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Monthly Gain or Loss

Change Relative toFebruary 2020

-82,400

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Colorado’s unemployment rate dropped below6 percent in August

Source: U.S. Bureau of Labor Statistics. Data are seasonally adjusted.

Unemployment rates

0%

2%

4%

6%

8%

10%

12%

14%

1996 2001 2006 2011 2016 2021

5.9%5.2%

Colorado

U.S.

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Enhanced Federal Unemployment Benefits Ended inSeptember

Source: Colorado Department of Labor and Employment

0

50,000

100,000

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2000 2005 2010 2015 2020

RegularBenefits

Federal PUABenefits

ExtendedFederal Benefits

Weekly Claims overThree Business Cycles

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Monthly Average Claims

Regular Benefits

Federal PEUC

Federal PUA Benefits

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-140 -120 -100 -80 -60 -40 -20 0

Accommodation & Food ServicesRetail TradeHealth Care & Social AssistanceArts, Entertainment & RecreationOther ServicesAdministrative & Support ServicesLocal GovernmentManufacturingConstructionEducational ServicesProfessional, Scientific & Technical ServicesReal EstateWholesale TradeTransportation & UtilitiesInformationMining & LoggingManagement of Companies & EnterprisesState GovernmentFinance & InsuranceFederal Government

Accommodation & food services leads job gains in 2021,still down 25,200 jobs

Source: U.S. Bureau of Labor Statistics. Data are seasonally adjusted.

Thousands of Job Losses

Job LossesFebruary 2020 to

April 2020

Job LossesFebruary 2020 to

August 2021

Jobs regained April2020 to August 2021

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Factors Differ for Industries Lagging In Jobs Recovery

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Manufacturing

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Construction

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Leisure & Hospitality

Job Openings since January 2020January 2020 = 100

Source: U.S. Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS). Seasonally adjusted. Data throughJuly 2021.

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5,000

10,000

15,000

20,000 Unemployment

Job Openings: Total Nonfarm

Hires: Total Nonfarm

Job openings surpass unemployed, outpace hiringactivity

U.S. Unemployment, Job Openings, and HiresThousands

Source: U.S. Bureau of Labor Statistics, Current Population Survey (CPS) and Job Openings and Labor TurnoverSurvey (JOLTS). Seasonally adjusted. Data through July 2021.

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Employment recovery varies by region

Source: U.S. Bureau of Labor Statistics, CES (establishment survey). Seasonally adjusted. Data through June 2021.

Employment Growth by Region since January 2020January 2020 = 100

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Denver MetroColoradoU.S.

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ColoradoFort CollinsU.S.

Colorado Springs

Boulder

Pueblo

Greeley

Grand Junction

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The gap between low- and high-wage workerspersists

Source: Opportunity Insights. More interactive charts available: www.tracktherecovery.org

Percent change in Colorado employment since January 2020

High Income

Middle Income

Low Income

+8.9%

-0.5%

-23.4%

2020 2021

-40%

-30%

-20%

-10%

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Energy prices continue to rise as travel resumes andunseasonably hot weather persists

Source: Energy Information Administration (weekly average prices).

West Texas IntermediateCrude Oil PriceDollars per Barrel

Henry HubNatural Gas Price

Dollars per Mcf

$4.06

$72.75

16

Crude oil production has stabilized at 2018 levels

Source: Energy Information Administration (production shown as three-month moving averages).

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New drilling activity is showing signs of life as pricesincrease

Source: Baker Hughes.

U.S. Active Drilling Rig Counts Colorado Rig Counts

Oil & GasCrude Oil

Natural Gas

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Declining transfer payments drag on personal income

Source: U.S. Bureau of Economic Analysis with Legislative Council Staff calculations.Data shown as seasonally adjusted annual rates and are not adjusted for inflation.

U.S. Personal Income and Its ContributionsContributions to Percent Change, Year-over-Year

Transfer Payments

-10%

-5%

0%

5%

10%

15%

20%

I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Personal Income

Social Insurance Contributions

Dividends, Interest & Rent

Proprietors' Income

Wages & Salaries

Employer Contributions

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-3%

-2%

-1%

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Inflationary pressure continues in some sectors

U.S. City Average CPI-U InflationYear-over-Year Change in Prices Selected Components, August 2021

Headline*

Core**4.0%

Source: U.S. Bureau of Labor Statistics.Inflation is calculated as the growth in urban area prices in a given period relative to the same period in the prior year.*Headline inflation includes all products and services. **Core inflation excludes food and energy prices.

5.2%

5.2%

4.0%

24.9%

3.7%

3.5%

4.2%

17.6%

0.4%

3.4%

1.4%

3.5%

HeadlineCore

EnergyFood

HousingApparel

TransportationMedical Care

RecreationEducation

Other

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Home prices accelerated during the pandemic but areexpected to level off some in the years ahead

Source: Federal Housing Finance Agency (FHFA). MSA = Metropolitan Statistical Area.

FHFA All Transactions Home Price IndexIndex 100 = 2012Q2 (trough)

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220 Boulder MSADenver MSAGreeley MSAFort Collins MSAColoradoUnited States

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220 Colorado Springs MSAPueblo MSAGrand Junction MSAColoradoUnited States

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Course of the pandemic reemerges as key risk

• Ongoing uncertainty from the course of the COVID-19pandemic and vaccine rollout, particularly with wave of Deltavariant

• Downside: Continued supply and demand mismatches, waningfiscal stimulus, inflation, longer term economic “scarring”

• Upside: Passage of federal infrastructure spending package,with positive consequences for spending, employment,incomes, and tax revenues

• Near-term risks appear weighted to the downside

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Questions?

David HansenSenior Economist • Legislative Council StaffDavid.hansen@state.co.us • 303-866-2633

www.leg.colorado.gov/lcs