Colorado's economy is flush and so are expected revenues to the state, economic forecasters told legislators Wednesday.
Even though state forecasters said months ago that Colorado was at near full employment because of the 2.9 percent statewide unemployment rate, more people have gotten jobs this year from people who left the labor market after the Great Recession, the economists said.
"We would have told you at this time last year that the economy was at full employment, but it seems that we found more workers that were able to come back into the labor force," legislative economist Greg Sobetski told the Colorado Legislature's Joint Budget Committee. "Most sectors are adding jobs. By and large, this is reflective of an expanding economy, one where more workers are coming in. That means more income for households. That also means, coupled with a tight labor market, that there's more money that's being demanded by these laborers and personal income is increasing as well."
Overall, the state continues to see solid economic growth with expectations of even more expansion, some of which is due to relatively low interest rates and federal tax cuts pushed through Congress last year, the economists said.
The good economy also is because business confidence remains relatively high, and oil production on the Front Range has reached near record levels. Natural gas production on the Western Slope has increased slightly, but remains stymied by low commodity prices, the economists said.
Still, while the economists said there was a low risk of another recession hitting the state anytime soon, there are concerns in their economic forecasts, which mostly center on a continued tight labor market, rising housing costs and the impact federal tariffs could have on the state's agriculture industry.
"The economic outlook moving forward is one where we anticipate continued expansion, but with rising deceleration and rising recessionary risks toward the end of the forecast period, and that means late 2019 and into 2020," Sobetski said. "The current economic expansion is on track to be the longest in U.S. history. Currently, it's the second longest surpassed only by the 1990s expansion. The current expansion is being driven overwhelmingly by advances in consumer spending, but also by business activity."
All of that is expected to lead to another surplus in state revenue. In March, economists predicted a $1.2 billion surplus for the current fiscal year, which ends June 30. About half of that money — $495 million — was earmarked for transportation funding, with the remainder going to K-12 education and other state programs.
The economists are predicting another $1 billion surplus next year.
Increases in mining production in the state are also expected to nearly double estimated severance tax revenues next year, from about $101 million this year to $209 million next year. That increase is expected to continue through the end of the 2019-20 fiscal year, with about $166 million in revenues expected.
For the western region of the state, forecasters said things were looking up. Despite slow employment growth in Grand Junction, which was at a negative 0.4 percent in 2017, it's increased 3.4 percent in the first six months of this year, economists said.
The economists also said that the region's construction market has started to gain momentum after years of subpar growth.
They also said that while visitation at the Black Canyon of the Gunnison National Park increased 12.3 percent in the first four months of 2018, visitors to Colorado National Monument decreased 11.7 percent during that time.