Despite some persistent challenges, key indicators of Colorado Springs’ economy appear strong, even though many who live in Colorado Springs may not believe it. That was the core message from Bill Craighead, program director for the 28th annual UCCS Economic Forum.
Craighead, who took over the forum last year after years of teaching economics at both the University of Colorado and the U.S. Air Force Academy, told a packed audience at the Ent Center for the Arts on Thursday that the Federal Reserve’s polling He said this shows that there is a huge gap between people. their perceptions of their own personal finances (fairly good) and of the national economy as a whole (fairly bad).
Craighead acknowledged that Gen Z economist Tik-Toker and author Kyla Scanlon coined the term, and said people are suffering from “vibe sessions.”
“This was a real challenge for me as an economist, because the data tells us much more positive things than what we hear when we go out,” Craighead said.
So why is there such a gloomy atmosphere? Craighead said that while national inflation and unemployment rates are both currently below their long-term averages, there are strong recent memories of times when both rates were very high. Inflation in particular has reached its highest level in decades in the years following the coronavirus pandemic.
“Not only did people lose purchasing power during this period, but psychologically, I think it had a profound impact on people,” Craighead said. The last time we had high inflation was in the early ’80s, so people didn’t really experience it. ”
Craighead said Americans are still recovering from the shock. Data from the Federal Reserve and the U.S. Bureau of Labor Statistics shows that median wage growth has outpaced inflation since about February 2023. In other words, most people should regain the ability to pay for their needs through higher pay raises.
Regarding the local economy, Craighead said there are quite a few positive signs for the Pikes Peak region. Consistent with national trends, the pandemic appears to have stimulated a wave of entrepreneurship, with the number of businesses in Colorado Springs now 10% higher than expected pre-pandemic trends.
Local employment continues to grow, albeit at a slower pace. More tourists and more traffic at the Colorado Springs Airport. The city’s office vacancy rate is up slightly from pre-pandemic levels, at just under 10%. In Denver, by contrast, the percentage of vacant offices is more than double.
However, not everything is rosy for Springs. Indeed, while rental prices have fallen from their August 2022 peak due to a surge in new apartment construction in the city, they are still well above pre-pandemic levels.
Meanwhile, there are several hundred more homes left on the market than in recent years, and high interest rates are helping to stabilize home prices. But high interest payments make it harder for new home buyers to get a mortgage, and potential home sellers are also reluctant to part with their current rates. The Federal Reserve has started lowering interest rates, but the situation is also increasing construction costs.
“I think housing affordability remains the biggest issue for the economy in this area,” Craighead said.
