Patty Silverstein is forecasting slower economic growth in the Boulder County region this year, but not a recession.
Silverstein, with Development Research Partners, was the keynote speaker at the Advance Longmont Economic Summit on Tuesday at the Longmont Museum — the event’s return to in person since 2019. Her speech focused on comparing historical trends to where the Boulder County and Denver Metro area actually sits following the pandemic and economic predictions for 2023.
She prefaced her talk by adding that while she thinks this coming year will be slower, she doesn’t think the country will meet the criteria of a recession.
“Just to put it out there, I am not in the recession camp,” Silverstein said. “I know there’s a lot of angst out there amongst our businesses, amongst our consumers — and granted, there is a lot to be worried about — but I’m also seeing a lot to be excited about and a lot to look forward to and a lot of reasons to be believe we will avoid a major turn down here.”
She pointed to the tremendous employment growth in the Denver metro area, with Boulder County seeing a 4.5% growth from 2021 to 2022. While Weld County saw slower growth than other urbanized areas, it too increased its employment opportunities.
Professional and business services, the largest sector in the Denver metro, saw the most growth last year. Manufacturing also grew at a strong pace, Silverstein said.
“That’s really important because manufacturing is considered one of those primary industries, meaning those are the industries that are bringing dollars from outside of the community into the community,” she explained.
The two sectors lagging behind since the pandemic are leisure and hospitality — which includes businesses like restaurants — and government.
With Colorado at 3.3% unemployment, it’s sitting in the middle of the country for joblessness rates and has two jobs for every unemployed person in the state right now. Silverstein added that because Colorado also has the second highest labor force participation rate, meaning that there’s not many more people left to pull into the labor force.
“If you are in the hiring mode for your company, if you are involved in the HR, do whatever you can to maintain your staff, but also be trying to think creatively about how to get your work done with fewer people because that is our reality,” she said.
Colorado matched the U.S. for inflation last year, and Silverstein expects that to temper in 2023 though inflation will still be above historical trends — she’s expected 4.5%.
The larger than average inflation trends combined with slower population growth in the Denver metro means that Silverstein isn’t expecting much economic growth this year nor much of a shrinking.
On the residential real estate side, she’s also expecting things to continue cooling down with higher mortgage rates.
“We went from incredibly hot, incredibly active marketplaces in 2020 and 2021 to a 20% drop off in the number of homes that were trading hands in 2022,” Silverstein said.
With the Boulder metro area the seventh most expensive housing market in the U.S., and Denver the 14th, Silverstein doesn’t expect house prices to rise as much as they have the past few years. Instead she’s predicting just a 2% price increase, which is below previous trends, but will help correct the house prices that are currently $65,000 higher than pre-pandemic trends would have indicated.
On the apartment side, Silverstein was excited to see the Denver metro area “finally” building more units. With about 17,000 new units expected this year, she said this puts the area on pace for having enough units available for the growing population.
“We are now, dare I say, closer to an equilibrium in the market,” she said.