Colorado business filings decline, reflecting coronavirus slowdown

This content was originally published by the Longmont Observer and is licensed under a Creative Commons license.

Colorado business filings were undercut by COVID-19 in the first quarter of 2020, according to The Quarterly Business and Economic Indicators report published today.

The Quarterly Business and Economic Indicators report is prepared by the Leeds Business Research Division (BRD) at CU Boulder in conjunction with the Colorado Secretary of State’s Office. The latest report shows 33,848 new corporations, nonprofits and other entities filed initial documents with the Secretary of State’s Office in the first quarter of this year. However, the rapid onset of COVID-19 impacted every facet of Colorado’s economy, including new entity filings and renewals.

Due to COVID-19, a decade of job-growth in Colorado has come to an end with a spike in jobless claims of 105,073 for the week ending on April 11. The cumulative total of 301,177 jobless claims during the last five weeks is equivalent to the number of jobless claims over the previous three full years combined. The latest unemployment data shows Colorado’s unemployment rate increased from 2.5% to 4.5% in the month of March alone. Colorado’s unemployment rate is now higher than the U.S. unemployment rate of 4.4%.

“Before the pandemic, Colorado’s economy was outperforming the nation. Now, unemployment more than doubled in a month and many small businesses are struggling to keep their doors open,” said Secretary Griswold. “The federal stimulus packages passed are a start, but Congress must take additional action focused on small businesses and everyday people immediately.”

Colorado’s economy overall was growing, at a slightly slowed down rate from 2019, before the COVID-19.

First quarter dissolution filings increased 6% from the first quarter of 2019. They fell 11.5% from the previous quarter. Trademarks (-15.7%) and trade name (-9.3%) filings also dropped sharply.

Entities in good standing declined 1% from the fourth quarter of 2019.

Colorado’s economy in 2020

“Business filings are often an early indicator of job growth,” said Rich Wobbekind, senior economist and faculty director of the Leeds Business Research Division. “The data clearly illustrates the deterioration in Colorado’s economic growth caused by this pandemic. How badly its affected will depend on how long this goes on.”

Economic data lags the fast-moving real world scenario COVID-19 is presenting. While the most recent U.S. and Colorado gross domestic product (GDP) numbers reflect growth (2.1% and 3.4% year-over-year, respectively), projections for the future predict a double-digit drop.

Colorado business confidence for the second quarter of 2020 is at an historic low, according to the latest Leeds Business Confidence Index (LBCI). Though the LBCI does recover somewhat looking to the third quarter of 2020, indicating confidence in the strength of Colorado’s economy going into the crisis and its ability to rebound.

Building permits decreased 1.6% year-over-year in February, according to the report, though the value of building permits increased 1.1%. March numbers aren’t out yet, so it’s difficult to tell at this point the impact of COVID-19 on construction, but permits are expected to lag in the coming months.