Possible recession could hit Pikes Peak region soon, local economist says

Posted at 9:10 PM, Jul 20, 2018
and last updated 2018-07-20 23:10:14-04

It’s been about 10 years since the last recession and Colorado has really rebounded. However, some economists are saying another recession could soon hit the Pikes Peak region. 

Tatiana Bailey, director of the UCCS Economic Forum, says there are hints that a downturn could happen by late next year or early 2020. She says Colorado Springs and Colorado are still growing in many areas, but the trade war, an already tight labor market, and inflation are causing concern. 

Bailey said, "I’m hoping that it’ll be a mild recession, certainly not like the Great Recession, but we’ll have to see."

After the harsh decline in economic activity that hit global markets 10 years ago Colorado is finally back on top. 

"We’re in a really good spot. We really are. It’s amazing. It took a long time to come out of the recession."

In the last four or five years, Bailey says state and local economies have really taken off. 

"We had sort of the perfect scenario where interest rates were still really low, consumers and businesses started to become more confident."

However, the incline those economies have been on could soon take a descent. 

"It does seem likely that we have…six to twelve months of some steam left and then probably some things hitting unfortunately at once."

A contributing factor is some over exuberance. An example is the tight labor market. 

"We have more job postings than we have people looking for work. What happens? You have wage push inflation and once that starts to happen businesses have no choice but to start to increase wages."

Another component is that interest rates are going up. 

"That’s going to constrain some of the business investment and probably personal investment too in terms of new homes, cars, and so forth. We’re not there yet, but it’s coming."

She says one of the most concerning things: trade wars.

"If you already have inflation and then you have even more price increases because of tariffs and protectionism people will really start to clamp down."

People may stop buying as many goods which could have some negative impacts as 2/3 of the U.S. economy comes from just consumers. 

In case a recession does happen Bailey has some tips. 

"As a small business owner, I would say if you’re doing well this is a really good time to invest before the party is over."

If you’re thinking about a small investment, whether it’s a newer car, home, or upgrades to your home, she says it’s a good time now while interest rates are still relatively low. 

Bailey says she will be keeping a very close eye on all these factors and the data that goes with them.