With inflation steadily ramping up its pressure on state residents, many citizens are now re-tightening their wallets once again in preparation for the uncertain future. According to the U.S. Bureau of Labor Statistics, for the month of October 2022, the west coast saw an increase in new business formations by 2 percent. A total of 31,889 new startup businesses were reported across the nation for the month, with 8,992 of those businesses being started in our corner of the West. Our state also saw an explosion of entrepreneurs and business owners beginning new ventures, with more than 110,567 new applications being submitted. Additional state data has not yet been released.
Colorado is home to 674,741 small businesses, with 1.2 million small business employees, representing half of Colorado workers. 99.5 percent of the state’s businesses are defined as small businesses with fewer than 500 employees. Colorado’s employment recovery has outperformed most other states, increasing 1.2 percent above the pre-recession peak as of May 2022. This ranks Colorado’s recovery 11th nationally, though the nation as a whole remained 0.5 percent below pre-recession levels as of May.
Economist Brian Lewandowski, executive director of the Business Research Division at the Leeds School of Business, University of Colorado Boulder, said the third-quarter growth was a surprise because of past trends. New business filings were higher in the third quarter than in the second only four times in the past 17 years, including this year. “Our expectation is that we’ll see a net job growth in the fourth quarter of the year,” he said. “We’re operating under the assumption that there will be a slowdown in the first half of 2023 nationally. We’re concerned about decreased investment in general, given the higher cost of capital and higher cost of borrowing. We’re concerned about the exchange rate impacting exports in general nationally. Colorado is not a heavy exporting state. And we’re concerned about how inflation can chip away at real consumption growth. That sort of the backdrop to why we’re thinking there could be a mild recession or flattening of economic growth in the first half of 2023.”
With Governor Jared Polis’ midterm re-election comes further calls for investments into the state’s small businesses through his 2023-2024 budget proposal, including $8 million to continue the nearly free cost to start a small business. He also proposes further reducing background check fees for people entering the childcare workforce in order to grow the profession, as well as free transit during certain months to save commuters money while equally improving air quality (especially during August which is peak ozone month). The Governor is also proposing that $15 million be repurposed towards innovative affordable workforce housing projects through the private-public partnership program to save people money and create new housing opportunities. While times may be tough, and there are certainly signs that might suggest things could become more difficult in the coming months, there are equal moments that give cause for the continuing optimism that we will survive and thrive once more again.