The Colorado Springs economy won’t recover the jobs lost in the COVID-19 pandemic until next year, according to an economist at the University of Colorado at Colorado Springs.
While the local economy is recovering faster than the rest of the nation, Tatiana Bailey, director of the UCCS Economic Forum, said business closures and other disruptions will make it difficult to return to the near-record low unemployment rate that was reached just before the pandemic triggered a statewide stay-at-home order. She made the comments during a virtual presentation to the Apartment Association of Southern Colorado.
Bailey forecasts that El Paso County’s unemployment rate will average more than 6% this year, or nearly double the 3.3% rate in 2019 before the pandemic inflated last year’s average to more than 7%. The hotel and restaurant industries are a long way from rehiring the employees laid off during the pandemic, and some restaurants and retailers have closed permanently, she said.
The Colorado Springs economy wasn’t hit as hard as the rest of the state or nation, with economic activity declining 2.8% last year, compared to a 3% decline for the state and a 3.5% drop for the nation. Bailey forecasts that local economic activity also will bounce back faster than the nation at 4.2%, this year compared with 4% for the nation, but not as fast as the 4.8% rebound she predicts for the state.
Strong growth in the business and professional sector, which includes the software industry and many military contractors, will help fuel the stronger economic rebound in Colorado Springs, Bailey said. That sector lost the lowest percentage of jobs during the pandemic, recovered them within a month or so and continued to add workers faster than any other sector for the rest of the year.
“That is why I am bullish on Colorado Springs. That sector is growing in its contribution both to employment and economic growth. It bodes well for the future,” Bailey said.
“While we are doing better than most, we still have a long way to go. I am expecting the job market to improve this summer when the economy opens up, but it will take a while to return to pre-pandemic levels, probably sometime in 2022.”
Bailey remains most concerned about the long-term unemployed — those who have been without a job for more than six months and make up 40% of the people who are out of work. Those people likely didn’t have a lot of savings before the pandemic and probably have fallen behind on rent, credit card payments and other debt. Until they return to work, she said, there isn’t much chance they will catch up.
At the same time, rent and home prices in Colorado Springs are surging. Bailey forecasts that the average apartment rent, near record levels, will jump another 6.4% this year to nearly $1,350. And she projects the median home price will surge more than 15% to more than $425,000. Despite recent increases, wages haven’t come close to keeping up, she said.