Colorado economists say the risk of a recession in the state is growing

The Governor's Office of State Planning and Budgeting says there is a 50-50 chance that Colorado will experience a mild recession this year -- up from 40% in March, while the risk of a more severe recession is 25%.

"We have a lot of downside risk," budget director Mark Ferrandino told lawmakers on the Joint Budget Committee.  

Economists from both the budget office and Legislative Council say Colorado's economy is slowing.

"In recent months, Colorado has fallen behind the nation on several indicators," said Dr. Elizabeth Ramey, Principal Economist with the Legislative Council Staff, before the committee. 

Ramey says the state's unemployment rate is higher than the national rate, while wage growth is lower. Consumer confidence is also sinking along with sales tax revenue.

Meanwhile, credit card debt is the highest it's been in 14 years in Colorado, with half of all spending coming from the wealthiest 10% of Coloradans.

Bryce Cooke, deputy director of the planning and budgeting office, says consumer spending is the main driver of economic activity,

"For many households, we're seeing that they are going to have to pull back to more essential purchases," Cooke said before the committee.

Economists are expecting a $700 million shortfall in the state's general fund this year and Ferrandino says it could triple depending on what happens at the federal level.

"I think there is becoming more and more fear that we could get into a place of stagflation," Ferrandino. 

Ferrandino says President Donald Trump's "Big Beautiful Bill" would be a further drag on the state's economy.

Ferrandino says changes to Medicaid, food stamps and taxes in the Colorado House version would mean $1 billion loss in revenue for the state. If there's a recession on top of that, he says, the state would be in the hole $2.6 billion, and that's before you factor in tariffs.

Ferrandino says the uncertainty over tariffs continues to rattle the economy. 

"The more uncertainty we have and the more chaos there is in the system the more likely we will see that worse-case scenario," Ferrandino said. 

The White House released its own analysis of President Trump's tax and spending bill, and it differs sharply from the state's analysis.

The President's Council of Economic Advisors looked at how the bill will impact each state, and it found Coloradans will come out ahead.

It estimates wages here will go up $7,000 to 13,300 annually, and take-home pay will increase $8,700 to $15,000.

Editor's Note: An earlier version of this story incorrectly attributed the quote about the state falling behind to a person other than Dr. Elizabeth Ramey.