Forecast shows inflation in Colorado falling faster than national inflation, GDP growth expected to remain steady

DENVER - On September 19, 2024, the Governor’s Office of State Planning and Budgeting released the September economic forecast for Colorado. After several quarters of strong growth where Colorado outperformed the U.S. in wages and income, the forecast shows a return to more normalized levels in these areas as well as a tighter fiscal environment.

“Here in Colorado we continue working to save Coloradans money and drive economic growth, and we  know that in the coming year we are facing a more typical, tighter budget environment as inflation comes down. I’m committed to continue delivering results for Coloradans and saving people money, while delivering a responsible, balanced budget that ensures a strong fiscal future for our state,” said Governor Jared Polis.

Inflation continues to cool in the U.S. and Colorado, with Colorado inflation falling faster than the U.S. Falling inflation, combined with the slowing labor market growth and slight increase in unemployment, has prompted the first Federal Reserve interest rate cut in four years, and they expect to make more in the coming months. This will save Coloradans money on things like purchasing a home and credit card bills, and will also increase investments in construction to create more homes Coloradans can afford.

While the economic forecast shows lower inflation, that same lower inflation also reduces the allowable increase under the TABOR cap formula.

In FY 2023-24, TABOR refunds are estimated to be $1,660.3 million, a $219.5 million upward revision from June, largely due to prior years’ refunds reported in the OSC TABOR Certification Letter. Preliminary General Fund revenue came in $85.9 million below the June forecast in FY 2023-24, largely a result of stronger than anticipated individual income refunds. FY 2024-25 and FY 2025-26 GF revenues are revised down $210.5 million and $502.0 million respectively, largely due to revisions down in aggregate wages and salaries and consumer demand for retail that impact individual income and sales tax revenue. Cash funds are expected to grow by 4.9 percent in FY 2024-25 and then increase 3.4 percent in FY 2025-26. Compared with the June forecast, cash funds are revised up $49.5 million and $14.4 million in FY 2024-25 and FY 2025-26 respectively, as miscellaneous and transportation revenue exceed prior expectations.

View the forecast, slides, and supplemental materials.