Denver Battles High Inflation Rate, Impacting Construction, Housing, and Finance Industries
Denver, the Mile High City, is grappling with a soaring inflation rate of 4.7% in July, marking the second-highest in the country after Tampa, Florida. According to Senior Economist Mark Johnson, there is some consolation, as the inflation rate in Denver is actually dropping, with a decline from 5.1% in May and 5.7% in March.
However, the high inflation rate is predicted to have long-lasting consequences, particularly on industries such as construction, housing, and finance. The inflation surge is primarily attributed to the escalating costs of energy and housing. Household energy services witnessed a staggering increase of 15.4%, burdening residents’ budgets.
The housing crisis in Denver continues to worsen, with housing costs soaring by 10.4% for renters and 9.5% for owners. This spike significantly contributes to the overall inflation rate. The good news is that rent inflation is projected to slow down as landlords gradually make up for missed increases during the first year of the pandemic.
One area that experienced a positive shift is gas prices, which saw a significant decrease of 20% in July. This drop played a role in alleviating the inflationary pressure in Colorado as a whole.
While fuel costs may have dipped, the same cannot be said for food prices. Denverites are experiencing a continued rise in the cost of eating out, with a 7.8% increase, and eating at home, with a 4.2% hike compared to a year ago. This trend is adding to the financial strain faced by consumers.
Regarding job growth, Colorado encountered a surge in the first half of 2022. However, growth significantly slowed down to a mere 1.5% in June. With an unemployment rate resting at 2.8%, it appears that the state is grappling with a supply issue rather than a lack of job demand.
Despite economic challenges, Colorado seems determined to foster its entrepreneurial spirit. The state witnessed a record number of new startups during the second quarter, defying expectations even after the end of a business filing discount.
Unfortunately, not all businesses are thriving. Trucking company Yellow Corp recently filed for bankruptcy, leading to the closure of regular operations and causing over 22,000 job losses nationwide. In addition, courier giant FedEx plans to shut down a shipping facility in Colorado Springs, resulting in the loss of 94 jobs.
The adverse economic climate has also impacted small businesses in Colorado. Many of them are scaling back on full-time hires and, instead, increasing their reliance on temporary and part-time workers. Additionally, higher rental costs and mounting concerns about an impending recession have further dampened the spirits of Colorado’s small business owners.
As Denver grapples with high inflation, it remains to be seen how the city’s economy will weather the storm. The challenges faced by various industries and small businesses underscore the need for strategic economic policies and planning to ensure the long-term stability and growth of Colorado’s economy.
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