Economists with BBVA Economic Research say the U.S. economic recovery process will be characterized by a slow expansion rate over a prolonged period of time, although the nation will still fare better than other developed countries.
Regionally, several challenges will result in below-average economic growth rates compared to
previous expansion cycles.
Fiscal pressures from reduced tax revenues have increased budget gaps. And, because states will have to cut spending and/or increase taxes, it could partially offset the impact of federal fiscal stimulus, affecting long-term growth, BBVA’s Third Quarter U.S. Regional Watch said.
And cautious consumers – whose financial and real estate wealth has declined significantly – are increasing savings, rather than spending, which, along with weakness in the labor market, will soften the pace of domestic demand.
As for the Colorado economy, the best possible economic driver is strong growth in primary industries and primary occupations because these industries will drive growth indirectly in other industries, such as business-to-business and personal services sectors.
In order for Colorado to remain of the nation’s top performing economies, BBVA economists said, partnerships need to be formed or strengthened among the sectors of education, government and private industry.