Two reports issued in December 2025 combined to paint a picture of a state economy that continued to grow through the end of the year but is showing signs of slowing down.
The University of Colorado Leeds School of Business released the 2026 Colorado Business Economic Outlook on Dec. 8. The 182-page report provides a comprehensive portrait of the state’s economy in 2025, a forecast for 2026 and industry-specific data, analysis and insights.
According to the report, “Colorado has demonstrated one of the strongest economies over the medium-term horizon.” When viewed over time from 2009-2024, Colorado had the fifth-fastest real GDP growth in the nation, sixth-fastest population and labor force growth, seventh-fastest employment growth and sixth-highest home price appreciation in the country.
In the short term, however, “Colorado’s performance has slipped in the rankings, demonstrating the difficulty in maintaining growth-on-growth for a sustained period,” the report states.
Still, Colorado’s real GDP was estimated to rise 2.1% in 2025 and 2.9% in 2026, outpacing national growth.
Although the state remained in the Top 10 in 2025 for per capita personal income, average annual pay and labor force participation, Colorado ranked 22nd in Q2 real GDP growth, and unemployment rate, labor force growth rate and employment growth rate all ranked the state in the 30s.
Overall job growth moderated, with employment estimated to have increased in 2025 by 0.4%, down from 1.1% in 2024. Among the state’s 11 top industries, job growth was greatest in Education and Health Services, Government, and Leisure and Hospitality. Job losses were greatest in Professional and Business Services, Trade, Transportation and Utilities, and Information.
Regional year-over-year employment growth was mixed in 2025, with Colorado Springs among four metropolitan statistical areas (MSAs) in the state that posted growth. The state’s rural areas also posted strong growth, while the Pueblo MSA recorded a modest decline, the report states.
The report forecasts a 0.6% rate of job growth for 2026.
“Moderate growth in GDP at the national and state level may appear inconsistent with the sluggish employment growth outlook,” says Richard Wobbekind, senior economist at the Leeds School of Business. “The labor market is constrained, particularly by slower population growth, which is dampened by lower levels of international immigration. When employment can’t expand as quickly, productivity has to pick up.”
Eight of the 11 top industries are projected to add jobs, however, with Education and Health Services, Government and Trade, and Transportation and Utilities leading the way.
Construction industry activity is projected to grow slightly in 2026, with an increase in employment of 0.5%. Nonresidential and multifamily construction will account for most of the increase, while weakness will continue in single-family building, and “the industry will continue to face persistent cost pressures, tariffs and extended project timelines,” the report states.
Manufacturing employment declined slightly in 2025 under pressure from high interest rates, elevated costs, shifting federal trade policies, workforce shortages and accelerated investment in automation and AI. In 2026, manufacturing employment is projected to resume slow growth, “though uncertainty in trade policy and capital spending remains a key risk,” the report states.
Education and Health Services, representing nearly one in eight Colorado jobs, saw estimated employment growth of 2.9% in 2025 and is projected to grow by 2% in 2026.
For detailed information on industry sectors and regions, access the report at colorado.edu/business/media/20290.
The Colorado Office of State Planning and Budgeting provides the governor’s office and the Legislature with information and recommendations to inform policy and budget decisions.
In a Dec. 19, 2025, economic and revenue outlook report to the Joint Budget Committee, the office noted that, although some data were lacking because of the government shutdown, “overall it appears that the economy is maintaining strength, supported by AI investment and labor demand in the healthcare sector.”
Although forecasts for economic growth in 2025 and 2026 were revised upward, “2026 [is] still expected to show weakness due to labor and consumer demand,” the report states. “The chance of a recession in the next 12 months remains at 50% with elevated downside risk,” including federal trade policy, inflation, a softening labor market, global geopolitical conflicts and questions about Federal Reserve independence, the report states.
Wage growth is projected to decelerate in 2026, and the disparities in wage growth between high- and low-income earners are expected to continue.
Retail sales grew significantly in 2025, driven by increases in spending on health and personal care, motor vehicles and general merchandise, but restaurant spending grew faster nationally than in Colorado — “a sign of discretionary spending capacity,” the report states. “Spending growth is driven by the top 20% of earners, while lower income consumers are struggling to keep up.”
View the Budget and Planning Office’s quarterly reports at colorado.gov/governor/economics.