Colorado could lose more than 250,000 jobs by summer, primarily in hospitality and retail, analysis finds

The industries hardest hit by the efforts to contain the novel coronavirus outbreak in Colorado could shed about 261,000 jobs through this summer, part of an unprecedented rise in unemployment, the Economic Policy Institute estimated Wednesday.

“Our best guess at this point is that the national economy could lose 14 million jobs by summer 2020,” economic analysis Julia Wolfe and David Cooper said in their analysis.

Last week, EPI estimated that Colorado faced potential job losses of around 56,000 out of 617,000 jobs in retail and hospitality and leisure, segments of the economy that are taking the biggest hit because of the spread of COVID-19. Wolfe and Cooper now acknowledge they were too conservative.

“Sadly, our predictions were likely too optimistic. Expectations of how many jobs will ultimately be lost are rapidly evolving, with new forecasts from different macroeconomic analysts being released on an almost daily basis,” the two wrote.

Adding a loss of 261,000 jobs to the roughly 79,000 people who were unemployed going into the downturn would push the state’s unemployment rate to around 10.7% by this summer, up from the historically low 2.5% rate in place from October to January. In the fall of 2010, in the aftermath of the Great Recession, the state unemployment rate reached a high of 8.9%.

It took two years from the financial crisis of September 2008 to reach peak unemployment. This time around, the job losses will be front-loaded and highly concentrated. If EPI is correct, hospitality and leisure and retail are looking at an unemployment rate of 42% in Colorado, even if it is only for a month or two.

Tourism is off the table and ski resorts in the state are closed. So too are restaurants and bars, although some are offering take-out. A wide range of personal services, from hair salons to tattoo parlors, were ordered closed last week, as were nonessential medical procedures. Flights have been cut sharply at Denver International Airport and the planes that are still flying are largely empty. Retailers, apart from those considered essential, have also shut down as more residents in the state come under shelter-in-place orders.

The EPI estimates don’t include the spill over that will hit other sectors in the economy that are still functioning. For example, Clear Choice Management in Greenwood Village, which runs a chain of dental clinics, informed the state it plans to lay off or furlough 120 headquarters workers. Dental offices have shut down because of the outbreak, with the exception of emergency surgeries.

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Ali Wolf, an economist at Meyers Research, said Wednesday on a conference call that she expects the U.S. unemployment rate could get into the 9% to 15% range. Normally that would be a dire forecast, but it puts her in the optimistic camp. She expects cities like metro Denver, Salt Lake City and San Francisco will fare better than the rest of the country. EPI by contrast, sees a slightly harder hit in Colorado because of its higher concentration of hospitality and retail jobs, which represent 26.5% of the state total versus versus 25.1% of all jobs nationally.