(The Center Square) – Pessimism persists for Colorado business leaders as they look ahead to the third quarter, according to a new survey.

Interest rates, inflation and a general concern about a recession led to a negative view of the next 90 days, according to the Leeds Business Confidence Index, a survey of 191 qualified panelists conducted by the Leeds School of Business at the University of Colorado.

A rating of 50 in the survey indicates a neutral view. Business leaders were questioned on the national and state economies, industry sales, profits, hiring plans and capital expenditures. Colorado’s index fell from 45.1 entering the second quarter of the year to 44.1 entering the third quarter. All six components recorded negative perceptions. However, the index looking ahead to the fourth quarter increased to 44.6.

“Fewer respondents believe the U.S. will enter a recession in 2023 versus last quarter,” the report stated, noting a decrease from 56.9% to 42.9%.

The outlook for the national economy increased 2.2 points to 39.3 from the second quarter, but the state economy fell 2.5 to 44.9.

“For the state economy, 44% of respondents were neutral on the outlook, while 37.7% project a moderate-to-strong decrease and 18.3% expect an increase,” the report stated. “On the national level, more than half (53.9%) were projecting a decrease versus 17.3% projecting an increase (28.8% remained neutral).”

Approximately 10% of panelists expect inflation to fall below 3% in 2023, but 44.9% expected inflation to fall below 3% in 2024. Inflation in the Denver-Aurora-Lakewood metropolitan statistical area is predicted to increase 4.3% in 2023, according to the Business Research Division’s forecasting model published in the report.

Colorado was ranked 18th nationally in employment recovery, according to the report. Employment increased 2.8% in May compared to last year while the national rate was 2.5% for the same period.

There were 30,200 new jobs in Colorado in May, an increase of 1.1% compared to last May. Forecast models show the state’s employment growth will slow to 1.8% in 2023 after a growth rate of 4% in 2022.

Colorado’s per capita personal income increased 5.3% during the fourth quarter of 2022, ranking it 28th nationally, and personal income increased 5.9%, ranking it 27th. Personal income is projected to grow 7.1% in 2023, according to the report.

The most current data for the state’s gross domestic product showed an annualized rate of 2.7% during the fourth quarter of 2022 and 1.7% compared to the previous year.

Panelists were asked to name Colorado’s most pressing challenges. Of the 164 leaders who responded to open-ended answers, housing costs were the most frequently cited challenge (27.4%), followed by politics (21.3%) and labor (20.1%).