Economists warned us about a recession last year, and it never really happened. But that isn’t because the economy improved, and that’s what worries some experts heading into 2026.
“You can forestall some of it,” says Phyllis Resnick, the chief economist and executive director for Colorado State University’s Colorado Futures Center, of a possible downturn. “But it gets harder and harder to do so.”
Resnick admits 2025 wasn’t quite as bad as people in her profession thought it might be. But it wasn’t booming, and the growth in the Colorado economy showed signs of slowing. State officials predicted a 50-50 chance of a recession for 2026 back in September.
Based on the latest economic indicators, Resnick recommends approaching 2026 with caution. This was the case even when the U.S. economy rebounded to 4.3 percent growth in Gross Domestic Product (GDP) in October.
“Nothing, to me, has changed,” Resnick says. “I might feel differently if we get multiple quarters in a row of [October’s] level of economic performance. But that waits to be seen.”
By caution, Resnick means preparing for a recession. Consumers should save a bit more, and businesses should keep expenses low and prepare for less spending by consumers.
After all, the signs of a possible downturn are all there. Colorado has more federal employees than many other states, mostly in Lakewood and Colorado Springs, though Northern Colorado also has federal employees in places such as the U.S. Forest Service. Many federal employees are currently affected by layoffs—Colorado lost thousands of federal jobs in 2025—and just suffered a long government shutdown. Tariffs and deportations are affecting industries such as manufacturing and agriculture. High housing prices continue to eat into paychecks.
Colorado once led the nation in people moving to our state, but that has slowed significantly in the last few years. Even a profitable Colorado staple, the ski season, is historically bad this year, as temperatures in the 60s killed any hopes of a white Christmas up and down I-25. This all affects Northern Colorado’s economy.
“Nothing is completely insulated,” Resnick says.
But there’s a caveat, and it’s even bigger than the obvious one that this is all educated forecasting and speculation. It’s that the current federal administration is even harder to predict than the economy, Resnick says.
“The thing that’s so tricky is that the policy is so erratic,” she says. “That’s not something we’ve experienced before, and the whiplash is difficult for business owners.”
Mirrored fortunes
Northern Colorado’s outlook is more like the state’s every year, says Kelly Caufield, executive director of the Common Sense Institute (CSI). The organization was founded in 2010 by business and community leaders who prefer to look at economic analysis to recommend policy instead of partisanship. They examine Northern Colorado (Fort Collins in particular) as a part of their nationwide scope.
The CSI predicts economic growth to be slightly worse across Northern Colorado than other parts of the state because the region’s boom has slowed a bit in the last few years. But there are some encouraging signs that the state, and Northern Colorado in particular, may dodge some of the toughest times, Resnick says.
Oil and gas, a staple in Weld County, is always in demand, and prices have remained fairly steady. Universities also offer steady employment in Northern Colorado, Resnick says, and the region weighs a little heavy on food and beverage, which is also always in demand and probably won’t be as affected by tariffs. There even appears to be a little more insulation in Northern Colorado just because certain parts of it are so wealthy, such as Windsor and Fort Collins.
“There’s a fair amount of wealth up there that can continue to spend,” Resnick says. “This has protected Boulder in the past, and Fort Collins is becoming more similar to that.”
The University of Colorado’s team of economists at the Leeds School of Business projects a slightly sunnier state forecast. The state’s GDP should grow by 2.9 percent in 2026, according to the annual Colorado Business Economic Outlook report. That number, while not booming, would outpace national growth.
The region also boasts both established and emerging industries: Agriculture, energy and manufacturing anchor the local economy while new opportunities continue to present themselves in bioscience, fabrication, e-commerce, information technology, plastics, food processing and manufacturing, the report states.
“With its diverse economy, strong infrastructure, skilled workforce and collaborative partnerships, Northern Colorado is a region growing with purpose,” the report states.
October’s national economic report does show signs that the state may forestall a recession well into 2026, even with the caution expressed by Resnick. Caufield agrees.
“The state continues to generate jobs,” she says.
Unemployment on the rise nationally, but not locally
The state’s unemployment rate fell from 4.7 percent in June to 3.9 percent in November, while the nation’s unemployment rate rose from 4.1 percent in June to 4.6 percent in November.
This worries Resnick, who says rising unemployment across the nation is never a good thing despite the state’s steady success. Caufield also warns that Colorado won’t escape the pain felt by national economic conditions, and the state should prepare for hundreds of millions in reduced spending.
The high cost of housing continues to loom large in Colorado, meaning that even with a strong economy, many residents may not get to enjoy it, Caufield says. Housing may even be preventing the state economy from reaching its full potential.
“Housing costs have risen dramatically…making dual-income households a necessity rather than an option,” she says. “Would-be businesses and residents are less likely to move into such circumstances, and current businesses and residents are more likely to leave.”
