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Colorado unemployment rate reaches historic low of 2.5%

Colorado’s seasonally adjusted unemployment rate reached a historic low of 2.5% in December, according to a monthly update Friday from the Colorado Department of Labor and Employment.

“As it stands this is the lowest unemployment rate since the series began in 1976,” said Ryan Gedney, a senior economist with the labor department.

That unemployment rate reflected 80,200 people actively looking for work in December in Colorado out of a civilian labor force of 3.17 million people. That is down by 33,300 people from the 113,500 unemployed workers in the state in December 2018.

Colorado entered 2019 with an unemployment rate of 3.6% and likely ended it at 2.5%. Driving that decline was an estimated 1.9% increase in non-farm jobs, which rose by an estimated 56,600.

Colorado’s job gains last year, while not the most robust of the decade, outstripped the increase in the civilian labor force, which rose by 47,900 people. Adding more jobs than workers is what helped push down the unemployment rate from already tight levels.

Employers added a relatively anemic 1,400 workers between November and December, which would indicate the economy was losing steam at the end of the year. But November’s gain over October was revised to 9,400, versus an original estimate of 4,100.

“There is a good chance those figures get revised upward,” Gedney said of the December payroll counts.

Broomfield economist Gary Horvath, after reading the report, expressed dismay about how tight the labor market has gotten in Colorado.

“Good grief Charlie Brown, how low can we go?” he asked.

Horvath said it will be interesting to see how companies cope with the lack of workers. Some might try to make themselves more efficient, doing more work with fewer people, not unlike what the oil and gas industry did last decade when hit with lower commodity prices.

Others might invest more capital in robotics and artificial intelligence and other systems to fill the gap, effectively replacing workers. Some may just bide their time until the economy slows and more workers become available.

Periods of very low unemployment are often followed by a recession that results from an overheated economy. In 2000, Colorado’s unemployment rate doubled two years after hitting a new low of 2.7%, largely because the Federal Reserve began raising interest rates to slow things down.

Colorado didn’t break through the dot-com era unemployment lows until early 2017. Initial estimates had the rate at 2.3%, but those were revised to 2.6%. Rather than rolling over into a recession, nearly three years later Colorado revisited the low mark in October and November.