A 21.7% dip in folks filing to start a business in Colorado during the second quarter was largely attributed to the end of a program more than a year ago that reduced filing fees to $1, according to the latest quarterly data from the Colorado Secretary of State’s Office.
“It was the sharpest decrease year-over-year in the state (that) we’ve been tracking since 2005. That’s both in percentage terms and absolute numbers,” said Brian Lewandowski, executive director of University of Colorado’s Business Research Division, which analyzed the data for the Secretary of State’s Office.
New business filings reached a second-quarter high last year at 54,940. The fee returned to $50 in June 2023 and now, one year later, filings dropped to 43,029 for the quarter. That’s still above prior years, including years before the pandemic.
Lewandowski called it “a normalization of activity because of that somewhat anomalous growth we experienced with that fee reduction a year ago,” he said during a news conference Monday.
The new-business decline, however, coincided with a higher number of companies delinquent in renewals or filing proper documents. The number of delinquencies is up by almost 91,000 from a year ago. Overall though, the state has more companies in good standing to 963,373, up 17,500 from a year ago.
“Colorado businesses are staying in business,” Secretary of State Jena Griswold said. But, she added, “The cost of renewing a business just went up and that is because the state legislature two years ago passed increased reimbursements for county elections without funding it from the general fund.”
That means her office has to come up with extra funding, so it’s tapping business registration fees to support the reimbursements, the office said. Filing fees for a company’s periodic reports are $25. It’d been at $10 since 2006.
The quarterly report also pointed to positive data in a weaker economy. While Colorado’s job growth has slowed from last year, the number of new jobs added is up 1.4% through June and ranked near the middle of all U.S. states for job growth.
The number of job openings for every unemployed Coloradan is no longer two per unemployed worker, but dropped to 1.4. However, that’s better than the national ratio of 1.2 openings per unemployed worker. Colorado’s GDP also improved 2.3% between fourth quarter 2023 to first quarter this year, ranking the state 18th nationwide.
But some other financial data is concerning, said Richard Wobbekind, faculty director of CU’s Leeds School of Business who works with Lewandowski. It’s about consumer spending slowing and their rising debt.
“We are seeing increased delinquencies on auto loans and credit cards at this particular point in time,” he said. “There seems to be a slowing of use of credit cards even by the higher income folks who still have excess savings and the wherewithal.”
Interest rates are still high and there’s still inflation. But ultimately, the two economists are not translating the indicators as signs that the economy is receding.
“Our office does not believe the U.S. is currently in a recession. We also don’t believe that one is imminent,” Lewandowski said. “Seeing GDP growth, seeing continued employment growth, albeit slow, seeing growth in income, seeing the labor force growth, seeing the inflation really moderate — all of this we think is good news and it doesn’t really signal that we’re on the precipice of a sharp downturn in economic activity.”