Colorado new business filings fall in Q2

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Colorado’s economy, as measured by the number of new business filings with the Secretary of State, declined in the second quarter of the year, as might be expected because of the impact of the novel coronavirus.

Secretary of State Jena Griswold and University of Colorado Leeds School of Business economist Rich Wobbekind released the second-quarter new business report Wednesday.

While the report showed that new business filings declined in Q2 1.7% year over year and 7.8% from the previous quarter, business renewals were up 12.2% year over year, the report said.

The 1.7% decline still reflects 31,221 new entities filing in the second quarter. That number was just not as high as a year earlier.

Declines in new business filings, coupled with increases in unemployment and decreases in the state’s gross domestic product, have led to a generally negative business outlook as recorded by the Leeds Business Confidence Index. The index was set at 44.3, with 50 being considered neutral. That number was up from 28.8 three months earlier, indicating that businesses are still pessimistic about the economy but not quite as negative as before.

“Things are moderately improving but still worse than the low point of the Great Recession,” Griswold said. She said the uncertainty from the federal government with regard to future federal relief funding might be having a negative effect on the state economy.

Personal-income levels were up in the quarter, likely due to federal stimulus payments and the supplemental federal weekly unemployment payments, Wobbekind said. “We have seen high savings rates. People are holding onto that money [and not spending], and you can’t blame them,” he said, in reference to the uncertainty about future federal assistance to individuals and businesses.

Wobbekind said that dissolutions of businesses are increasing, with 8,659 businesses dissolved in the second quarter, which is 5.2% up from the previous year. The report noted that dissolutions are a lagging indicator because the filing of the dissolution often falls months after the actual closing of a business. During the Great Recession, the peak for dissolutions was recorded in the second quarter of 2011, after the recession had ended.

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