Metro Denver had the eighth strongest economy heading into the pandemic, but two years later, its economic ranking slipped to 121st out of 192nd metro areas, making it among the most deteriorated economies during the pandemic, according to a study from Brookings Metro.
The region joined the “tested” category of top-half economic performers between 2011 to 2019 who dropped to the bottom half between 2019 to 2021. About 40% of very large metros, defined as having more than 1 million residents, moved into that tested group, including New York, Los Angeles, San Francisco, Seattle, Atlanta, Boston and San Diego.
“There are a lot of theories, but not a lot of firm answers as to why. Very large metros had this tremendous run of growth and they were where economic activity was increasingly concentrated. Denver was a poster child for that inclusive growth,” said Joseph Barilla, fellow and director of applied research at Brookings Metro Monitor and a co-author of the study.
Brookings looked at three indicators each in four categories, including typical measures like job growth, GDP growth, wage growth, productivity and the employment rate. It also had a category for racial inclusion to measure the gap in employment, earnings and poverty among various groups.
While very large metros slipped, many nearby large metros, defined as those with populations of between 500,000 and 1 million, rose in the rankings. One explanation is that they may have benefitted from lower housing costs, which workers, freed to go remote, found more attractive.
Almost mirroring in reverse of Denver’s decline, Colorado Springs’ ranking went from 119th to sixth, making it among the metros that came out on top economically despite the chaos of COVID-19. One explanation is that El Paso County is more reliant on federal and military spending, which were not impacted as severely as other areas like tourism, health care and retail trade.
Colorado Springs was in the emergent category, along with Fort Collins, which rose from 126th to 26th in the Brookings economic ranking. Emergent metros are defined as bottom-half performers last decade who rose into the top half.
Metro Greeley, which encompasses all of Weld County, also was in the tested category, going from 53rd to 190th, near the very bottom. Barilla said many oil and gas hubs found their economies severely tested by depressed oil prices, which caused a reduction in drilling activity. Weld County, once a top performer for job growth and wage gains, also stands out for still not recouping its pandemic job losses.
Boulder was in the resilient category, meaning its economy was in the top half before the pandemic and stayed there during the tough years. Boulder’s ranking didn’t move much, going from 14th to 22nd. It was strong and stayed strong.
At the other extreme were stagnant metros, which weren’t doing well before the pandemic or during it. Their level of misery tended not to change much. Most stagnant metros are in the Midwest and Northeast and were once dependent on manufacturing. None of the five Colorado metros studied were considered stagnant.
Barilla said the concentration of growth in very large metros, especially in the Western half of the country, made it hard to supply enough housing to their growing populations. That caused home prices and rents to spike and during the pandemic contributed to population declines, especially in core urban areas like Denver County.
“There are a lot of fundamentals in metro Denver that made it a strong economy and I don’t see this derailing what had been a strong economic trajectory,” Barilla said. “More time is needed to see whether this is just a blip or something more significant.”
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