Colorado struggles to keep pace in the Mountain West economy

Colorado has been the shining star of the Mountain West for years.

It’s a place where people flocked for stunning mountains, vibrant cities and a booming job market. It felt like the state was always on the winning side of the great American business migration, drawing companies and talent away from the pricey coasts.

But something’s shifted, and it’s making folks wonder if our economic rodeo is losing some of its swagger.

American businesses are still on the move, abandoning traditional coastal strongholds for the country’s interior.

But it’s not just about dodging high taxes or insane real estate costs anymore. Companies are looking for a place that offers long-term stability, aligns with their values, and provides real opportunities for growth.

For years, Colorado was a poster child for what Rick Pederson calls the Rodeo Region, a fast-rising economic corridor spanning Texas, Utah, Idaho, Colorado, the Dakotas and other high-growth states across the Mountain West and Southwest.

Although Denver ranks high when it comes to attracting corporate headquarters, it’s lagging behind other Rodeo Region cities, coming in at No. 6 with 23 new headquarters between 1018 and 2024. That’s a far cry from Dallas, which ranks No. 1 with 100 new corporate headquarters, Austin, coming in at No. 2 with 83.

“One thing I’m concerned about is why Denver is not getting more of those and why we’re not getting more people,” said Pederson, vice chairman and chief strategy officer at Denver-based Bow River Capital.

Pederson’s research that shows the middle of the country, including Colorado, was outperforming the coasts in key economic areas like personal income and productivity. And Colorado had that “social capital,” the strong sense of community and trust that makes places work better, in spades.

But lately, Colorado hasn’t been pulling its weight like it used to, especially when compared to other Rodeo Region states. While we’re still growing, the pace has slowed, and some of the big corporate prizes seem to be landing elsewhere.

Pederson attributes the loss of momentum to a few key areas that make Colorado a tougher sell for businesses and people considering moving here:

• The sticker shock of living in Denver: Denver has gotten expensive. The inflation rate, especially for housing, has been higher than the national average for a while. While we’re starting to see apartment rents cool off and home prices level out, the cost of putting a roof over your head has outpaced much of the country. Add higher bills for things like energy and eating out, and you can see why other places with lower costs, like many parts of Texas, suddenly look a lot more appealing.
• A slowdown in new jobs: Colorado used to be a job-creating machine. But lately, job growth has been sluggish compared to other major cities. While places like Colorado Springs are still seeing some growth because they’re more affordable, and the public sector is adding jobs, the state is not seeing the same kind of private-sector boom that keeps an economy vibrant.
• The business-friendly question: Increasingly, the perception is that Colorado, and Denver in particular, isn’t as welcoming to businesses as it once was. There are more state regulations, which, while often well-intentioned, think Denver’s Green Roofs initiative or Electrify Denver, can add costs and complexity for companies. The regulatory environment is pushing some businesses to choose places like Houston, Phoenix or Nashville when they’re looking to relocate or expand.
• Fewer Americans choosing Colorado: While the state’s population is still growing, it’s largely because of people moving here from other countries and new births. There’s a negative trend in people moving here from other U.S. states. Fewer Americans are choosing Colorado as their new home, and that’s a red flag. It suggests that our economic pull isn’t as strong as it once was, and we’re not attracting the same level of talent and opportunity from within the country.

Colorado still has a lot going for it. The quality of life is undeniable, and the state’s natural beauty is a huge asset. However, these shifts mean the state can no longer coast on its reputation, Pederson said. While market forces might eventually help with some of the cost-of-living pressures, local and state officials must look at the overall framework, from city policies to state regulations.

“Companies are making holistic decisions based on cost,” Pederson said. Denver is losing. We are not attracting from other states as we used to. Our economic base is eroding to the extent that we’re not growing our jobs the way we used to.”