Colorado’s economy outperforms larger states despite smaller population

Where a state ranks in terms of its population is a pretty good indicator of where it will rank in terms of the size of its economy relative to other states. For example, California has the largest population and the largest economy. Texas ranks second on each of those. For just over half of states, population and GDP rank line up precisely or are off by just one in either direction.

Florida has the third largest population but the fourth largest economy. In contrast, New York now has the fourth largest population after losing so many residents to Florida, but still ranks third economically. Another dozen states are off by two positions, but still close. And then you have states like Colorado and Connecticut, which are pushing out way more economic horsepower than expected given the smaller number of cylinders under the hood.

Colorado ranks 21st among U.S. states in terms of its population, 15th when it comes to the size of its economy, and an even more impressive eighth in terms of how much personal income that economy generates per resident, according to the Only Connecticut, which ranks 29th in terms of population and 23rd for the size of its economy, matches Colorado with a GDP ranking six times higher than might be expected given its population .

Colorado has one of the highest shares of its , and it has one of the most found in any state, two likely contributors to the state’s performance. In 2022, Colorado ranked fourth among states for the contribution the information sector provided to its growth and first for professional, technical and scientific services, notes Broomfield economist Gary Horvath.

Those two sectors are very important players in overall U.S. GDP growth now and in the future, and Colorado is strong in both. “They are significant drivers of the state economy. They are high paying jobs that often have high value added,” Horvath said. With a state GDP in 2022 of $386 billion in inflation adjusted 2012 dollars, Colorado ranks behind Michigan at $490 billion and ahead of Maryland at $369 billion.

Michigan has the nation’s 10th largest population, while Maryland ranks 19th and Colorado ranks 21st with 5,877,610, according to the . Colorado’s outperformance is even more noticeable when it comes to per capita personal income, where the state ranks ninth in the country on that measure at $74,167, just behind New Hampshire and just ahead of resource rich Wyoming, which made the top 10 for per capita personal income despite having the smallest population of any state, or maybe because of it.

But all states must cede the checkered flag to Connecticut regarding income. It leads the nation with a per capita personal income of $84,972, excluding the District of Columbia, which is racing on a track of its own fueled by federal dollars. Another way to look at Colorado’s economy would be to imagine the state as an independent country.

Colorado’s GDP in 2022 was $491.3 billion in current dollars, enough to rank 30th largest in the world, after Thailand and ahead of Nigeria, according to WorldBank numbers assembled on the . Thailand, however, has a population of 71.7 million, which is 12 times larger than Colorado, while Nigeria’s population is 37 times as large.

Colorado’s relative outperformance stands out even more on the global stage. As of the third quarter of last year, Colorado wasn’t the fastest growing state economy, but its 5.8% annual pace was just enough to make the top 20%, according to the U.S. Bureau of Economic Analysis. were on the anemic side at 31,100 for the 12 months through November.

And in metro Denver, they were dismal. Out of the 50 largest metro areas in the country, only three had lost jobs year over year as of November — Memphis, Denver and Detroit, . Denver ranked second after Memphis for the annual percentage loss — 0.6% vs. 0.4% and second after Detroit in total number of jobs lost — 7,300 vs.

7,100. If those initial job counts are accurate, then job growth last year in Colorado came despite metro Denver, a case of the freight cars pushing the engine forward. But the Colorado Department of Labor and Employment expects some major upward revisions to the job numbers for 2023 this March as the initial counts go through a process known as benchmarking.

The , a leading forecast of the state economy, predicts that after revisions to the job counts are completed, Colorado should end up with closer to 64,500 jobs in 2023, followed by a smaller gain of 24,000 jobs in 2024. That would better align with the GDP growth measured in the state last year and provide evidence that the state’s economic engine hasn’t thrown a rod or seized up..