Tamara Chuang
Business/Technology Reporter
Quick links: Local manufacturing not immune to tariffs | Lots of condos for sale | Reader poll | Poll results | Colorado quantum news | Visionary Broadband expands
Colorado business leaders are the most pessimistic they’ve been about the economy in years, according to the latest Leeds Business Confidence Index — and that was before new tariffs on nearly all of America’s trade partners were announced this week.
The index, produced by the business school at the University of Colorado, offers a glimpse into what local business leaders expect for the next quarter. Approximately 218 Colorado business leaders took the survey in early-to-mid March. Their second-quarter outlook?
“We saw the second-largest drop in the index (in 23 years) and I think that’s reflecting uncertainty,” said Brian Lewandowski, executive director of the Business Research Division at the University of Colorado. “There’s a lot of uncertainty out there when it comes to the impact of tariffs and restructuring of the federal government and other things.”
At 31.9, that was the worst the business community has felt since the second quarter of 2020, when COVID-19 struck and pandemic shutdowns disrupted commerce. The only other time it was lower? During the Great Recession. The latest numbers had dropped from the first quarter’s 50 points, which is considered neutral. Participants were surveyed in December before President Donald Trump took office.
The Trump administration’s new reciprocal tariffs, announced Wednesday, shocked the stock market, causing retirement plans like Empower to note Friday for users logging in, “In light of recent market volatility, remember that your retirement account is intended for long-term investment.” China, a recipient of a new 34% reciprocal Trump tariff, responded Friday with an additional 34% on U.S. imports.
Colorado imported $17 billion and exported $10.5 billion in goods last year. A lot of the imports or exports are from small businesses and numbered around 6,000 who imported or exported back in 2021, according to U.S. Census Bureau data. And for small companies, they can’t easily build a manufacturing plant here in the U.S.
Colin McIntosh, founder of sustainable bedding brand Sheets & Giggles in Denver, took to Instagram to share his discontent. The company’s sheets are made in India, which now has a 27% reciprocal tax. That means the company is on the hook for an extra $1.3 million on a $5 million order, which its manufacturer won’t release at the port until it’s paid.
“Businesses can’t just ‘find’ that extra cash, especially small businesses,” McIntosh wrote. “I’m desperately trying to explain to you that American companies pay tariffs — not China — and many will close because they don’t have the cash to get their goods released by U.S. Customs to pay these new tariffs.”
Not immune to tariffs even with manufacturing in Denver
System76 founder and CEO Carl Richell with one of the computers from its Thelio line that was being in Denver’s Montbello neighborhood back in 2018. (Anthony Quintano, Special to The Colorado Sun)Tariffs weren’t unexpected. Trump promised high reciprocal tariffs long before he took office in January. And he had a history of them in his first term.
Back then, Colorado company System76, a Linux-based computer builder, had moved some of its manufacturing to Denver during the last Trump administration due to tariffs as well as quality concerns and rising costs in China. But it’s taken awhile to move everything. And the company still must order some computer parts from other countries.
“We’re not immune to the tariffs and they are particularly harsh toward Asia where most electronics are made,” Carl Richell, CEO and founder of the computer company, said in an email. “The scramble in our industry is intense. Our team worked through the night Wednesday to determine cost changes based on country of origin and the tariff rate applied to each. Every vendor and distributor is recalculating prices, cancelling orders, cancelling previously agreed pricing, and in one extreme, returning in-transit US bound product to Asia.”
Today, System76 manufactures desktops, workstations and keyboards in Denver. But its laptops, servers and Meerkat mini desktops are made in Asia.
“We’ve been bringing more products manufacturing to Denver,” Richell added. “It’s a long process.”
If the business leaders’ sentiments seem radically different between quarters, a lot happened between December and March. Tariffs were started, paused and restarted to impact fewer American businesses, at least those that trade with Mexico and Canada.
“It’s not just our survey. It’s consumer confidence. It’s consumer sentiment, the National Federation of Independent Businesses. It’s even the ISM Purchasing Managers Index. All of these took a step back,” Lewandowski said. “It’s not like the idea of tariffs were sprung on us but I think they are just becoming the reality.”
The latest round of reciprocal tariffs start Saturday.
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Expected profits and sales look dismal on the far right of the chart, which is the second and third quarter. The index drops to 37.3 in the second quarter and 37 in the third quarter, compared with 53.4. Profits also fell to 35.2, from 50.4 in the first quarter. At 50, that’s considered neutral, so business leaders neither expect big growth nor big declines.(Screenshot of Leeds Business Confidence Index from University of Colorado Boulder.> Read
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Colorado’s condo force
A condo advertised on Zillow at 1341 N. Washington St. in Denver is listed as “non-warrantable due to deficiencies in the HOA’s master insurance policy.” The one-bedroom, one-bath unit recently had its price cut to $224,900 and has an HOA fee of $421 a month. (Screenshot)High prices, high condo fees and high insurance premiums have hurt the local condo industry. According to the Colorado Association of Realtors, the number of Denver-area condos and townhomes for sale in February was up 17.5% from a year ago.
“I’m going to tell you that right now in Aurora, we have over 1,000 condos listed on the market,” Realtor Sunny Banka told me last month. That was a mix of listings for sale, under contract and recently closed, she added. Most were townhomes.
While there are a number of potential buyers who can’t afford them, Banka said she’s also seeing that more condos are nonwarrantable. In other words, mortgage lenders won’t make loans on properties that don’t meet Fannie Mae’s guidelines. The top issues are complexes with deductibles above 5% on their master insurance policy, too much deferred maintenance and too-low reserves.
That has left buyers disqualified for conventional loans and owners unable to sell their units, and it’s ranked Colorado the third state nationwide on Fannie Mae’s so-called mortgage blacklist. I tackled the issue in a story this week about why Colorado has a growing number of unsellable condos. The biggest culprit appears to be rising insurance premiums. Homeowners associations opt for higher deductibles to minimize condo fees, and many remain unaware that puts the entire complex on the blacklist.
We’re continuing to follow this topic since housing affordability remains a top issue in the state, even as there are thousands of condos for sale in the Denver metro area, according to Zillow listings.
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The frenetic changes from the Trump administration along with existing financial chaos caused by rising insurance premiums and slowing job growth has created an inundation of economic news. It’s a challenge to keep up! So help us figure out what’s going on by taking the What’s Working reader poll. Your comments could wind up in our next story.
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Other working bits
Dr. Laura Wadleigh, a quantum engineer at Atom Computing, tunes an optical distribution system for the company’s next-generation quantum computing platform at its Boulder, Colorado facility. (Courtesy of Atom Computing)➔ 3 Colorado quantum companies picked for federal competition. U.S. Department of Defense’s Defense Advanced Research Projects Agency, or DARPA, named 18 quantum computing companies for its first Quantum Benchmarking Initiative test in a goal to build a “transformative, fault-tolerant quantum computer in under 10 years,” according to the announcement.
The three from Colorado are Quantinuum in Broomfield and Atom Computing and Oxford Ionics in Boulder. All are part of the state’s quantum-computing hub, a federally recognized Tech Hub that received $40.5 million in federal grants last year.
The first stage in the DARPA competition provides $1 million to each company to detail their concept. If they make it to further rounds, they stand to get $300 million to build it, though not without DARPA “doing whatever we can to show that these companies’ plans won’t work,” said Joe Altepeter, DARPA QBI program manager, in a video. If any make it past the critical reviews and testing, added Altepeter, it’ll be proven that “the U.S. government should get one of these because it’s going to change the world.”
Related : ActivateWork, the Denver workforce development nonprofit, was picked to help build out a program for those interested in a career in quantum technology. The budding commercial industry will need loads of workers with manufacturing and technical skills and not necessarily advanced degrees. ActivateWork was awarded a $150,000 contract that’s part of the Quantum Flexible Talent Pathways Ecosystem managed by Elevate Quantum, which is also managing the state’s Tech Hub. >> More details➔ Visionary Broadband expands in Buena Vista. A grant from Colorado Broadband Office’s Advance Colorado program is supporting the expansion of Visionary Broadband’s fiber internet service to 1,305 homes around Buena Vista. Construction begins this month and will span “nearly 15 miles from north of Buena Vista to the west of the town, and southward to the community of Nathrop,” according to the company. According to Advance Colorado, funding for the $6.9 million project is split between the state’s $5.2 million and local matching funds of $1.7 million. A Visionary spokesperson said the project will be completed in phases and is expected to be wrapped up in late November.
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Thanks for sticking with me for this week’s report. As always, share your 2 cents on how the economy is keeping you down or helping you up at cosun.co/heyww. ~ tamara
Miss a column? Catch up:
Denver chamber winds down diversity tool that just didn’t do the job How some rural Colorado businesses tapped an unheralded state resource and reaped financial returns Colorado’s tipped minimum wage would be left up to local governments under bill compromise Trump’s tariff roller coaster is no fun for Colorado’s farm and agriculture industry Colorado agriculture programs are feeling the federal funding freeze too Federal workers on Colorado unemployment benefits. Who pays? Higher egg, gas prices raise Denver inflation in January but rate still lower than the U.S. Public support for unions is high. But a Colorado grocery store strike on Super Bowl weekend?What’s Working is a Colorado Sun column about surviving in today’s economy. Email tamara@coloradosun.com with stories, tips or questions. Read the archive, ask a question at cosun.co/heyww and don’t miss the next one by signing up at coloradosun.com/getww.
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