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US economy shrank less than previously estimated; fear lingers among some Colorado businesses

Staffing shortages, supply chain issues and inflation among top concerns
denver skyline 2022
Posted at 6:20 PM, Aug 25, 2022
and last updated 2022-08-25 20:42:15-04

DENVER — New data released Thursday suggests the economy contracted at a slightly slower rate than estimated during the 2nd quarter, but the economy is still shrinking.

The debate continues among experts whether we are truly experiencing a recession or just teetering on the brink of one.

Either way, local businesses are navigating a number of economic issues, including record-high inflation, staffing shortages and lingering supply chain disruptions.

“As far as business is concerned, we’re doing very well,” said Brian Becker, store manager for Meineke on Broadway and Iowa in Denver.

Becker’s Meineke car center, like most auto repair shops, can barely keep up with demand.

“This has been a very strange time as far as automotive is concerned,” Becker said. “The market for cars is ridiculous. No new cars available.”

Because of that – and looming fears of a recession – Becker says most people are pumping the brakes on buying new, opting instead for the occasional pit stop at the shop.

“When folks are trying to figure out what the best options are, the consensus says to fix the ones that they have,” said Becker.

And while Becker’s shop is fully staffed, many others are running on empty.

“It definitely has been difficult to find good help,” he said.

That brings us to the restaurant industry.

“We do Angus beef, grass-fed beef, prime beef, Wagyu beef,” said renowned chef Troy Guard, owner of multiple restaurants in the Denver area, including Guard and Grace, a modern steakhouse downtown.

Guard had 630 employees in his restaurant group pre-pandemic. He now has about 400 and says a looming recession after surviving a pandemic could be a recipe for disaster for some in the business.

“We're in the second-biggest building in Denver,” Guard said. “1801 California is a million square feet. That’s as big as the Cherry Creek Mall if you can envision that. So, just think — a million square feet and only half of it is being used. People are working from home, people aren't coming in.”

US economy shrank less than previously estimated; fear lingers among some Colorado businesses

On top of a workforce slow to return to downtown, the fear is a recession could cool off tourism and nightlife.

“We still are only open three days a week for lunch,” Guard said. “We can't find enough staff to get two more days.”

“We’re not out of the woods, unfortunately,” said Laura Shunk, president of the Colorado Restaurant Foundation.

Shunk says restaurants are now operating like corporations in an attempt to attract and keep good workers.

“They’ve raised wages to historically high levels, they've added benefits,” Shunk said. “Insurance, paid leave, health care, mental health care.”

On the flip side, Bakery Four on Tennyson may just take the cake when it comes to bucking recession fears.

“We specialize in sourdough bread and pastries,” said owner Shawn Bergin. “European-style sourdough, French pastries, laminated doughs, things like that. All of our butter's imported from France. All of our chocolate is imported from France.”

The line outside is a testament to what they do here. Bergin has found a sweet spot in an otherwise sour economy.

“We kind of grew up during the pandemic,” Bergin said. “We were right place, right time. We're lucky in that we get people from all over the country and some from around the globe that want to come work with us and see what we're doing.

But while he's well-staffed in the back of the house, he, too, has the help wanted sign out for good people up front.

“Even if the pay is great and the tips are great, there's just not that need for people to look for those positions it seems like at least,” Bergin said. “The more people we have up front, the faster we can get people through the line.”

“The service industry in general is very vulnerable,” said Dr. Kishore Kulkarni, distinguished professor of economics at Metropolitan State University of Denver.

He points out there are industries more recession-proof than others, including repair shops, grocery and liquor stores, health care, technology and freight operations.

“Computer technology or information technology companies,” Kulkarni said. “They do good. Google, for example. Amazon.”

And that brings us to the retail side of things.

“There's nothing scarier to a small business than a recession,” said Jimmy Funkhouser, owner of Feral, an indie outdoor gear shop. “Our property taxes are not going to go down. Our payroll costs are not going to go down. Our cost of inventory is not going to go down.”

Funkhouser went out on a limb six years ago, opening his small shop in a city saturated with outdoor retailers.

“Everyone said that it made no sense in the shadow of the big corporate outdoor retailers here,” Funkhouser said. “But we've had a great community here in the neighborhood. It's the only thing that ever keeps small businesses alive.”

His David vs. Goliath story of survival is simple: never stop listening to your community or what he calls renewing your social license to operate.

“Ultimately, if you're not maintaining the relationship with your community, they're going to wake up one morning and not only not think it's important that you continue to exist, but not really care,” he said.

And while he is genuinely concerned about recession, he's driven by a mission to make the great outdoors accessible to all.

“That's the main reason we launched our used gear and clothing program because we wanted to make those activities accessible to everybody,” Funkhouser said. “We don't really control the price on new gear. Once we sell it used, we take control of the price conversation and that allows us to make things much more accessible for people.”

And while there is fear about a recession, there's also a great deal of optimism.

“I see a very bright future because American enterprise is quite alive,” Kulkarni said.

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