Colorado Economy: Aerospace, Outdoor Industry, and Tech

Colorado is a mid-sized state economy that punches above its weight, usually ranked in the upper third of states by GDP per person — the dollar value of everything a place makes and sells in a year, divided by population. The Colorado economy mixes aerospace, technology, energy, outdoor recreation, and a fast-growing professional services base in the Denver metro.

This is a plain-English tour. For the national picture, see The State of the U.S. Economy and the Economy hub.

How big is the Colorado economy?

For example, recent state GDP for Colorado has run around $510 billion, according to the Bureau of Economic Analysis. Population is roughly 5.9 million, per the U.S. Census Bureau. The Denver-Boulder Front Range corridor holds most of the people and economic output.

The biggest industries

Colorado has one of the more knowledge-intensive industry mixes in the country. The main pillars are:

• Aerospace and defense — Colorado has the second-highest concentration of aerospace workers in the country, with major employers like Lockheed Martin, Northrop Grumman, and Ball Aerospace, plus several U.S. Space Force bases.
• Technology — Denver and Boulder host a deep cluster of software, telecom, and biotech firms; many West Coast companies have opened large second offices in the Front Range.
• Energy — Colorado is a top-ten oil and natural gas producer, and a national leader in renewable energy capacity.
• Outdoor recreation and tourism — skiing, hiking, and national parks support a meaningful chunk of the western slope economy.
• Agriculture — cattle, dairy, corn, and wheat are the largest farm products.
• Cannabis — Colorado was the first state to legalize recreational cannabis, and the industry is now a measurable part of state tax revenue.

Jobs and wages

Colorado labor data is published by the Colorado Department of Labor and Employment, with national-level numbers from the Bureau of Labor Statistics. For example, the Colorado unemployment rate has typically run close to or just below the national average, with Denver-Boulder usually one of the tightest labor markets in the Mountain West.

The Colorado minimum wage is set by the state and is well above the federal floor; it is adjusted each year for inflation. Denver has its own higher local minimum wage.

Taxes in Colorado

Colorado has a flat state income tax at a relatively low rate. The state also has the unusual TABOR provision that limits how fast tax revenue can grow.

The state sales tax rate is 2.9% — one of the lowest in the country — but local add-ons in cities like Denver push the combined rate above 8%. State tax forms and rules live at the Colorado Department of Revenue. You can read more about how sales tax works in our glossary.

Cost of living

Cost of living in Colorado, especially the Denver-Boulder corridor and ski resort towns, is well above the national average — driven mostly by housing. Smaller cities and the eastern plains are more affordable. The federal government tracks region-specific Consumer Price Index data through the BLS Mountain-Plains region, and HUD publishes Fair Market Rents for every county at HUD User.

The Front Range tech corridor

The strip of cities running from Fort Collins through Boulder, Denver, and down to Colorado Springs is home to a tech and engineering cluster that has grown steadily for two decades. The University of Colorado, Colorado School of Mines, and Colorado State all feed local employers, and many West Coast firms have opened large second offices in the Front Range to tap into talent that prefers the climate and lower (though rising) housing costs. The result is one of the highest concentrations of software, telecom, and aerospace engineers in the country.

The outdoor recreation economy

Colorado's outdoor recreation industry is large enough to be tracked separately by federal statistics. Skiing, snowboarding, hiking, river rafting, and mountain biking all draw national and international visitors and support a year-round workforce in resort communities. The combination of national parks, public lands, and a network of small mountain towns gives Colorado one of the more visible recreation economies of any state.

How does the Colorado economy fit into the national picture?

Colorado is one of the few states with both a heavy aerospace footprint and a fast-growing tech sector. The combination of high education levels, federal aerospace spending, and lifestyle appeal keeps the population growing — although that growth has pushed housing costs up sharply.

A note on the numbers

Numbers in this article change every quarter — always check the latest from BEA, BLS, and the Colorado Department of Revenue for the most current data.