Zions Bank Small Business Index for Idaho
December 2009 Release
January 13, 2010

Written by Jeff Thredgold, President, Thredgold Economic Associates
Economic Consultant to Zions Bank

IDAHO'S SMALL BUSINESSES TO BENEFIT FROM STRONGER U.S. ECONOMIC GROWTH

HIGHLIGHTS

• The Zions Bank Small Business Index for Idaho registered 83.9 in December 2009, up from a revised 79.6 in November 2009

• Idaho's unemployment rate was estimated at 9.2% in the most recent month, up from the 9.1% rate of the prior month.  Idaho employment declined by an estimated 24,800 jobs during the past 12 months

• Idaho's small business sector will benefit from stronger U.S. economic growth during 2010, as the Great Recession has run its course

• The U.S. economy lost an estimated 85,000 net jobs in December, worse than the flat number largely expected.  In addition, the initially reported loss of 11,000 jobs during November was revised to a gain of 4,000 jobs, the first monthly employment rise in two years.  The U.S. unemployment rate remained at 10.0% in December

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STRONGER U.S. ECONOMIC GROWTH

The Great Recession is over!

The U.S. economy grew at a 2.2% real (after inflation) annual growth pace during 2009's third quarter.  Moreover, most forecasting economists see growth in the October-December quarter at a 4.0%-5.0% real annual pace, with numerous forecasts seeing even stronger growth.  Most forecasts for 2010's first half are near 2.8%-3.0%, again with various forecasts for both stronger and weaker growth.

The Great Recession 'officially' started in December 2007, according to the National Bureau of Economic Research Business Cycle Dating Committee.  This group is likely to make a determination around mid-year 2010 that the recession 'officially' ended near mid-year 2009.

With a formal end date as expected, the Great Recession will have run 18-21 months, making it the longest, deepest, most painful, and most pervasive since the Great Depression.  By comparison, the two prior recessions in 1990-91 and in 2001 each ran eight months.

All fifty states are currently in recession, with employment change during the most recent 12-month period as the measure.  A return of U.S. economic growth, combined with a faster-than-expected return of global economic growth, meets two critical preconditions for a return of Idaho and regional growth in later 2010, as well as a return to modest growth for most other states by the end of the year.

U.S. economic performance and global economic performance are each components of the Idaho Small Business Index, with stronger performance by either a positive contributor to the Index.

IDAHO EMPLOYMENT

The Idaho unemployment rate—the most heavily weighted component of the Zions Bank Small Business Index for Idaho—was estimated at 9.2% in the most recent month, up from the 9.1% rate of the prior month.  The estimated 9.2% rate compares to the 6.1% rate of one year ago.  A higher Idaho unemployment rate is a positive for the Index as it implies greater labor availability for Idaho's small businesses.

The Idaho jobless rate averaged 4.9% in 2008, 3.0% in both 2006 and 2007, 3.7% in 2005, and 4.9% during the period 2000-2004.  By comparison, the Idaho jobless rate averaged 5.5% during the 1990-99 period.  Average 2009 unemployment has not yet been released.

The latest 12-month decline in Idaho employment estimated at 24,800 jobs (down 3.9%) compares to a revised loss of 32,100 jobs in the prior year-over-year period.  Idaho lost 6,500 jobs during 2008, added an average of 22,300 jobs annually during 2005 to 2007, and gained an average of 7,100 jobs annually during the 2001-2004 period. 

These totals compare to gains averaging 17,600 net new jobs annually during the 1991-2000 period.  More recently, employment declines, leading to slower income creation and softer retail spending, have a negative impact upon Idaho's small businessescand therefore, the Index.

NATIONAL EMPLOYMENT

The U.S. Department of Labor reported a net loss of 85,000 jobs in December 2009, worse than the largely unchanged number expected.  However, the previously reported loss of 11,000 jobs during November was revised to a gain of 4,000 jobs, the first monthly employment rise in two years. 

The U.S. unemployment rate was unchanged at 10.0% in December, versus a 26-year high of a revised 10.1% in October.  The current 10.0% jobless rate compares to the 7.4% rate of one year ago and is double the 5.0% rate of December 2007.  The average hourly wage rose 0.2% (three cents) to $18.80 hourly, a rise of 2.2% during the past 12 months.

Goods-producing employment continued to decline in December, with a net loss of 81,000 jobs.  Manufacturing employment fell by 27,000 positions, while construction lost another 53,000 jobs. 

Service-providing employment declined in December by 4,000 positions.  The professional & business services sector gained 50,000 jobs (mostly gtemph jobs), while the retail trade sector lost 10,000 jobs in December.  Government employment fell by 21,000 jobs, while the education & health services sector added 35,000 positions in December.

The net decline of 3.1 million jobs during 2008 was the worst year since 1945.  The loss of 4.1 million jobs during 2009 surpassed the 2008 total.  The net decline of 7.2 million jobs is a painful contrast to the average gain of 1.9 million net new jobs annually during 2005 to 2007.  Modest job gains and occasional losses could be reported in coming months as the U.S. economy continues to emerge from the worst recession in the post-Depression period. 

 

The January 2010 Zions Bank Small Business Index for Idaho will be released on February 10, 2010.

Jeff Thredgold
Thredgold Economic Associates
Economic Consultant to Zions Bank
(801)614-0403

©Copyright 2009 Thredgold Economic Associates