Zions Bank Small Business Index for Idaho
July 2010 Release
August 11, 2010

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

SLOWING U.S. ECONOMIC GROWTH WILL IMPACT IDAHO’S SMALL BUSINESSES

HIGHLIGHTS

• The Zions Bank Small Business Index for Idaho was 98.9 in July 2010, down from a revised 99.2 in June 2010

• Idaho’s unemployment rate was estimated at 8.8% in the latest month, unchanged from the 8.8% rate of the prior month. Total Idaho employment fell by an estimated 1,200 jobs during the past 12 months

• Slowing U.S. economic growth will place a damper on Idaho’s small business sector

• The U.S. economy lost an estimated 131,000 net jobs in July, worse than expectations of a 90,000 job decline. The loss of 143,000 temporary Census jobs was the culprit, with private businesses adding 71,000 jobs during the month. June job data was revised to show 96,000 additional lost jobs. The U.S. unemployment rate remained at 9.5% in July, as more than 180,000 people left the labor force

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SLOWING U.S. ECONOMIC GROWTH WON’T HELP

GDP, or Gross Domestic Product, is an estimate of the value of all goods produced and services provided inside U.S. borders, measured as an annual growth rate or annual rate of decline, with the impact of inflation removed. The U.S. economy grew at a 2.4% real (after inflation) annual rate during 2010’s second quarter, just slightly less than expected. In addition, all of the U.S. economic data of the past three years was revised, in some cases for the fifth time, to more accurately reflect what is happening in the American economy.

Revised data suggests the recession was actually worse than previously thought. In addition, the U.S. economic recovery of roughly the past year has been a little weaker than originally suggested by government estimates.

What many refer to as the “Great Recession” has been over for about a year, according to a majority of forecasting economists. The actual scorekeeper for the U.S. economy, the Business Cycle Dating Committee of the National Bureau of Economic Research, is likely to make that call later this year or early in 2011. The NBER previously announced that the recession officially began in December 2007.

Weaker U.S. economic growth suggests Idaho’s small business sector will be impacted somewhat negatively. The performance of the U.S. economy is a component of the Small Business Index, as is the performance of the regional and global economies.

IN IDAHO

The Idaho unemployment rate—the most heavily weighted component of the Zions Bank Small Business Index for Idaho—was estimated at 8.8% in the most recent month, unchanged from the 8.8% rate of the prior month. The estimated 8.8% rate compares to the 7.9% 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. Other associated factors typically tied to a higher unemployment rate, such as lesser job creation, lesser income gains and lower retail sales, pull the Index lower.

The Idaho jobless rate averaged 8.0% in 2009, 4.9% in 2008, 3.0% in both 2006 and 2007, and 3.7% in 2005. By comparison, the Idaho jobless rate averaged 4.9% between 2000 and 2004, and 5.5% during the 1990 to 1999 period.

The latest 12-month decline in Idaho employment estimated at 1,200 jobs (down 0.2%) compares to a revised loss of 1,500 jobs in the prior year-over-year period. Idaho lost 34,500 jobs in 2009, lost 6,100 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 had a negative impact upon Idaho’s small businesses…and therefore, the Index.

NATIONAL EMPLOYMENT

The U.S. unemployment rate was unchanged at 9.5% in July, matching the lowest level of the past 12 months.  However, the decline resulted primarily from more than 180,000 people—presumably less optimistic about finding a job—leaving the labor force.  The current 9.5% jobless rate compares to the 9.4% rate of one year ago and greatly exceeds the 5.8% rate of July 2008. 

Goods-producing employment rose by 33,000 jobs in July.  Manufacturing employment rose by 36,000 positions, while construction lost 11,000 jobs.  Mining and logging employment rose by 8,000 jobs.

Private-sector service-providing employment rose in July by 38,000 positions.  The professional & business services sector lost 13,000 jobs, while the leisure & hospitality sector added 6,000 jobs.  The education & health services sector added 30,000 positions in July.  Overall government employment fell by 202,000 jobs during the month.

The U.S. economy suffered a net decline of 3.6 million jobs during 2008, the worst year since 1945.  The loss of 4.8 million jobs during 2009 easily surpassed the 2008 total.  The net decline of 8.4 million jobs is a painful contrast to the average gain of 1.9 million net new jobs annually during 2005 to 2007.

Excluding the impact of Census and other government jobs, the economy has now added an estimated 630,000 net new jobs this year.  An estimated 196,000 additional Census jobs will be ended in coming months, suggesting weak “headline” employment totals into the Fall.

 

The August 2010 Zions Bank Small Business Index for Idaho will be released on September 8, 2010.

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

©Copyright 2010 Thredgold Economic Associates