Zions Bank Small Business Index for Idaho
December 2011 Release
January 11, 2012

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

POSSIBLE THREATS TO IDAHO SMALL BUSINESS PROSPERITY ARE PRIMARILY EXTERNAL

HIGHLIGHTS

• The Zions Bank Small Business Index for Idaho was 105.5 in December 2011, down from a revised 107.3 in November 2011

• Idaho’s unemployment rate was estimated at 8.5% in the latest month, down from the prior month’s 8.8% rate. Total Idaho employment grew by an estimated 5,200 jobs during the past 12 months

• Idaho’s small business sector has rebounded reasonably well over the past 18 months. Threats to rising prosperity are now primarily tied to issues across Europe and the Middle East, as well as one in the nation’s capital

• The U.S. economy saw a net rise of 200,000 jobs during December, exceeding consensus expectations of a 155,000 rise. Estimated job gains of the two prior months were revised lower by 8,000 jobs. The U.S. unemployment rate declined from a revised 8.7% in November to 8.5% in December, the lowest level in nearly three years

SMALL BUSINESS THREATS

Almost all states have added jobs during the most recent 12-month period. However, various external threats, or headwinds, could cloud the outlook for state and local performance during 2012.

The first of these threats involves continuing deterioration of the European economy, with major issues still to be resolved in regard to the ability of numerous euro-currency nations to finance massive budget deficits and associated national (sovereign) debt levels. Greece, Portugal, and Ireland have received substantial bailouts, while Italy and Spain are on the brink of requiring similar financial support. The most serious threat to the global and American economies would be the failure to achieve a successful resolution of these funding problems.

Another major threat to small (and large) business success within the U.S. is the eventual resolution of tensions between Iran and the rest of the world. Saber-rattling by the Iranian government about its nuclear weapon ambitions and its threat to close the Strait of Hormuz, thereby disrupting oil flows, threatens Middle Eastern peace and oil prices around the globe.

The U.S.-based threat to American small business prosperity involves the need for the Administration, the Democratic Senate, and the Republican House of Representatives to reach agreement next month on an extension of the payroll tax cut through the end of the year. Politicians at year-end 2011 extended the tax cut for only two months.

Political stalemate in Washington DC damaged this nation during the summer months. Eliminating uncertainty about this tax issue, as well as a decision whether to extend unemployment benefits or not, would boost small business confidence.

The performance of the global economy is a component of the Small Business Index for Idaho, as is the performance of the U.S. economy. Stronger levels of performance boost the Index.

IN IDAHO

The Idaho unemployment rate—the most heavily weighted component of the Zions Bank Small Business Index for Idaho—was estimated at 8.5% in the most recent month, down from the 8.8% rate of the prior month.  The estimated 8.5% rate compares to a 9.6% rate of one year ago.  A lower Idaho unemployment rate is a negative for the Index as it implies lesser labor availability for Idaho’s small businesses. Other associated factors typically tied to a lower unemployment rate, such as greater job creation, greater income gains and stronger retail sales, pull the Index higher.

The Idaho jobless rate averaged 9.3% in 2010, 7.7% in 2009, 4.7% in 2008, 2.9% in 2007 and 3.0% in and 2006.  By comparison, the Idaho jobless rate averaged 5.2% between 1990 and 2005.

The latest 12-month increase in Idaho employment estimated at 5,200 (up 0.9%) jobs compares to a revised gain of 4,800 jobs in the prior year-over-year period.  Idaho lost 7,000 jobs in 2010, lost 38,900 jobs in 2009, lost 6,100 jobs during 2008, added 16,500 in 2007 and added 27,100 in 2006. 

These totals compare to gains averaging 15,300 net new jobs annually between 1990 and 2005.  More recently, job gains leading to greater income creation and stronger retail spending, have a positive impact upon Idaho’s small businesses…and therefore, the Index.

 

NATIONAL EMPLOYMENT

The U.S. Department of Labor reported a net gain of 200,000 jobs in December 2011, exceeding consensus expectations of a 155,000 job rise.  Estimated job gains of the two prior months were revised lower by 8,000 jobs.

The U.S. unemployment rate declined to 8.5% in December, the lowest in nearly three years, versus the revised 8.7% rate of the prior month.  The current 8.5% jobless rate compares to the 9.4% rate of one year ago, the 9.8% rate of December 2009, and the 7.3% rate during December 2008. 

Goods producing employment rose by 48,000 jobs in December, led by an estimated 23,000 gain in manufacturing jobs, a 17,000 rise in construction jobs, and a 8,000 rise in mining & logging employment.  Private-sector service providing employment rose by 164,000 jobs in December, led by an estimated 50,000 gain in transportation & warehousing jobs.  Education & health services employment rose by an estimated 29,000 jobs, while retail trade added 28,000 jobs.  Overall government employment fell by another 12,000 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 net loss of 5.1 million jobs during 2009 easily surpassed the 2008 total.  The American economy added 940,000 net new jobs during 2010, or 78,000 per month.  Job gains during 2011 totaled 1,640,000 jobs, or 137,000 per month.

The January 2012 Zions Bank Small Business Index for Idaho will be released on February 8, 2012

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

©Copyright 2012 Thredgold Economic Associates