Zions Bank Small Business Index for Utah
March 2009 Release
April 7, 2009

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

LENGTHY U.S. RECESSION PUSHES REGIONAL UNEMPLOYMENT RATES HIGHER

HIGHLIGHTS

• The Zions Bank Small Business Index for Utah was 70.3 in March 2009, up from a revised 68.9 in February 2009

• Utah’s unemployment rate was estimated at 5.1% in the latest month, up from the prior month’s 4.6% rate.  Total Utah employment is down an estimated 26,000 jobs during the past 12 months

• The lengthy and deep U.S. recession, now into its 16th month, has contributed to much higher unemployment rates in the Rocky Mountain region

• The U.S. economy lost an estimated 663,000 net jobs in March, matching economists’ expectations.  Job losses in February were confirmed at 651,000, while January losses were revised higher by 86,000 to a loss of 741,000 jobs.  The U.S. unemployment rate rose to a 25-year high of 8.5%

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REGIONAL UNEMPLOYMENT HIGHER

Severe U.S. economic weakness during 2008 and into 2009 has pushed unemployment rates of states within the Rocky Mountain region sharply higher.  Such jobless rates are likely to move still higher in coming months.

The two most recent recessions of the early 1990s and during much of 2001 each ran eight months.  The current U.S. recession officially began in December 2007, and is now 16 months in duration.  Most forecasts suggest the recession will continue until mid-to-late 2009.  More pessimistic forecasts suggest the recession will continue well into 2010. 

The current recession, resulting initially from severe housing sector weakness and a freeze-up of domestic and global credit markets, has ravaged employment across the nation.  Total U.S. job losses since the recession began now total 5.1 million, with nearly two-thirds of these losses in the past five months alone.   All states within the region have seen much slower job creation (or greater job losses), as well as much higher levels of unemployed workers.

The Utah unemployment rate and year-over-year gains or losses in employment are key components of the Utah Small Business Index, as is the performance of the regional and U.S. economies.  A higher unemployment rate is a positive contributor to the Index as it suggests greater labor availability for local employers.  However, a rising jobless rate also suggests weaker job gains (or greater losses), lesser income growth, and slower retail spending, all factors which lead the Index lower.

UTAH EMPLOYMENT

The Utah unemployment rate—the most heavily weighted component of the Zions Bank Small Business Index for Utah—was estimated at 5.1% in the latest month, up from the 4.6% rate of the prior month.  The 5.1% rate compares to a 3.3% rate during the same month one year ago.  A higher Utah unemployment rate is a positive contributor to the Index as it implies increased access to Utah labor.

Utah’s unemployment rate averaged 3.4% during 2008, 2.7% in 2007, 3.0% in 2006, 4.2% in 2005, and 4.9% during the 2000-2004 period.  These rates compare to an average Utah unemployment rate of 3.5% between 1995 and 1999.

Total Utah employment declined by an estimated 26,000 jobs (down 2.1%) over the past 12 months.  This decrease compares to a revised loss of 19,700 jobs in the prior year-over-year period.  Utah added 1,900 jobs in 2008, 49,600 jobs in 2007, 55,700 jobs in 2006, 43,700 jobs in 2005, and 30,200 jobs in 2004. 

These totals compare to gains averaging 38,000 new jobs annually during the 1994-2000 period and a net loss of 1,300 jobs in 2001 through 2003.  More recently, job losses, leading to lesser income creation and softer retail spending, have a negative impact upon Utah’s small businesses…and therefore, the Index.

LOCAL PERFORMANCE

Cache County employment decreased by 1,500 jobs (-2.9%) in the latest 12-month period.  The area’s jobless rate was 4.2%, up from the 2.6% rate of one year ago.

Weber County experienced a decrease of 2,200 jobs (-2.3%) from a year ago.  Joblessness registered 6.2%, up from the 3.8% unemployment rate one year ago.

Davis County payrolls declined by 2,300 jobs (-2.3%) in the past year.  The unemployment rate was 4.7% in the latest month, up from 3.0% one year ago.

Salt Lake County employment fell by 14,200 jobs (-2.4%) over the year.  The county’s unemployment rate was 5.0% in the latest month, up from 3.0% last year.

Utah County employment declined by 5,100 jobs (-2.8%) over the last 12 months.  The area’s jobless rate was 4.8%, up from the 3.0% rate of one year ago.

Washington County payrolls declined by 2,000 jobs (-3.9%) in the past year.  The unemployment rate was 7.1% in the latest month, up from 3.7% one year ago.

NATIONAL EMPLOYMENT

The U.S. Department of Labor reported a net loss of 663,000 jobs in March 2009, the 15th monthly decline in a row.  Previously estimated job losses during February were unchanged at 651,000, while January’s loss was revised higher by 86,000 to 741,000 jobs.  The U.S. economy has now lost 5.1 million jobs since the recession began in December 2007, with nearly two-thirds of the losses during the past five months alone.

The U.S. unemployment rate jumped to 8.5% in March, the highest in 25 years, versus 8.1% in February.  The current 8.5% jobless rate compares to the 5.1% rate of one year ago.  The average hourly wage rose 0.2% (three cents) to $18.50 hourly, a rise of 3.4% over the past 12 months.

Goods-producing employment continued to decline sharply in March, with a net loss of 305,000 jobs.  Manufacturing employment fell by 161,000 positions, while construction lost another 126,000 jobs. 

Service-providing employment also declined sharply in March by 358,000 positions.  The professional & business services sector lost 133,000 jobs, while the leisure & hospitality sector lost 40,000 jobs.  The retail trade sector lost 48,000 jobs in March.  The education & health services sector added 8,000 positions in March, while the government sector lost 5,000 jobs.

The net decline of nearly 3.1 million jobs during 2008 was the worst year since 1945.  The sharp decline was also a painful contrast to the average gain of 1.9 million net new jobs annually during 2005 to 2007.  Such job losses are likely to build in coming months as the U.S. economy struggles with the worst recession in the post-WWII period.

The April 2009 Zions Bank Small Business Index for Utah will be released on May 12, 2009.

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

©Copyright 2008 Thredgold Economic Associates