Zions Bank Small Business Index for Utah
December 2009 Release
January 12, 2010
Written by Jeff Thredgold, President, Thredgold Economic Associates
Economic Consultant to Zions Bank
UTAH'S SMALL BUSINESSES TO BENEFIT FROM STRONGER U.S. ECONOMIC GROWTH
HIGHLIGHTS
- The Zions Bank Small Business Index for Utah was 80.2 in December 2009, up from a revised 79.0 in November 2009
- Utah's unemployment rate was estimated at 6.3% in the latest month, down from the 6.5% rate of the prior month. Total Utah employment fell an estimated 38,800 jobs during the past 12 months
- Utah'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
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 Utah 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 Utah Small Business Index, with stronger performance by either a positive contributor to the Index.
UTAH EMPLOYMENT
The Utah unemployment rate—the most heavily weighted component of the Zions Bank Small Business Index for Utah—was estimated at 6.3% in the latest month, down from 6.5% during the prior month. The 6.3% rate compares to a 3.8% 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, 4.1% 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. Average 2009 unemployment has not
yet been released.
Total Utah employment fell by an estimated 38,800 jobs (down 3.1%) over the past 12 months. This decrease compares to a revised loss of 42,000 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 businessescand therefore, the Index.
The Zions Bank Small Business Index for Utah was 80.2 during December 2009, up from a revised 79.0 during November 2009.
The Index measures business conditions from the viewpoint of the Utah small business owner or manager.
A higher Index number is associated with more favorable business conditions for Utah's small businesses. The Index uses 100.0 for calendar year 1997 as its base year. The Index includes revisions to various historical and new forecast components as they
become available.
LOCAL PERFORMANCE
Cache County employment decreased by 2,100 jobs (-4.2%) in the latest 12-month period. The area's jobless rate was 4.2%, up from the 2.8% rate of one year ago.
Weber County experienced a decrease of 5,300 jobs (-5.5%) from a year ago. Joblessness registered 7.2%, up from the 4.6% unemployment rate one year ago.
Davis County payrolls declined by 2,200 jobs (-2.1%) in the past year. The unemployment rate was 5.8% in the latest month, up from 3.7% one year ago.
Salt Lake County employment fell by 21,600 jobs (-3.6%) over the year. The county's unemployment rate was 6.2% in the latest month, up from 3.7% last year.
Utah County employment declined by 6,400 jobs (-3.5%) over the last 12 months. The area's jobless rate was 5.9%, up from the 3.7% rate of one year ago.
Washington County payrolls declined by 1,700 jobs (-3.4%) in the past year. The unemployment rate was 8.2% in the latest month, up from 5.6% one year ago.
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 'temp' 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 Utah will be released on February 9, 2010.
Jeff Thredgold
Thredgold Economic Associates
Economic Consultant to Zions Bank
(801)614-0403
©Copyright 2009 Thredgold Economic Associates
