Zions Bank Small Business Index for Utah
January 2010 Release
February 9, 2010

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

HIGHER REGIONAL UNEMPLOYMENT RATES HURT UTAH'S AND NEIGHBORS' SMALL BUSINESSES

HIGHLIGHTS

• The Zions Bank Small Business Index for Utah was 88.7 in January 2010, up from a revised 82.5 in December 2009

• Utah’s unemployment rate was estimated at 6.7% in the latest month, up from the 6.3% rate of the prior month.  Total Utah employment fell an estimated 34,700 jobs during the past 12 months

• Utah’s small business sector has seen business conditions deteriorate since the Great Recession began in December 2007, with a sharply higher jobless rate and weaker consumer spending.  Neighboring states have experienced similar business challenges

• The U.S. economy lost an estimated 20,000 net jobs in January, worse than the slight gain expected.  November’s estimated job gain was revised higher, while December’s estimated loss was revised to reflect a greater job loss.  The U.S. unemployment rate dropped to 9.7% in January

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REGIONAL UNEMPLOYMENT HIGHER

Severe U.S. economic weakness during 2008 and much of 2009 has pushed unemployment rates of states within the Rocky Mountain region, as well as across the nation, sharply higher.  However, jobless rates have likely peaked in many states, while other states may see jobless rates move slightly higher in coming months.  All 50 states are currently in recession, but will eventually benefit from the return of U.S. economic growth during the past six months.

The two most recent recessions of the early 1990s and during much of 2001 each ran eight months.  The Great Recession officially began in December 2007, and likely concluded during the summer of 2009, with a duration of roughly 20-22 months.  It has been the longest, the deepest, the most pervasive, and the most costly since the Great Depression. 

The Great 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 more than eight million.  All states within the Rocky Mountain region have experienced 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 6.7% in the latest month, up from 6.3% during the prior month.  The 6.7% rate compares to a 4.1% 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 5.7% during 2009, 3.4% in 2008, 2.7% in 2007, and 3.0% in 2006.  These rates compare to an average Utah unemployment rate of 5.0% during the 2001 to 2005 period, and an average 3.5% rate between 1995 and 2000.

Total Utah employment fell by an estimated 34,700 jobs (down 2.8%) over the past 12 months.  This decrease compares to a loss of 38,800 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 900 jobs (-1.8%) in the latest 12-month period.  The area’s jobless rate was 4.7%, up from the 3.2% rate of one year ago.

Weber County experienced a decrease of 4,000 jobs (-4.2%) from a year ago.  Joblessness registered 7.6%, up from the 5.2% unemployment rate one year ago.

Davis County payrolls declined by 400 jobs (-0.4%) in the past year.  The unemployment rate was 6.1% in the latest month, up from 4.0% one year ago.

Salt Lake County employment fell by 20,000 jobs (-3.3%) over the year.  The county’s unemployment rate was 6.4% in the latest month, up from 4.0% last year.

Utah County employment declined by 6,300 jobs (-3.4%) over the last 12 months.  The area’s jobless rate was 6.3%, up from the 4.0% rate of one year ago.

Washington County payrolls declined by 2,900 jobs (-5.9%) in the past year.  The unemployment rate was 8.7% in the latest month, up from 6.1% one year ago.

NATIONAL EMPLOYMENT

The U.S. Department of Labor reported a net loss of 20,000 jobs in January 2010, worse than the slight gain expected.  The previously reported loss of 85,000 jobs during December was revised to a loss of 150,000 jobs.  However, November’s 4,000 estimated job gain was revised to reflect 64,000 net new jobs. 

The U.S. unemployment rate declined to 9.7% in January 2010, versus 10.0% in December.  The rise occurred as more than 540,000 people reported finding jobs in January when measured by the household survey, from which the unemployment rate is derived.  The current 9.7% jobless rate compares to the 7.7% rate of one year ago and is nearly double the 5.0% rate of January 2008. 

Goods-producing employment continued to decline in January, with a net loss of 60,000 jobs.  Manufacturing employment actually rose by 11,000 positions, the first gain in three years, while construction lost another 75,000 jobs. 

Service-providing employment rose in January by 48,000 positions.  The professional & business services sector gained 44,000 jobs (mostly “temp” jobs), while the retail trade sector added 42,000 jobs.  Government employment fell by 8,000 jobs (all state and local jobs), while the education & health services sector added 16,000 positions in January.

Annual benchmark revisions to prior employment data now suggest job losses were even greater during the past two years.  The revised net decline of 3.6 million jobs during 2008 was 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.  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 February 2010 Zions Bank Small Business Index for Utah will be released on March 9, 2010.

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

©Copyright 2009 Thredgold Economic Associates