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Denver Small Business

Vectra Bank Colorado Small Business Index for Colorado
February 2012 Release

March 15, 2012

Written by Jeff Thredgold, President, Thredgold Economic Associates
Economic Consultant to Vectra Bank Colorado

COLORADO’S SMALL BUSINESS SECTOR WILL BENEFIT FROM STRONGER U.S. JOB GAINS

HIGHLIGHTS

  • The Vectra Bank Colorado Small Business Index for Colorado measured 117.3 in February 2012, up from a revised 116.7 in January 2012
  • Colorado’s unemployment rate was estimated at 7.8% in the latest month, down from the prior month’s 7.9% rate.  Total employment grew by 43,400 jobs during the past 12 months
  • Solid American employment gains of the past six months will lead to stronger personal income gains across the nation, bolstering Utah’s small businesses
  • The U.S. economy saw a net rise of 227,000 jobs during February, slightly exceeding consensus expectations of a 210,000 rise.  Estimated job gains of the two prior months were revised higher by 61,000 jobs.  The U.S. unemployment rate remained at 8.3% in February, the lowest level in three years

IT’S ALL ABOUT STRONGER U.S. JOB GAINS

The U.S. economy’s net addition of 227,000 jobs during February 2012 was one more sign of an American job creation machine finally shifting into a higher gear.  The 227,000 net job gain slightly exceeded forecasting economists’ view of a 210,000 job rise. 

In addition, estimated job gains of the two prior months were revised higher by 61,000 jobs.  February’s rise capped the best six-month streak of job growth since 2006 (bloomberg.com).

As expected, the nation’s unemployment rate remained at 8.3% in February, a three-year low.  The nation’s unemployment, or jobless rate, is derived from a survey of households that is different from the “official” job creation survey data. 

The estimated 428,000 rise in employment as measured in the household survey was largely matched by the estimated 476,000 rise in the nation’s civilian labor force.  We have long suggested that if and when U.S. employment gains were stronger, hundreds of thousands of people who had formerly left the labor force as discouraged workers would return to seek more readily available jobs.  Such was the case in February.  We expect more of the same in coming months, leading to no major downward move in the nation’s jobless rate prior to year-end.

More than 1.2 million net new jobs have been added in the U.S. economy over the past six months, with a gain of nearly 3.4 million net new jobs since the end of 2009.  However, such gains represent only 40% of the 8.5 million net jobs lost during the Great Recession, which ran from December 2007 to June 2009.

In addition, U.S economic growth since the recovery officially began in July 2009 has been the weakest since the 1940s.  It remains to be seen whether solid job gains…which lead to stronger consumer spending…will be able to lead U.S. economic growth higher.

The American economy grew at a 3.0% real (after inflation) annual rate during 2010, only to see growth slow to a 1.7% real pace in 2011.  Most forecasts see real U.S. economic growth during 2012 near 2.2%-2.5%, better than the prior year, but substandard as it relates to prior economic recoveries.  The long-in-place economic headwinds of weak American home values; anxiety about European financial strife getting worse; fear of Iran’s nuclear ambitions leading to a Middle Eastern conflict, with even higher oil prices; and consumer anxiety about the size, growth and direction of the U.S. government, leading to four years of $1.3 trillion annual budget deficits; limits American economic growth opportunities.

US Emp

U.S. and global economic performance are components of the Vectra Bank Small Business Index for Colorado.  U.S. job gains and U.S. and global economic performance are components of the U.S. Business Index.

IN COLORADO

The Colorado unemployment rate—the most heavily weighted component of the Vectra Bank Colorado Small Business Index for Colorado—was estimated at 7.8% in the most recent month, down from the 7.9% rate of the prior month.  The 7.8% rate compares to the 8.8% rate 12 months ago.  A lower Colorado jobless rate is a negative contributor to the Index as it suggests decreased access to labor for small businesses. Other associated factors typically tied to a lower unemployment rate, such as greater job creation, greater income gains and higher retail sales, pull the Index higher.

The state’s unemployment rate averaged 8.3% during 2011, 8.9% during 2010, 8.1% during 2009, 4.8% in 2008, 3.7% in 2007, and 4.3% in 2006.  Colorado’s jobless rate averaged 4.6% between 1990 and 2005.

The last 12 months saw an estimated increase in Colorado employment of 43,400 jobs (up 2.2%).  This increase compares to a revised gain of 30,400 jobs in the prior year-over-year period.  Colorado gained 33,000 jobs in 2011, lost 23,300 jobs in 2010, lost 104,700 jobs in 2009, added 19,000 jobs in 2008, added 52,200 jobs in 2007, and added 53,100 jobs in 2006.   

These job totals compare to gains averaging 46,500 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 Colorado’s small businesses…and therefore, the Index.


The Vectra Bank Colorado Small Business Index for Colorado measured 117.3 in February 2012, up from a revised 116.7 in January 2012. The Index measures business conditions from the viewpoint of the Colorado small business owner or manager. 

A higher Index number is associated with more favorable business conditions for Colorado’s small businesses.  The Index uses 100.0 for calendar year 1997 as its base year.  The Index also includes revisions to various historical and new forecast components as they become available.

Colorado Small Business Index

The March 2012 Vectra Bank Colorado Small Business Index for Colorado will be released on April 12, 2012.

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

©Copyright 2013 Thredgold Economic Associates

©Copyright 2013 Thredgold Economic Associates