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Denver Small Business

Vectra Bank Colorado Small Business Index for Colorado
March 2012 Release

April 12, 2012

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



  • The Vectra Bank Colorado Small Business Index for Colorado measured 117.8 in March 2012, up from a revised 117.7 in February 2012
  • Colorado’s unemployment rate was estimated at 7.8% in the latest month, unchanged from the prior month’s rate.  Total employment grew by 48,200 jobs during the past 12 months
  • The fits and starts of American job creation will provide little incentive for the nation’s central bank to deviate from current interest rate policy, a positive development for those small businesses who are net borrowers
  • The U.S. economy saw a net rise of 120,000 jobs during March, sharply below consensus expectations of a 210,000 rise.  The U.S. unemployment rate declined to 8.2% in March from 8.3% in February

Disappointing U.S. employment gains during March will provide the Federal Reserve greater support for leaving its key interest rate…the federal funds rate… at an historic low target range of 0.00%-0.25%.   Such a level has been in place since December 2008.  At the same time, however, it will increase financial market expectation of the Fed providing another extraordinary money creation program, referred to as “quantitative easing.”

Employment gains in March were much weaker than expected.  Federal Reserve Chairman Ben Bernanke suggested in recent weeks that jobs gains could slow sharply as the economy was not all that robust.

The Federal Reserve will face rising pressure to bring another round of additional monetary stimulus.  However, the Fed’s leadership is likely to remain patient and closely examine additional economic and financial data in coming weeks. 
The Fed’s Open Market Committee is on record that it expects its key interest rate to stay unchanged until late 2014.  At the same time, the Fed would like to be able to move that rate higher sooner should U.S. economic performance surprise on the upside.

The level of short-term financing costs is a component of the Small Business Index for 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, unchanged from the rate of the prior month.  The 7.8% rate compares to the 8.6% 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 48,200 jobs.  This increase compares to a revised gain of 46,800 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 117.8 in March 2012, up from a revised 117.7 in February 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 U.S. economy’s net addition of 120,000 jobs during March 2012 was much weaker than expected. The consensus of forecasting economists was for a 210,000 job rise.  The nation’s unemployment rate dipped to 8.2% in March, a three-year low.  The prior month’s rate was 8.3%. 

More than 1.1 million net new jobs have been added in the U.S. economy over the past six months, with a gain of roughly 3.5 million net new jobs since the end of 2009.  At the same time, such gains represent only 41% of the 8.5 million net jobs lost during the Great Recession, which ran from December 2007 to June 2009.

U.S economic growth since the recovery officially began 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 this year near 2.2%-2.5%, better than the prior year, but substandard as it relates to prior economic recoveries. 

U.S. and global economic performance are components of the Zions 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.  


The April 2012 Vectra Bank Colorado Small Business Index for Colorado will be released on May 10, 2012.

Jeff Thredgold
Thredgold Economic Associates
Economic Consultant to Vectra Bank Colorado

©Copyright 2013 Thredgold Economic Associates