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Denver Small Business

Vectra Bank Colorado Small Business Index for Colorado
October 2011 Release

November 10, 2011

Written by Jeff Thredgold, President, Thredgold Economic Associates


  • The Vectra Bank Colorado Small Business Index for Colorado measured 114.3 in October 2011, down from a revised 114.8 in September 2011
  • Colorado’s unemployment rate was estimated at 8.3% in the latest month, down from the prior month’s 8.5% rate.  Total employment grew by 23,100 jobs during the past 12 months
  • Improving U.S. economic performance in 2011’s third quarter, should it continue, would provide a stronger foundation for growth within Colorado’s small business sector
  • The U.S. economy saw a gain of 80,000 net new jobs during October, slightly below expectations.  However, estimated job gains of the two prior months were revised higher by 102,000 jobs.  The U.S. unemployment rate declined to 9.0%, versus 9.1% in the three prior months

American economic growth improved during 2011’s July–September quarter, especially when compared to the anemic economic performance during the year’s first half.  Similar to slightly softer economic growth seems on tap in coming quarters, with plenty of obstacles to be faced along the way. 

U.S. GDP, the most inclusive of all measures of economic activity taking place on U.S. soil, grew at a 2.5% real (after inflation) annual rate during the third quarter, matching the consensus view of forecasting economists.  The 2.5% growth pace greatly exceeded the 1.3% real annual growth pace of the second quarter and the pathetic 0.4% growth pace during the January–March 2011 quarter.


Even as economic growth has improved, it still lags the 3.0%-4.0% real annual growth pace needed to bring the nation’s unemployment rate down from the 9.0% average of the past three years.  Given the obstacles (or headwinds) faced within the economy, including the painful reductions of recent years in home prices, anxiety about the European debt crisis, distaste for higher taxes for those who invest and create jobs, and our domestic frustration about government spending out of control, such stronger growth seems unlikely in coming quarters.  However, the new data has, for the moment, dampened the worst case views of those economic forecasters calling for an imminent return to recession. 

The American consumer spent money more aggressively during the third quarter, with personal consumption rising at a 2.4% rate.  Such growth rose at a miniscule 0.7% pace in the prior quarter.  American businesses also stepped up their spending pace during the third quarter, with investment in equipment and software rising at a 17.4% annual rate, the strongest pace in a year. 

The American economy finally exceeded the real pre-recession peak of total economic output during 2007’s final quarter.  It took 15 quarters to offset the 5.1% decline in output during the Great Recession.  This was three times the average number of quarters needed to reach the prior peak in other post-WWII recessions.

The level of U.S. economic performance is a component of the Colorado Small Business Index, as are the performances of the global and Intermountain economies.   Stronger performance of any of the three pushes the Index higher.


The Colorado unemployment rate—the most heavily weighted component of the Vectra Bank Colorado Small Business Index for Colorado—was estimated at 8.3% in the most recent month, down from the 8.5% rate of the prior month.  The 8.3% 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 8.9% during 2010, 8.3% 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 23,100 jobs.  This increase compares to a revised gain of 20,900 jobs in the prior year-over-year period.  Colorado lost 25,500 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 114.3 in October 2011, down from a revised 114.8 in September 2011.  The Index measures business conditions from the viewpoint of the Colorado small business owner or manager. 

A lower Index number is associated with less 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. Department of Labor reported a gain of 80,000 net new jobs in October 2011, weaker than the 100,000 net gain expected.  However, estimated job gains of the two prior months were revised higher by 102,000 jobs.
The U.S. unemployment rate declined to 9.0% in October, versus the 9.1% rate of the three prior months. The current 9.0% jobless rate compares to the 9.7% rate of one year ago, the 10.1% rate of October 2009, and the 6.6% rate during October 2008. 

Goods producing employment fell by 10,000 jobs in October, with a loss in construction (down 20,000 jobs) larger than the rise in manufacturing (up 5,000 jobs) and mining & logging employment (up 5,000 jobs).  Private-sector service providing employment rose by 114,000 jobs in October, led by gains in professional & business services (up 32,000 jobs) and education & health services (up 28,000 jobs).  Overall government employment fell by another 24,000 jobs during the month.

The U.S. economy suffered a net decline of 3.6 million jobs during 2008, the worst year since 1945.  The net loss of 5.1 million jobs during 2009 easily surpassed the 2008 total.  The American economy added 940,000 net new jobs during 2010, or 78,000 per month.  Gains-to-date during 2011 have totaled 1,256,000 jobs, or 126,000 per month. 

Roughly 130,000 net new jobs need to be added monthly just to meet the needs of a rising population, and just to keep the unemployment rate stable.  Consistently stronger gains are necessary to lead the unemployment rate lower.

Jeff Thredgold
Thredgold Economic Associates
Economic Consultant to Vectra Bank Colorado

©Copyright 2011 Thredgold Economic Associates