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Denver Small Business

Vectra Bank Colorado Small Business Index for Colorado
September 2011 Release

October 8, 2011

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



  • The Vectra Bank Colorado Small Business Index for Colorado measured 114.3 in September 2011, up from a revised 113.9 in August 2011
  • Colorado’s unemployment rate was estimated at 8.5% in the latest month, unchanged from the prior month’s rate.  Total employment grew by 16,400 jobs during the past 12 months
  • Low confidence levels of American consumers and business managers have led to extremely soft performance of the American economy since the Great Recession officially ended in June 2009
  • The U.S. economy saw a gain of 103,000 net new jobs during September, exceeding an expected 60,000 rise.  In addition, estimated job gains of the two prior months were revised higher by 99,000 jobs.  The U.S. unemployment rate remained at 9.1%

A combination of 1) the most severe U.S. recession since the Great Depression; 2) a largely anemic U.S. economic recovery since it began in June 2009; 3) global investor anxiety about sovereign debt problems across Europe; and 4) enormous concern about the direction of government and unprecedented budget deficits has contributed to ongoing weak readings of consumer confidence (The Conference Board).  Desired progress in coming months in Washington DC to slow government spending and reduce future budget deficits would go a long way in rebuilding confidence levels…and by connection, contribute to more vibrant U.S. economic performance.

A confident American consumer is willing to spend more and invest more, while a consumer who lacks such confidence does less.  The same is true for business managers, who might be willing to add to employment levels when confidence is rising, but stay on the sidelines when confidence is low.

The latest U.S. employment data is likely to weaken the “recession is coming again” view of many forecasters.  September job gains were stronger than expected, while previously reported job gains in July and August saw significant upward revisions.

An opportunity to reduce future U.S. government budget deficits in a substantial way is currently in the hands of the “super committee” of six Republicans and six Democrats of the Congress.  They are to report their recommendations (if any) no later than November 23.  An agreement to set aside extremely partisan politics and work together to address the nation’s dangerous spending path would go a long way to rebuilding confidence of both consumers and business managers.  American stocks have moved higher in recent days as “better news” relative to addressing high debt levels emerges from Europe.

The level of consumer confidence is a component of the U.S. Business Index which accompanies the Colorado Small Business Index each month.  Rising confidence across the nation, and across the West, would benefit Colorado’s small business sector.


The Colorado unemployment rate—the most heavily weighted component of the Vectra Bank Colorado Small Business Index for Colorado—was estimated at 8.5% in the most recent month, unchanged from the rate of the prior month.  The 8.5% 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, 4.9% 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 16,400 jobs.  This increase compares to a revised gain of 16,200 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 September 2011, up from a revised 113.9 in August 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 103,000 net new jobs in September 2011, stronger than the 60,000 net gain expected.  In addition, estimated job gains of the two prior months were revised higher by 99,000 jobs.
The U.S. unemployment rate remained at 9.1% in September, matching the rate of the two prior months.  The current 9.1% jobless rate compares to the 9.6% rate of one year ago, the 9.8% rate of September 2009, and the 6.2% rate during September 2008. 

Goods producing employment rose by 18,000 jobs in September, with a loss in manufacturing (down 13,000 jobs) more than offset by a rise in construction (up 26,000 jobs) and mining & logging employment (up 5,000 jobs).  Private-sector service providing employment rose by 119,000 jobs in September, led by gains in professional & business services (up 48,000 jobs) and education & health services (up 45,000 jobs).  The information sector added 34,000 jobs, tied to the return of 45,000 formerly striking Verizon workers, which has now been settled.  Overall government employment fell by another 34,000 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 1,074,000, or 119,000 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