Analysts project yearlong recession to hammer nation
Financial analysts indicate that current United States recession could continue through 2009, negatively impacting small businesses in Carbon County, across Utah and throughout the nation.
America's economic pain was widespread during 2008's final quarter, noted the latest Zions Bank small business index report. The overall U.S. economy contracted at a real, after inflation annual 3.8 percent rate, representing the sharpest decline posted nationwide since first quarter 1982.
On the surface, the shrinkage rate could be viewed as "good" news since the consensus view of forecasters estimated a 5 percent to 5.5 percent decline, noted the bank's economic consultant, Jeff Thredgold. However, the lesser rate of decline occurred for the wrong reason - a rise in inventories of goods. The gross domestic product represents the broadest, most complete measure of the nation's overall economic activity. Increasing inventories suggest the U.S. economy will be weaker in 2009's first half than previously estimated.
At the state level, Utah's small business index registered at 67.5 during January.
The index measures conditions from the viewpoint of the small business owners or managers, explained Thredgold
A lower number is associated with less favorable business conditions. The index uses the number 100 for calendar year 1997 as its base year.
The most heavily weighted component, Utah's unemployment rate was estimated at 4.3 percent in the latest month.
By comparison, the statewide jobless level registered at 2.9 percent in 2008, continued the economic consultant.
A higher unemployment rate implies increased access to labor and represents a positive contributor to the index.
Utah's unemployment rate averaged 3.4 percent in 2008, 2.7 percent in 2007, 3 percent in 2006, 4.2 percent in 2005 and 4.9 percent during the 2000-2004 period.
The state posted an average 3.5 percent unemployment rate between 1995 and 1999.
Total employment declined by an estimated 1.9 percent or 24,600 jobs statewide within the last 12 months, according to the index report.
By comparison, Utah's economy added 8,300 employment opportunities in 2008, 47,800 in 2007, 55,700 in 2006, 43,700 in 2005 and 30,200 in 2004.
Job losses lead to decreased income and dropping retail spending, resulting in a negative impact upon small businesses, pointed out Thredgold.
U.S. and global economic performances are also components of the Utah's small business index.
At the national level, the U.S. Department of Labor reported a net loss of 598,000 employment opportunities nationwide in January, representing the 13th consecutive month of a declining American labor force.
In addition, the nationwide unemployment rate jumped to 7.6 percent, reaching the highest jobless level posted across the U.S. in 16 years.
On the negative side of the economic spectrum, goods producing employment across the U.S. continued to drop and posted a net loss of 319,000 jobs nationwide.
Manufacturing employment fell by 207,000 positions, while the number of active participants in construction's labor force decreased by 111,000 American workers.
Service providing employment dropped 279,000 positions, while the professional and business services sector lost 121,000 employment opportunities. Leisure and hospitality cut 28,000 positions and retail trade sector lost 45,000 jobs in January.
On the positive side of the nation's economic spectrum, education and health services created 54,000 employment opportunities in January, while the government sector added 6,000 positions.
The revised net decline of nearly three million jobs during 2008 resulted in the worst year experienced across the U.S. since 1945. The sharp decline represented a painful contrast to the average annual gain of 1.9 million net employment opportunities reported nationwide from 2005 to 2007.
The job losses are likely to build in the coming months as the U.S. economy struggles with the worst recession in the post-World War II period, concluded the Zions Bank consultant.