State's small-business conditions slip a bit

Conditions for Utah's small businesses slipped a hair during September, putting 2009 on pace to be the worst year since 1990, according to a monthly gauge released Tuesday by Zions Bank.

The Zions Bank Small Business Index for Utah was 70.6 in September, down from a revised 70.8 in August.

The index measures business conditions from the viewpoint of the Utah small-business owner or manager. It uses 100.0 for calendar year 1997 as its base year. A lower index figure is associated with less-favorable business conditions.

The index has been hovering around 70.0 in 2009, far below its worst-year level of 86.8 in 2008. The annual index was as high as 126.1 in 1994. The index dates back to 1990.

Keeping things from being worse are small businesses' borrowing costs, which are "likely to remain extremely low as the Federal Reserve shows no immediate signs of an interest rate boost," Jeff Thredgold, president of Thredgold Economic Associates and economic consultant to Zions Bank, said in a prepared statement.

Thredgold noted that the Federal Reserve has said it plans to keep its key short-term interest rate, the federal funds rate, at a record low target to help the U.S. economy and markets stabilize.

"Forecasting economists expect the rate to remain at current levels well into 2010. Some economists suggest the federal funds rate could remain unchanged during all of next year. … Financing costs are a component of the Utah Small Business Index, with an assumption that most small businesses are net borrowers. As a result, extremely low financing costs are a positive contributor to the index," Thredgold said.

The largest component of the state index, the Utah unemployment rate, was estimated at 6.0 percent in August, unchanged from July but up from 3.4 percent a year earlier. A higher Utah unemployment rate is a positive contributor to the index because it implies increased access to Utah labor.

The national unemployment rate was 9.8 in September, up from 9.7 percent in August.

Utah's employment total fell an estimated 55,400 jobs during the past year.

"The U.S. economy has now lost 7.2 million jobs since the 'Great Recession' began in December 2007, with more than half of the losses during 2009's first nine months," Thredgold said. He added that 4.1 million jobs were lost in the first half of 2009, surpassing the net decline of 3.1 jobs for all of 2008, which was the worst year since 1945.

"Job losses are expected to lessen in coming months as the U.S. economy likely continues to emerge from the worst recession in the post-Depression period," Thredgold said. "Most forecasters see the recession now concluding, with a consensus view that positive GDP will be achieved during 2009's second half and throughout 2010."