Economist predicts further interest rate cuts

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In the face of low national job growth and a surprising jump in national unemployment, the Vectra Bank Colorado Small Business Index registered 94.8 during December, up from a revised 92.7 during November 2007.

That was enough to cause Vectra Bank’s corporate economist Jeff Thredgold to believe that additional federal interest rate cuts are on the way.

Such cuts would benefit Colorado’s small business sector by improving the cost of doing business, Thredgold said. Colorado’s unemployment rate was estimated at 4.1 percent in the latest month, up from the prior month’s 3.7 percent rate. Total employment rose by 43,200 jobs during the past 12 months.

“Last Friday’s nationwide jobs report was painful,” said Thredgold. “The pathetic 18,000 net job gain number was worrisome, but the sharp rise in the nation’s unemployment rate to 5 percent was just plain shocking. The Fed will undoubtedly be easing interest rates further in coming months to ward off a potential recession.”

The U.S. economy added only 18,000 net new jobs during December, below expectations. The U.S. unemployment rate jumped from 4.7 percent to a two-year high of 5.0 percent.