Vectra’s Thredgold offers good news for small businesses

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News flash: 2010 is economically better and brighter than last year.

National growth is at a solid pace, which bolsters the Colorado economy. The Vectra Bank Colorado Small Business Index for Colorado measured 85.9 in February, up from a revised 83.6 in January.

And more good news is on the horizon.

In Colorado, personal income is expected to improve significantly in 2010 versus 2009.

“Colorado’s job picture continues to look up,” said Vectra Bank corporate economist Jeff Thredgold. “Even though the state is down 100,000 jobs in the last 12 months, revised figures show that last August was the low point in Colorado employment.”

Additionally, the U.S. economy lost an estimated 36,000 net jobs in February, almost half of the expected loss of 68,000.

“Add to these bright points an extremely low interest rate environment, and Colorado small business owners have a lot to look forward to in 2010,” Thredgold said.

Although the Federal Reserve made a slight increase in the discount rate on Feb. 18, it did not change its federal funds rate – the rate to which most other short-term interest rates are related. This rate has remained at a target range of zero to 0.25 percent over the past 15 months. Instead of raising it, the Fed indicated this rate would remain unchanged for an “extended period.”

Because the costs of financing are an important component of the Colorado Small Business Index, the extremely low federal funds interest rate is a positive contributor to the index.

The most heavily weighted component of the Vectra Bank small business index – the Colorado unemployment rate – was estimated at 7.4 percent in the most recent month, up from the revised 7.3 percent rate of the prior month. The 7.4 percent rate compares to a recent peak of 8.3 percent in June 2009 and a 6.7 percent rate 12 months ago. A higher Colorado jobless rate is a positive contributor to the index because it suggests greater access to labor for small businesses.