Trends
Real economic output has been rising, especially since third quarter 2003. Production increased in manufacturing, an industry hard hit during and after the recession. Real gross private investment is also improving, a sign that capital spending is recovering.
The economy is experiencing positive employment signs, including the creation of nearly 600,000 new nonfarm jobs in the first three months of 2004. Nearly all sectors saw positive gains from November 2003 to March 2004. Unemployment remains an issue, however as nonfarm payrolls have not recovered to their pre-recession levels, and 3.3 million people remain unemployed. The employment picture is cited for waning consumer sentiment and business optimism (NFIB survey) in February and March, yet both are higher than their 2002 and 2003 averages.
Productivity has increased rapidly, with nonfarm business output per hour up 5.3 percent between first quarters 2003 and 2004.
Costs to provide benefits to employees continue to increase. Wages and salaries increased 2.6 percent between first quarters 2003 and 2004, while benefit costs rose 7.1 percent. Prices, however, remained stable.
Interest rates remain at all-time lows, less than half of their value in 2000. The Federal Reserve Board's Senior Loan Officer Opinion Survey indicates more banks this year than last plan to ease small firm lending standards in the next three months, and small firm demand for lending is rising.
Venture capital has remained relatively stable over the past year, although venture investments are significantly lower than their highs during the technology boom of the late 1990s.
Proprietors' income, up nearly 10 percent between the first quarters of 2003 and 2004, continues to increase. Corporate profits increased 31.4 percent from fourth quarter 2002 to fourth quarter 2003. (First quarter data are not yet available.)
The number of incorporated self-employed was at 5.2 million in March 2004, up from an average of 4.4 million for the years of 1999, 2000, and 2001.
More small firm owners are saying it's a good time to expand their business than in previous years, although the February and March 2004 levels for this sentiment were lower than in the previous few months. Job-related concerns are cited for these dips.
