The Quarterly Indicators report provides recent monthly and quarterly data from a wide variety of sources relevant to small businesses. Economic activity of small firms is examined at the national level.
Trends
U.S. economic growth slowed in the fourth quarter of 2005. Growth of real gross domestic product (GDP) slowed to an annualized rate of 1.1 percent during the quarter. For the year, real GDP grew 3.5 percent. This drop-off mirrored a reduction in real personal consumption expenditures, which grew an annualized 1.1 percent during the fourth quarter, down from 4.1 percent in the third quarter. Net exports also were a factor. While real exports increased an annualized 2.2 percent, real imports rose 9.1 percent. On the positive side, real gross private fixed investment rose an annualized 12.2 percent in the quarter.
U.S. economic growth slowed in the fourth quarter of 2005. Growth of real gross domestic product (GDP) slowed to an annualized rate of 1.1 percent during the quarter. For the year, real GDP grew 3.5 percent. This drop-off mirrored a reduction in real personal consumption expenditures, which grew an annualized 1.1 percent during the fourth quarter, down from 4.1 percent in the third quarter. Net exports also were a factor. While real exports increased an annualized 2.2 percent, real imports rose 9.1 percent. On the positive side, real gross private fixed investment rose an annualized 12.2 percent in the quarter.
Small business owners, according to the monthly National Federation of Independent Business Optimism Index, ended the year at 101.4. For the year, the index was off from the near-record scores of 2004, but for most of 2005 the optimism readings stayed above 100 (averaging 101.6), indicating a growing small business sector. The NFIB surveys also showed a willingness to expand and hire in the next three months. The University of Michigan's Consumer Sentiment Survey indicated a steady rise in optimism during the fourth quarter; this had fallen to low levels after Hurricanes Katrina and Rita.
The unemployment rate at year's end was 4.9 percent. There were 2 million nonfarm payroll jobs added in 2005, with 438,000 of those stemming from the fourth quarter. Industries with the largest percentage of small business employment—construction, other services, wholesale trade, and leisure and hospitality—added 142,200 net new jobs during the quarter. Each industry sector except for retail trade saw employment gains in the fourth quarter. There was a slight up-tick in incorporated self-employment.
Interest rates have continued to rise, with the average prime rate for 2005 nearly two percentage points higher than the 2004 average. Higher rates have not affected the demand for loans to small businesses; this remained strong according to the most recent Senior Loan Officers' Survey. Meanwhile, the number of deals and amount of investment in venture capital remained steady and were quite similar to the 2004 levels.
Overall inflation remained under control, helped by lower energy costs in the fourth quarter. The price of West Texas crude ended the year below $60 a barrel. In the labor market, private sector wages and salaries rose 2.5 percent from the fourth quarter of 2004 to the fourth quarter of 2005, whereas private sector benefits jumped 4.1 percent.
The Complete Report (pdf)
Information courtesy of the Small Business Administration.
