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
Reflecting ongoing weakness, the U.S. economy grew 0.6 percent in first quarter 2008, mirroring the previous quarter. Consumer spending rose 1 percent on an annual basis, the slowest rate since second quarter 2001. Residential investment declines helped cause a drop of 4.6 percent in real gross private fixed investment. Nonresidential investment also declined. Industrial production fell; the Institute for Supply Management's manufacturing composite index, which remained below 50, signified a shrinking manufacturing sector. On the positive side, real exports benefited from a weaker dollar with annualized growth of 5.5 percent for the quarter and 9.5 percent year to year. Real imports rose less, at 2.5 percent.
The public remains pessimistic about the overall economy. The small business optimism index from the National Federation of Independent Business (NFIB) fell to a record low since 1980 - 89.6 in March 2008. The University of Michigan consumer sentiment index was at its lowest level since February 1992, 69.5.
Unemployment was slightly higher than in previous months at 5.1 percent in March. The U.S. economy shed 240,000 net nonfarm payroll jobs in the first quarter. The goods-producing sectors of construction and manufacturing lost 259,000 jobs in the quarter. Service sector industries were mixed, with job growth in education and health services, leisure and hospitality, other services, and government; and job losses in all other service sectors, including retail trade and financial activities. Looking ahead, the NFIB survey indicated a drop in planned hiring in the next three months. Labor productivity rose an annualized 2.2 percent in the first quarter, and self-employment remained unchanged.
The Federal Reserve Board lowered interest rates to spur economic activity. The prime rate at the end of March was 5.25 percent - down three percentage points from September 2007. The three-month Treasury bill rate fell to an average of 1.26 percent in March, down 1.74 percent for the quarter and 3.68 percent since March 2007. The Senior Loan Officers' Survey showed weaker demand and tightening lending standards for small commercial and industrial loans. Venture capital deals were down $660 million in the first quarter; the amount invested was still higher than in any other first quarter since 2001.
Modest inflationary pressures persist. Consumer prices rose an annualized 3.1 percent in first quarter 2008 and, omitting food and energy costs, the so-called "core" inflation rate increased 2 percent on an annual basis. West Texas crude oil averaged $105.56 per barrel in March, up $13.83 since December and $45 from the previous year. Overall wages and salaries increased an annualized 3.4 percent and benefits grew 2.3 percent. A falling dollar increases the cost of imported goods; since December, the U.S. dollar has fallen 8.2 percent against the euro, 10.6 percent against the Japanese yen, and 3.9 percent against the Chinese yuan. It remained even with the British pound over the quarter.
The Complete Report (pdf)
Information courtesy of the Small Business Administration.
