Today, we released the newest update to the Quarterly Indicators: The Economy and Small Business for the first quarter of 2009. The Bureau of Labor Statistics also released the April employment numbers today, which were sobering. The U.S. economy lost 539,000 jobs in the month of April, but more importantly, this was the sixteenth consecutive month of job losses.  Since this recession began in December 2007, the U.S. has lost 5.7 million nonfarm payroll jobs! In that time frame, the unemployment rate has gone from 5.0 to 8.9 percent. Worse yet, these numbers are expected to get worse before they get better. (The positive spin from the day was that the 539,000 was better than in previous months, perhaps suggesting that the steep rate of decline has begun to slow down.)

Real gross domestic product in the first quarter declined by 6.1 percent, following the 6.3 percent fall in the previous quarter. The worst damage came from sharp drops in investment (especially the non-residential sector), exports, and imports. The global recession has impacted the overall volume of international trade. This reverses the stellar export growth that we had been experiencing for several years up until the fourth quarter of 2008. Likewise, non-residential construction had been quite resilient (even as the residential sector collapsed) until the second half of 2008. The good news is that consumption increased an annualized 2.2 percent in the first quarter, showing that the consumer might be moving back into the market.

Despite this increase in spending, both the consumer and the small business sector remain very pessimistic about the overall economy. Small business owners cite poor sales and access to credit as the biggest challenges that they face. However, the most recent American Express Small Business Monitor survey shows that 37 percent of small businesses see growth opportunities in the next six months, with 28 percent planning to hire employees in the coming months. This shows that entrepreneurs are able to spot opportunities even in uncertain times, and it perhaps suggests that better times might be coming. Earlier in the week, Federal Reserve Chairman Ben Bernanke testified in Congress that he is hopeful that the economy will improve by year’s end. Let’s hope that he and the respondents to the American Express survey are correct.


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