Magazine article The Small Business Advocate

Fourth Quarter 2007: The Economy and Small Business

Magazine article The Small Business Advocate

Fourth Quarter 2007: The Economy and Small Business

Article excerpt

Trends

* The U.S. economy was weaker in the fourth quarter of 2007, with real GDP ending the year at a 0.6 percent annualized growth rate. The weaker dollar helped boost real exports, which increased at an annualized 3.9 percent, while real imports were constant. Consumer spending increased by an annualized 2.0 percent. Investment remained weak, particularly in the residential sector where the nation has seen steady declines. In December 2007, new housing starts averaged an annualized 1.0 million homes-less than half the average level seen in 2005. The Institute for Supply Management's manufacturing composite index fell below 50 in December-the lowest reading since April 2003-suggesting that manufacturing output was contracting.

* The public remained somewhat pessimistic in the fourth quarter according to both the National Federation of Independent Business's optimism index and the University of Michigan's consumer sentiment survey.

* Unemployment rose to 5.0 percent in December 2007, its highest level since April 2005. It was low by historical standards, however. The economy generated 282,000 net new jobs in the fourth quarter, and 1.1 million during the entire year. The goods-producing sectors of construction and manufacturing saw declines. Nearly all of the net job gains in 2007 stemmed from service industries: trade, transportation, and utilities; professional and business services; education and health services; leisure and hospitality; and government. Unincorporated self-employment fell in the fourth quarter, and incorporated self-employment remained essentially unchanged. …

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