Vectra small-biz index rises

DENVER — Despite gloomy forecasts from notable economists that the U.S. economy is on the brink of recession, the climate for small business owners in Colorado is improving, according to an economist working for Vectra Bank Colorado.

The Vectra Small Business Index, a measure of the health of that sector, ticked upward to 94.8 in December from 92.7 the previous month.

Ironically, the same factors that guide some economists to predict recession are responsible for the rising index. Rising U.S. and Colorado unemployment levels mean that small businesses will have greater access to labor markets and might have lower labor costs.

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Economist Jeff Thredgold, who prepares the monthly index report, also said on Thursday the bad employment news would likely lead the Federal Reserve Board to lower interest rates another notch in an effort to forestall recession. Later Thursday, Fed chairman Ben Bernanke signaled a rate cut of one-quarter to a half point might be in the offing.

Thredgold said a rate cut by the Fed would lower the cost of doing business for the small-business sector.

The most heavily weighted component of the Vectra index, the Colorado unemployment rate, spiked in November at 4.1 percent, the highest rate for the year and a steep monthly rise from the 3.7 percent recorded in October.