Real GDP Growth of 3.1 Percent, Unemployment
Falls To 5.2 Percent
WASHINGTON, D.C. - Economic conditions for
small businesses moderated in the first quarter of 2005, according
to the Office of Advocacy’s newly released Quarterly
Indicators: The Economy And Small Business. The report shows
real gross domestic product (GDP) growth of 3.1 percent in
the quarter and unemployment falling to 5.2 percent.
“The economy cooled in the first quarter
of 2005 as higher energy costs weighed on the public’s
mind,” said Dr. Chad Moutray, Chief Economist for the
Office of Advocacy. “While real GDP grew at 3.1 percent,
that is slower than the previous quarter. Small business owners
remained optimistic, although at lower levels than in 2004.”
During the quarter, interest rates continued
to increase as policymakers tried to dampen inflationary pressures.
The average prime lending rate rose to 5.4 percent, while
the 2004 average was 4.3 percent. Nonetheless, the Senior
Loan Officers Survey showed the demand for small business
commercial and industrial loans remained strong.
Energy prices played a key role in the first
quarter of 2005. The average price of West Texas crude reached
$54.31 a barrel in March 2005 - almost $11 more than the December
2004 average.
This increase affected consumer prices, so
that between December 2004 and March 2005 they rose at an
annualized 4.25 percent rate, with 1.37 percentage points
of the rise attributable to energy costs. Producer prices
followed a similar pattern.
The Office of Advocacy, the “small business
watchdog” of the government, examines the role and status
of small business in the economy and independently represents
the views of small business to federal agencies, Congress,
and the President. It is the source for small business statistics
presented in user-friendly formats and it funds research into
small business issues.
The Quarterly Indictors series, which started
in the first quarter of 2004, is available on the Office of
Advocacy web site at www.sba.gov/advo/research/sbei.html.
