The SBA and PROem

proem

PRO-uhm, -em

An introduction, preface, or preamble.

from Latin prooemium, from Greek prooimion, from pro- (before) + oime (song).

 

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TIP OF THE WEEK

 

The proem on the future of the SBA is a one page overview in the President’s budget request for the next fiscal year.

 

Only $987 million is being requested in discretionary budget authority for 2024.

 

With less than a billion dollars, this will support almost $58 billion in lending through mainly the SBA 7(a) and 504 loan programs.

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Indices:

PRIME RATE= 7.75%

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SBA 504 Loan Debenture Rate for March

 

For 20 year debentures, the debenture rate is only 4.86% but note rate is 4.931% and the effective yield is 6.338%.

For 25 year debentures, the debenture rate is only 4.93% but note rate is 4.98% and the effective yield is 6.334%.

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AHEAD OF THE YIELD CURVE

 

A proem for the Federal Reserve’s next meeting on interest rates is the latest on jobs.

 

The Bureau of Labor Statistics reported that total nonfarm payroll employment rose by 311,000 in February.

 

105,000 of those new jobs were in leisure and hospitality.   At the beginning of the pandemic, in March and April of 2020, leisure and hospitality lost 8.2 million jobs, and are now down 410 thousand jobs since February 2020.

So, leisure and hospitality has now added back about 95% all of the jobs lost in March and April 2020.

 

US employment has largely returned to pre-pandemic levels but this recovery hasn’t been even across the labor market.

 

You can use data from the Federal Reserve Bank of Saint Louis to illustrate the recovery in employment according to establishment size: 1-19, 20-49, 50-249, 250-499, and 500+ employees.

 

Before the pandemic, employment across all establishment sizes had been slowly increasing. Predictably, employment dropped in March 2020 for all size categories.

 

For the smallest establishments (1-19 employees), employment dropped the least and recovered the fastest; however, employment in these establishments has fallen slightly since the end of 2021.

For establishments with 20-49 employees, 250 to 499 employees, and 500+ employees, employment has followed a similar pattern, increasing above employment levels from 2020.

For mid-range establishments with 50 to 249 employees, employment dropped the most and recovered the slowest.

 

The smallest establishments obviously benefited from PPP financial assistance

 

Here are the latest jobs numbers from the Bureau of Labor Statistics.

 

February  311,000

January  504,000

2022      4,810,000

2021       7,270,000

2020    -9,370,000

2019     2,108,000

2018      2,679,000

2017      2,110,000

2016      2,160,000

2015     2,740,000

2014     3,116,000

2013     2,074,000

2012     2,193,000

2011     2,103,000

2010    1,022,000

2009    -5,052,000

2008    -3,617,000

2007    1,115,000

2006    2,071,000

2005    2,484,000

2004    2,019,000

 

What does all this mean?

 

I don't know.

 

One profligate propaedeutic has been that there is a trade-off between jobs and inflation.

 

At last week’s auction of $18 billion in 30 year Treasury bonds, the high yield was awarded at 3.877 percent, up from 3.686 percent last month but down from a high of 4.080 percent in November.

Non-dealer bids accepted accounted for 91 percent of the total, indicating excellent demand from investors.

 

On Tuesday, the Consumer Price Index will be released.

 

Core prices in February are expected to hold steady at an elevated 0.4 percent monthly gain with overall prices also expected to rise 0.4 percent after January's 0.5 percent rise.

Annual rates, which in January were 6.4 percent overall and 5.6 percent for the core, are expected at 6.0 and 5.5 percent.

 

On Friday, the Federal Reserve will report on capacity utilization.

Last month capacity utilization dropped 0.1 percentage point in January to 78.3 percent.

 

Neither of these reports should provoke procacious proceleusmatics on the Federal Reserve’s next meeting March 21 and 22.

 

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OFF BASE

 

A glance at the Federal Reserve calendar of bank holidays reveals the next day off is not until May 29th Memorial Day.

 

If that is too long, the following excuses could be used:

 

-St Patrick’s Day Friday March 17th

 

-Opening Day Major League Baseball March 30th

 

-Good Friday April 7th