Venture Capital Investment Slips in first quarter

http://www.sltrib.com/ci_5757242

In this article, the amount of venture capital investment in Utah has dropped significantly, down nearly 60% in comparison to the first quarter in 2006. However, the article claims that a good level of investment is from 20 million to 60 million dollars and that the first quarter of 2006 was so high because of the abnormal amount of venture capital investment. Venture captial investments are early stage investments where the chances of success are uncertain.

The low investment in venture capital means that the GDP for the first quarter in Utah is lower because a 60% decrease in any form of investment will ineveitably decrease GDP by a noticeable amount. Also a decrease in investment decreases the injection of money into the cycle therefore decreasing the total money spent, whether it is in consumption or government spending. This could be signs of a recession because of the contraction of buisness activity within the economy. This in fact may be the trough of the business cycle because the level of investment is at the lowest point that is considered a good level of investment. Therefore, next year in the first quarter of 2008 we should see an increase in venture capital investment because it should be the recovery part of the buisness cycle. If it does not recover, then it may be considered a depression if this decline in investment continues for too long.