Signs the local and national economies have turned a corner are evident throughout the most recent IB100 survey conducted by IB and Chamberlain Research Consultants.
Whether it was how they rated the national and Dane County economies, their personal finances, or their company projections, the pre-selected group of 100 Greater Madison businesses provided the first dose of optimism since the severity of the nation’s economic crisis became clear.
Bottoming Out
Following the mixed national jobs report for August, even the local employment outlook, usually one of the last indicators to show upward movement, was slightly improved.
The sense that the economy has bottomed out actually began with the second quarter Gross Domestic Product report, which said real GDP decreased at an annual rate of 1% in the quarter, a much better performance than many analysts predicted.
Asked how they would rate the U.S. economy, IB100 respondents showed improvement in three of the four categories, the lone exception being “excellent,” which remains at 0%. Those who rated the national economy as good rose from 3 to 6%, those who consider it to be in fair shape jumped from 42 to 54%, and those who view it as poor declined markedly, from 55 to 40%.
More also rate the Dane County economy as good, 25% to 35%, and fewer rate it poor — 4% as opposed to 8% — and fewer now rate it as just fair, 60% versus 67%.
Another telling change was that significantly more, 13% compared to just 3%, rate their personal economic situation as excellent. Meanwhile, 63% now rate their personal situation as good, up from 60%, and only 21% rate it as fair, down from 35%. Somewhat troubling is the slight increase of those who view their personal finances as poor, which rose from 2% to 4%.
This mostly sunny outlook continues with the IB100ÃÂfÃÂfÃÂÂÂÃÂÂÂs company expectations. Sixty percent now believe their company revenue will increase in the next 90 days, up from 43% in our last poll. Fewer, 27% as compared to 35%, expect their revenues to remain the same, while only 13% anticipate a decrease, which is down from 22% in our last survey.
In terms of staffing levels, it appears the bleeding has largely stopped as 19% plan to increase their staff size, up from 17%, while 73% expect to remain the same, up from 62%. Perhaps more significantly, only 8% anticipate cuts, which is down from 22% in the previous survey. (Nationally, monthly job losses slowed to 216,000 in August, and although the official unemployment rate climbed to 9.7%, the monthly numbers continued to head in the right direction.)
Another promising metric comes in the form of IBTop 100 business expenditures. A greater percentage, 23% as compared to 13%, say they will increase business expenditures over current levels, while 58% will remain the same, up from 52%, and only 19% will decrease business spending, down from 35%.
Some change also was anticipated in the level of corporate charitable giving, as fewer (21% as opposed to 32%) plan to decrease their contributions, 73% will stay the same, up from 63%, and slightly more, 6% as compared to 5%, expect an increase.
Looking Forward
By this time next month, we should know how the national economy performed in the third quarter, but the comments of area execs were upbeat. “We are clearly through the worst part of the downturn,” said one banker, who forecast slow growth for the remainder of the year.
Added one business-to-business retailer: “It’s my opinion that the pendulum is beginning to swing back.”
One cautionary note came from a business-to-consumer retailer, who believes there is more work to do to restore consumer confidence. The Conference Board Consumer Confidence Index rebounded in August and now stands at 54.1 (up from 47.4 in July). “I do believe people are feeling a little more confident in the economy,” our B-2-C retailer acknowledged. “However, they are being very cautious on where they spend their money. They have to trust in the product or service and they have to feel there is a real value.”
