Sur­vey: Busi­ness economists are slightly op­ti­mistic about growth

Antelope Valley Press - - BUSINESS - By MARTIN CRUTSINGER

WASH­ING­TON — U.S. busi­ness economists are slightly more op­ti­mistic about eco­nomic growth than they were three months ago, and most fore­see sales at their com­pa­nies re­main­ing solid.

Those find­ings emerge from the lat­est sur­vey by the Na­tional As­so­ci­a­tion for Busi­ness Eco­nom­ics be­ing re­leased Mon­day. It found that 67% of the busi­ness economists who re­sponded to the sur­vey are ex­pect­ing mod­er­ate eco­nomic growth of 1.1% to 2% over the com­ing year.

That was es­sen­tially un­changed from the Oc­to­ber sur­vey. But the pro­por­tion of busi­ness economists who ex­pect sig­nif­i­cantly stronger growth of 2.1% to 3% jumped to 30% from 20% in the pre­vi­ous sur­vey in Oc­to­ber.

“Re­spon­dents ... are more bullish about eco­nomic growth over the com­ing 12 months than they were in Oc­to­ber,” said Con­stance Hunter, pres­i­dent of the busi­ness group and the chief econ­o­mist at ac­count­ing firm KPMG. She noted the siz­able jump in the pro­por­tion who ex­pect growth to be as strong as 3% this year.

The gov­ern­ment will re­port this week on eco­nomic growth, as mea­sured by the gross do­mes­tic prod­uct, for all of 2019. Many economists have es­ti­mated that growth last year slowed to around 2.3%, from 2.9% in 2018, which had been the strong­est per­for­mance since 2015.

The gen­eral ex­pec­ta­tion is that 2020 growth will slow fur­ther to per­haps 1.7%. That would be a dis­ap­point­ment for Pres­i­dent Don­ald Trump, who in­sisted as a can­di­date in 2016 that his poli­cies would dou­ble the lack­lus­ter eco­nomic growth of the past decade to an­nual rates of 4% or bet­ter.

Still, speak­ing at an eco­nomic fo­rum last week in Switzer­land, Trump pro­claimed that the U.S. econ­omy is ben­e­fit­ing from “ex­tra­or­di­nary pros­per­ity,” with the low­est un­em­ploy­ment in a half cen­tury and a record-high stock mar­ket.

The NABE busi­ness sur­vey, com­piled from 97 re­sponses of NABE mem­bers from late De­cem­ber through early Jan­uary, found that for the first time in a decade there were as many re­spon­dents re­port­ing de­clines in em­ploy­ment at their com­pa­nies as were re­port­ing in­creases.

But Me­gan Greene, chair of the NABE busi­ness sur­vey panel, said, ”This may have been due to dif­fi­culty find­ing work­ers rather than a pull­back in de­mand” for work­ers. She noted that the sur­vey found a sig­nif­i­cant in­crease in the per­cent­age of com­pa­nies that re­ported short­ages of un­skilled la­bor. And nearly half re­ported short­ages of skilled la­bor.

To help at­tract work­ers, roughly half of those re­spond­ing to the sur­vey said their com­pa­nies had raised wages in the past three months. An even big­ger 62% ex­pect their busi­nesses to raise wages in the com­ing quar­ter.

Among the fac­tors boost­ing op­ti­mism, the sur­vey found more busi­nesses re­port­ing ex­pec­ta­tions of ris­ing rev­enue, stronger profit mar­gins and in­creased sales prices than in the Oc­to­ber sur­vey.

Plans to boost cap­i­tal spend­ing, which have been de­pressed in large part be­cause of the un­cer­tainty caused by Trump’s trade wars, edged up slightly but still re­main at their se­cond-low­est level since 2016.

But 61% of busi­nesses said that the higher tar­iffs im­posed by the trade con­flicts with China and other coun­tries hadn’t af­fected their busi­nesses in a sig­nif­i­cant way. Among those busi­nesses that did feel an im­pact, 20% said the ad­verse ef­fects had been felt in fall­ing sales. Nine­teen per­cent said the trade con­flicts had con­trib­uted to higher costs.

The NABE sur­vey was taken af­ter the an­nounce­ment of a cease­fire in the trade war be­tween the United States and China, capped by the sign­ing of a pre­lim­i­nary agree­ment be­tween the two sides. That ac­cord is to be fol­lowed by ne­go­ti­a­tions on an ex­panded deal.

The new sur­vey of busi­ness economists found that 63% don’t ex­pect a sig­nif­i­cant ef­fect on their sales this year from trade de­vel­op­ments. Fif­teen per­cent think trade will ben­e­fit their sales this year. An equal pro­por­tion ex­pect fur­ther neg­a­tive con­se­quences.


Caeli Clen­nan serves In­spirit Kom­bucha Brew­ing Co.’s Cran­berry Or­ange Kom­bucha from a kego­ra­tor at Metropoli­tan Cof­fee in Hutchin­son.

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