By Michael F. Carmichael
March 29, 2012
Last August we reported on an exclusive survey of Corp! digital and print readers. They were only moderately positive about the future at the time so, less than a year later, we’ve asked again in partnership with the Business Improvement Team and Business Research Group.
For most questions we gave respondents the usual opportunity to rate their opinions on a scale that ranged from “Decrease Sharply” to “Increase Sharply.” We also included an option for “Don’t Know” but, not unexpectedly, few of our C-Level folks checked that. Decrease Sharply was similarly unchecked in almost all categories.
What did we find out this time?
The short answer is that most business leaders (73 percent are executive vice president level or above) who are Corp! readers and who responded to our survey say things are improving over 2011 and will continue to improve in the final two quarters of 2012. They just won’t improve as much as many of them would like.
Those leaders are, for the most part, from the Midwest, though we had responses from as far away as Hawaii.
Their responses mirror, for the most part, the overall trending of an economy that has been slow to heal from the Great Recession but is steadily picking up steam. The GDP increased at 3 percent from third quarter to fourth quarter in 2011. The number of people registering for unemployment insurance is down. The number of people being hired for new jobs is going up.
They also report, in their own words, their personal barometric measurements of the economy.
“Auto sales” “We see firsthand that our clients are doing better.” “Increases in inbound communication.” “Traffic on the highways.”
What’s happening at the state level?
We initially asked what factors will be affecting the economic health of their state. Two out of three say that innovation and new products will increase moderately over the year. Combined with those who say those elements will increase sharply and the figure rises to three out of four.
Job creation will probably be greater in the small company segment according to another two-thirds of respondents. Medium- to large-company hiring won’t be as robust, with about one-third responding that it will stay the same and slightly more than half saying it will increase moderately.
Wages for current employees will stay about the same, say two-thirds of our respondents. About half anticipate production costs will rise moderately. Perhaps the increased cost of production reflects anticipated higher transportation costs.
As states feel increased pressures from a variety of sources, the availability of incentives for alternative energy sources appears to be decreasing. This has resulted in about four out of ten of our respondents saying that the push for the use of those sources will stay the same and a similar proportion are optimistic that they will increase moderately. This is one of the few areas where Don’t Know had an uptick - to just 4 percent.
Business capital availability is also anticipated to either stay the same (45 percent) or rise moderately (41 percent). An optimistic group of 5 percent replied it might rise sharply while a slightly pessimistic group of 8 percent thought availability would decrease moderately. A positive note is that none of the respondents thought it would fall sharply.
Compared with our last survey, there was a statistically significant decrease of those who said that the amount of business taxes would decrease moderately. Seven out of ten feel they will either stay the same or increase moderately.
All in all, no matter where they live and do business, most of our respondents replied that their expectations for their state’s overall economy would increase moderately over 2012.
“Consumer confidence is growing. People are tired of holding back and being afraid to spend. They WANT a better economy.”
Industries affected
Some surprising growth sectors appeared, compared with our last survey. About three of ten said construction would increase moderately in their state while only 13 percent said it would decrease moderately. Combined with those who replied that the sector would stay the same, it netted out at almost 85 percent - a very positive indicator for a struggling industry.
“We work nationally, but there I see more willingness of clients and prospects to spend money on new projects.”
That kind of limited optimism affected responses to our question on the real estate market for both residential and commercial properties. Here, too, the four of ten who see the sector increasing moderately was a statistical improvement over last year. Combined with another 40 percent who saw the market staying the same gave us a total real estate picture that is anticipated to be stronger than last year, despite some predictions of a spike in residential foreclosures.
There were fewer respondents who replied this year than last that a moderate decrease was likely in travel or tourism (7 percent this year), with 31 percent checking “Stay the Same” and about half predicting a moderate increase.
As the nation transitions from a workforce that could “get by” with a high school education, the importance of post-secondary education begins to have a greater impact on the economy, according to our respondents. More than three of ten see the education sector increasing moderately, a change from last year. Paired with a statistical decrease in the number of respondents who see it decreasing moderately, and the result is eight out of ten anticipating either continuation or growth.
“The higher learning institutes are definitely doing a better job of educating the workforce for those jobs and trying innovative ways to deliver them.”
It appears that at least our community college is doing a good job of educating for supply chain management type jobs. As for the large university in our city it is doing a great job.”
These positive comments, unfortunately, were followed by:
“The K-12 educational system is not getting better and in some cases may also be getting worse. The system needs to change radically.”
Other respondents in other states had similar comments:
“We don’t feel the K-12 system in our state of Texas is doing as well as they should be doing.”
Closer to home
We then asked our survey panel to focus on their own company or organization.
Perhaps the best news is that seven of ten expect business to increase moderately or even sharply. Added to the 25 percent who say their company’s economy will remain the same and one could draw the conclusion that respondents are turning bullish. As but one example:
“Today, our business is doing much better and is flourishing both in the U.S. and overseas. We have never been in better business health than we are today.”
One in seven expects orders will increase sharply.
“An overall feeling the economy is slowly turning around.”
That may be that they are equally bullish on their company’s ability to innovate, with one in five expecting innovation to increase sharply and more than half anticipating a more moderate rise.
Although they projected little or no increase in workers’ salaries throughout their states, respondents were of mixed opinions about salaries in their own organization, with about an equal number saying they would stay the same or increase moderately, and 6 percent anticipating them to increase sharply.
That compares to the number of hours those workers were expected to put in, which more than six in ten say will rise to some degree. At least those workers are employed here and will probably stay, as seven of ten respondents report their company’s outsourcing production will remain the same. On the other hand, 15 percent say outsourcing will increase moderately in their organization.
Health care and other benefit costs are expected to rise moderately, according to more than half of respondents, an increase over last year. An additional 24 percent predict they will increase sharply, with only 17 percent saying they will remain the same.
The ability to borrow and the cost of borrowing will remain the same according to more than half of respondents, with an additional 30-35 percent anticipating either moderate or sharper increases for both. “Decrease Sharply” simply wasn’t an issue for their companies.
One final note
Because this is a presidential election year, we took our own straw poll of respondents. Of those that replied, the results were:
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President Barak Obama, 37%
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Mitt Romney, 31%
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Newt Gingrich, 8%
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Rick Santorum, 7%
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Ron Paul, 6%
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Others or Undecided, 12%
Reporter’s Note: Our sincere thanks to all who participated. Our next survey will include some of your suggestions for adding to or tweaking questions. Your additional responses (they’re “verbatims” in the survey biz and some of which we included) were appreciated as well because you took the time to comment on issues important to all of us. Congratulations to the two winners of the random drawing for a gift card, which was offered as an incentive for completing the survey. They were Phillip LeFebvre and Sean Roberts.
