Business Outlook Reports Offer Some Optimism, but Employers Still Fearful of Uncertainty
The recent release of several economic outlook reports offers a mixed bag of attitudes from employers. While many are optimistic the economy will pick-up in 2014, most are still expressing concerns about the ‘unknowns’ including the implementation of the Affordable Care Act, the regulatory environment, immigration reform and the new call for an increase in the minimum wage. Here’s a round-up of some of the results.
- McDonald Hopkins, a business advisory and advocacy law firm, recently released its 2014 Business Outlook Survey. The headline is that ‘2014 is the great unknown.’ There is considerable caution and uncertainty as respondents expressed numerous concerns about the rising cost and complexity of healthcare and fear of additional burdensome regulations. Some highlights include:
- 67% believe the Affordable Care Act will have a negative impact on their company’s bottom line; and 46% said increasing health care costs are the greatest challenge facing their company
- They have no confidence in Congress to help improve business conditions, with just 33% saying they are cautiously optimistic
- 41% say they are likely to ‘slightly’ increase their number of employees and the same percentage – 41% say their number of employees will stay about the same
- 51% expect to make a ‘moderate’ investment in capital; 55% will dedicate more resources to domestic growth
- The National Federation of Independent Business’ latest survey indicates that only 12% of small business owners plan to add jobs in the next three months. However, NFIB’s Chief Economist Bill Dunkelburg calls the number ‘solid’ and says it is the highest job creation since September 2007. “Small businesses are telling us they would hire more workers if they could find qualified applicants,” added Dunkelburg. “Nearly half of NFIB members surveyed said they tried to hire workers, but reported few or no qualified applicants for open positions.”
- The recent Federal Reserve report indicates banks are easing lending restrictions making it easier for businesses to access new capital. According to the survey, ‘Banks eased their lending policies for commercial and industrial loans to firms of all sizes and experienced stronger demand for such loans over the past three months.” The banks cited increased competition, a more favorable economic outlook and a greater tolerance for risk for the new standards.
- Finally, economists polled in USA TODAY’s quarterly survey predict that the U.S. economy is headed for stronger growth in 2014. They also believe we will see steady improvement in the unemployment rate. Many of the 40 economists surveyed Feb 5-6 cut their first-quarter forecasts due to the January weather and an expected pull-back in business stockpiling after firms aggressively replenished shelves in the second half of 2013.
- “While growth late last year was driven largely by the stockpiling, this year's expansion will be fueled by higher consumer and business spending,” says Dean Maki, chief U.S. economist of Barclays Capital.
- "I think we will regain momentum and not fall on our face," says Diane Swonk, chief economist of Mesirow Financial, drawing a contrast with previous ups and downs in the five-year-old recovery.