NABE Survey Reveals Worst Business Conditions Since 1982

The US economic recession deepened in the fourth quarter of 2008, and business conditions are now at their worst in over 27 years, according to a January survey of businesses by the National Association for Business Economicsю "NABE's January 2009

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The US economic recession deepened in the fourth quarter of 2008, and business conditions are now at their worst in over 27 years, according to a January survey of businesses by the National Association for Business Economicsю

“NABE’s January 2009 Industry Survey depicts the worst business conditions since the survey began in 1982, confirming that the U.S. recession deepened in the fourth quarter of 2008,” says Sarah Johnson, an analyst with NABE.

The survey also showed rising pessimism about the outlook for the economy, with 78% of respondents now expecting gross domestic production to be lower in 2009 than in 2008. In October of last year, only 38% expected a decline.

Businesses surveyed also said tight credit-market conditions continue to hurt them, with 52% saying they were moderately or severely affected, and 78% reporting their customers were adversely affected.

All sectors of the economy reported a direct negative impact, except for services. Falling profit margins were also reported by an overwhelming majority of firms, by a ratio of 5 to 1, also the worst reading since 1982, NABE says.

The survey says that job losses accelerated in the fourth quarter, and the employment outlook for the next six months has further weakened. The survey’s index for future hiring has slumped to negative 22, the worst reading since 2001.

Of the firms surveyed, only 17% expect employment to increase, mostly in the services sector, while 45% expect no change in hiring plans, and 39% expect reductions.

Job cuts are expected in the goods production, transportation, utilities, information and communications sectors, as well as in finance, insurance, and real estate.

Firms also “slammed the brakes” on capital spending in the fourth quarter of 2008, with 38% cutting expenditures, the highest reading in the history of the survey.

Respondents remain bearish about spending over the next year as well.

In the service sector, 23% still expect capital spending to increase by up to 10% over the next 12 months. But in the goods-producing sector, 54% expect decreases of at least 10%.

D.C.

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