Business confidence in both the U.S. and Connecticut economies slumped in the fourth quarter of 2012, according to a new survey released today.
CBIA's Quarterly Economic Survey: Fourth Quarter 2012 found that more than half (52%) of surveyed business leaders expect the state’s economy to worsen in 2013.
That represents an increase of eight percentage points over the previous quarter. Just 14% thought the state economy would improve, while 34% believed conditions would remain stable.
Expectations for the national economy also dipped, with 40% of those surveyed responding pessimistically, compared with 36% last quarter. About one-quarter (24%) felt conditions would improve.
Fiscal cliff concerns
CBIA economist Pete Gioia said the timing of the survey, which was in the field in January, likely influenced responses.
“There’s a lot of uncertainty out there, driven in part by Washington’s failure to fully resolve the fiscal cliff issues and the ongoing threats to defense spending,” Gioia said.
“These results show a lack of confidence in an economy that’s really stuck in neutral.”
The survey showed remarkably similar results to the two prior quarters, with most differences within the margin of error of the survey. Some important responses include:
- 34% of respondents expect increases in production and sales, with 21% seeing decreases, the best numbers in the survey.
- 18% see their work force expanding, while 19% expect to shed positions over the next quarter.
- 27% see an improved outlook for their firm against 22% who see conditions declining.
- For their industry, 23% see improving conditions while 28% see declines.
“In each case these numbers show an economy with a long way to go to reach sustainability,” Gioia said.
The third quarter rebound in business confidence--recovering from record low optimism in the April-June 2012 survey--was short-lived.
Turn for the worse
And the outlook has taken a decided turn for the worse since the fourth quarter of 2011, when two-thirds saw improving or stable conditions in the state and 81% forecast the same for the U.S. economy.
Based on the state Department of Labor’s latest figures, Connecticut lost 1,800 jobs in December, finishing the year with a net loss of 100 jobs.
The unemployment rate fell three-tenths of a point to 8.6%, which Gioia said represented “more people leaving the labor force because they were discouraged.”
CBIA’s Quarterly Economic Survey: Fourth Quarter 2012 was emailed to approximately 1,900 Connecticut businesses in January of 2013. A total of 187 responded, for a 10.2% response rate and a margin of error of +/- 7.3%.