Melt-Down: Keystone Business Climate Survey produces most pessimistic results ever
Pennsylvania’s business climate mirrored the national economic melt-down over the past six months according to a substantial majority of business owners and chief executive officers participating in the Fall 2008 Keystone Business Climate Survey. Fifty percent of those responding said the economy is already in a recession, while another 33% said we are headed toward a recession.
Sixty-five percent of those responding to the survey said business conditions in Pennsylvania are worse than they were six months ago, while only 1% said business conditions have improved. That is the most pessimistic outlook on the state’s economy in the thirteen year history of the Keystone Business Climate Survey. That number is up significantly from the 42% who said the economy had gotten worse in the survey taken one year ago.
Recent efforts in Washington to stabilize the nation’s economic free fall are not winning plaudits from the Pennsylvania business community. Fifty-one percent said the $700 billion bail-out was unwarranted government intrusion into the private sector, while 44% felt it was a necessary step. As for the impact of the economic crisis, 17% say they have already had difficulty securing needed credit for their business, while 75% have not yet experienced any credit difficulties. The federal take-over of Freddie MAC and Fannie MAE was seen as a necessary move by 58% of the respondents, while 36% viewed that as unwarranted government intrusion into the private sector.
The economic slump is having an impact on employment. Twenty-five percent of the businesses participating in the poll said they have fewer employees now than they did a six months ago, 11% say they have more workers. Forty-five percent say sales have decreased over the past six months compared to 18% who reported sales growth.
Looking ahead six months, 50% say they expect the economy to continue to get worse, with 13% expecting it to improve. Eighteen percent project declining employment in their business, with 15% expecting to hire additional employees. Thirty-three percent are braced for a decrease in sales, while 23% are optimistic their sales will increase.
Job Approval Ratings
Neither the Democratic Congress nor President Bush is winning high marks for their handling of the economic crisis. President Bush’s approval rating, which historically has been high among the ranks of the business community, sank to just 33% in the current survey. Congress, however, fared even worse: just 8% have a positive view of the United State Senate and only 4% give a positive rating to the U.S. House of Representatives.
Other federal officials fared poorly in the eyes of the Pennsylvania business community. Fed Chairman Ben Bernanke scored a 48% negative rating against a 25% positive; U.S. Treasury Secretary Henry Paulson was viewed in a negative light by 54% of the respondents. U.S. Senator Robert P. Casey, Jr. has a 19% positive ranking against a 52% negative; and 31% approve of the job being done by U.S. Senator Arlen Specter, 46% disapprove.
Respondents to the Keystone Business Climate Survey also disapprove of the job being done by their elected officials in state government. Nineteen percent give Governor Ed Rendell a positive job approval rating, 73% voiced their disapproval. Both the Pennsylvania state Senate and the state House received a 13% positive rating.
As bad is the state’s business climate is already, there are fears in the business community that the General Assembly could make it worse by placing additional costly mandates on businesses.
Of particular concern is legislation that would require employers to offer a minimum of seven days paid sick leave each year. In order to afford compliance with such a law, 46% of the businesses said they would delay or cancel pay raises; 40% said they would cut the number of vacation days they provide employees; 21% would drop or reduce health care benefits; 17% would reduce employee hours, and 4% said such a mandate would cause they to go out of business.
Likewise, adoption of a law requiring an automatic cost of living adjustment (COLA) in the minimum wage would result in 25% of the businesses raising prices, 20% implementing a hiring freeze, 10% would lay-off employees and 32% would implement a combination of all those actions.
As for the best approach to improving Pennsylvania’s business climate, 79% of poll respondents said the commonwealth should lower taxes and reduce regulation on all businesses. Another 12% said the state should continue the Rendell Administration’s approach of providing tax breaks and incentives to selected companies.
The high cost of energy is one of the factors driving the downward spiral in the nation’s economy. To counter that, 88% say they favor allowing more drilling off the costs of the United States. Eighty-one percent think drilling should be allowed in the Alaskan National Wildlife Reserve (ANWR). In prioritizing what should be done to deal with the energy crisis, those participating in the Keystone Business Climate survey most frequently cited offshore drilling, followed by improved efficiency of gas-powered vehicles, the generation of more nuclear power, development of solar power, increased mining of shale oil reserves, drilling in ANWR, development of wind power, conservation, development of natural gas-powered vehicles, and development of tidal energy.
Participants in the Keystone Business Climate Survey were also asked to indicate their choice for President of the United States in next month’s election. Seventy-one percent indicated they would be voting for U.S. Senator John McCain, while 17% expressed a preference for U.S. Senator Barack Obama.
The Fall 2008 Keystone Business Climate Survey was conducted electronically by the Lincoln Institute of Public Opinion Research, Inc. from October 1, 2008 thru October 10, 2008. A total of 245 business owners, chief executive officers, or top managers responded to the survey. Complete numeric results can be obtained on-line at [L]www.lincolninstitute.org[EL].