Economists still pessimistic about ‘09

Economists still pessimistic about ‘09

According to the National Association for Business Economics (NABE) January 2009 Industry Survey, more than half of the survey’s respondents expect real GDP to fall at least one percent in 2009

According to the National Association for Business Economics (NABE) January 2009 Industry Survey, more than half of the survey’s respondents expect real GDP to fall at least one percent in 2009. This reflects how economists have become increasingly pessimistic about the macroeconomic outlook for the year.

“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,” said Sara Johnson, IHS Global Insight. “The survey’s measure of demand fell to its lowest level in the history of the survey. Looking ahead to 2009, respondents grew more pessimistic about U.S. economic growth.”

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According to the National Association for Business Economics (NABE) January 2009 Industry Survey, more than half of the survey’s respondents expect real GDP to fall at least one percent in 2009. This reflects how economists have become increasingly pessimistic about the macroeconomic outlook for the year.

“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,” said Sara Johnson, IHS Global Insight. “The survey’s measure of demand fell to its lowest level in the history of the survey. Looking ahead to 2009, respondents grew more pessimistic about U.S. economic growth.”

Conducted between Dec. 17, 2008, and Jan. 8, 2009 with NABE members who work for private-sector companies and industry trade associations, the survey found that falling profit margins outnumbered rising margins five to one among respondents’ firms, the worst reading since 1982. In addition, the percentage of firms reducing capital expenditures (38%) was the highest since the survey began in 1982.

A total of 78% of respondents said that they expected real GDP to be lower in 2009 than it was in 2008, more than double the 38% who expected it in the October survey, NABE said. Only three of 99 respondents expect growth of 1% or higher.

Demand for goods and services increased for only 20% of respondents’ firms in the fourth quarter, the lowest in the history of the survey. This was most prevalent in the goods-producing sector, where 79% of firms reported declining demand.

Employment numbers continued to fall, with 44% of firms cutting payrolls and only 14% adding workers. And 39% plan to reduce payrolls over the next six months compared to 17% looking to add workers.

The respondents who said materials costs rose in the previous quarter was lower than the percentage that said materials costs fell for the first time since the last recession, NABE said. In addition, only 12% of respondents said their firms raised prices last quarter—the lowest percentage hike since the end of 1998.

In addition, the credit market has been impacting respondents, with 52% saying that the tightening of credit conditions has either moderately or severely affected their businesses--with 78% saying that it has adversely affected their customers.

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