A survey of Hoosier business owners shows an increasingly ho-hum outlook, with only one in seven optimistic for their own company and even fewer optimistic about the U.S. economy.
Those are some of the conclusions from a twice-yearly survey sponsored by Pittsburgh-based PNC Bank. The phone survey was conducted from July 23 through Sept. 7 and included 154 business owners from Indiana. The survey has a margin of error for Indiana of plus or minus 8 percent.
Among those small- and medium-sized businesses, 52 percent plan to make capital investments over the next six months, down from 66 percent who planned to do so in April, when the same PNC survey was last conducted.
The same trend showed up in PNC’s nationwide results, from interviews with 1,700 business owners.
Optimism appears to be lower in Indiana than the nation as a whole. Only 14 percent of Hoosier business owners said they were optimistic about their own company’s prospects during the next six months, compared with 23 percent nationally. The Indiana number was also down from 21 percent who said they were optimistic in the spring.
“I’m looking at Indiana right now as riding out, bearing the brunt of yet another slowdown, another deceleration in the national economy,” said Kurt Rankin, an economist at PNC Bank who covers the Midwest. But, he added, he expects the Indiana and Midwest economies to start improving modestly in early to mid-2013: “There are just a few more months for manufacturing-heavy states to endure of the national uncertainty and unwillingness to spend.”
Because of that, Rankin expects Indiana to see unemployment rise for another month or two and then to level out until the second quarter of 2013. In August, the latest month for which figures are available, the unemployment rate in Indiana was 8.3 percent, with 260,000 people looking for work.
Nationally, the unemployment rate fell in September to 7.8 percent as the economy added a modest 114,000 jobs. About 12 million Americans still can’t find jobs.
By early next year, three large clouds will clear—or at least thin out. First is the presidential election, which is just a month away. Related to the election is whether President Obama’s health care law—which will impose new costs on employers—will be cemented by his re-election or likely scaled back after a victory by Republican challenger Mitt Romney.
About one-third of Hoosier business owners think the Patient Protection & Affordable Care Act will hold back their hiring over the next year. Nationally, 42 percent of business owners think the same.
The last cloud to be cleared is the so-called “fiscal cliff” that is scheduled to hit Jan. 1 as several tax cuts all expire at once. No matter who wins in November, Obama and the lame-duck Congress will have to figure out at least a short-term solution to a sudden hike in numerous taxes.
“Until those longer-term planning issues are resolved by this election,” Rankin said, “I expect no change in hiring until maybe second quarter.”
Indeed, only one in five Hoosier business owners expects to hire new workers in the next six months, slightly less than the proportion nationally that do.