Posted by: Joe Weber on June 09
More U.S. business leaders appear to be throwing off their sour looks and calling a halt to hand-wringing about the nation’s economy and the fate of their own businesses. Nearly half of about 320 senior executives surveyed in late May for the Grant Thornton LLP Business Optimism Index are flashing a thumbs-up signal, the accounting firm reports. This puts the GT index comfortably back into pre-recession territory.
The survey, released June 8, found that 45% of the respondents expect conditions to improve over the coming six months, compared with just 17% when they were last quizzed, in February. Some 62% said they felt optimistic about their company’s growth through the balance of this year, up from 43% in February.
But the upbeat outlooks are curiously tempered. More than half of those questioned, some 54%, said they expect the economy to come out of recession in the first half of 2010, nearly a quarter (24%) said sometime in the second half of 2010, while 6% were aiming for 2011. Only 15% said that the recession will end in the second half of this year, meaning only an intrepid few share Federal Reserve Chairman Ben Bernanke’s optimistic view.
Of course, much of that may turn on what exactly people mean by "recovery." In economist-speak, recovery begins when a range of indicators hit their lowest points and then turn upward. Rarely does it seem that the economy is rebounding until well after that long process has begun. In fact, the unemployment rate -- the indicator most folks watch -- often climbs even after recovery is under way.
The accounting firm combined survey results for three areas to come up with an upbeat business optimism index level of 54.5, up sharply from the 37.6 level in February. The index measures attitudes about whether the U.S. economy will improve, whether the individual businesses of the executives will grow, and whether their companies will hire more people.
Hiring plans, perhaps the most tangible of the measures, give only slender grounds for optimism. Only 20% of those surveyed said their firms would be hiking staff, up from 9% in February. Still, 30% said they could be cutting staff, down from a troubling 45% in February.
BusinessWeek’s Joe Weber, Patricia O'Connell, Michelle Conlin, Frederik Balfour, Peter Coy, Greg Spielberg and Roger Crockett examine The Case for Optimism by looking past the financial turmoil and economic unrest gripping the globe to focus on the promising future that lies on the other side of this storm. We’ll chronicle the forward thinkers investing in R&D, launching promising new products, entering new markets, or implementing management and leadership.
See why BusinessWeek Editor-In-Chief Stephen J. Adler is optimistic about the economy amid the sharpest downturn since the Great Depression.