AIMBlog_Logo_Resized

Employer Confidence Stabilizes in June

Posted by Christopher Geehern on Jul 9, 2019 8:46:46 AM

Employer confidence stabilized in Massachusetts during June despite a continued swirl of conflicting economic and political signals around the globe.

BCI.June.2019The Associated Industries of Massachusetts Business Confidence Index (BCI) rose 0.5 points to 57.6 last month, rebounding from a May drop that left it at its lowest level since October 2016.

The Index has declined 3.7 points since June 2018 but remains within optimistic territory. And though confidence levels are virtually unchanged since January, the AIM Index reflects constantly changing headlines about international trade, economic growth and the direction of interest rates.

“We’re seeing confidence go up one month and down the next in the same way that financial markets have been whipsawed by almost daily changes in the economic outlook,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Employers remain concerned about the prospect of an economic slowdown but were encouraged at the end of June by larger-than-expected job growth numbers, signs of a thaw in the US/China trade battle and signals that the Federal Reserve might ease interest rates.”

Tariffs continue to influence employer confidence.

“Have seen cost increases for construction materials due to the effect of tariffs. This is creating some uncertainty in the pricing of new construction projects,” one member wrote.

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the AIM BCI were mixed during June.

The Massachusetts Index assessing business conditions within the commonwealth rose 0.3 points to 61.2 while the US Index rose a full 3 points to 58.0. The Massachusetts reading has declined 1.6 points during the past 12 months and the US reading has dropped 2.0 points during the same period.

The Future Index, measuring expectations for six months out, rose slightly, 0.2 points to 56.2. The Current Index, which assesses overall business conditions at the time of the survey, gained 0.8 points to 59.0, 4.5 points lower than a year ago.

The Employment Index declined 0.4 points for the month and 2.2 percent for 12 months. Analysts say employers continue to struggle to find qualified workers in a state economy with a 2.9 percent jobless rate.

Non-manufacturers (60.1) were more confident than manufacturers (54.4), who have seen their confidence levels drop 8.1 percent since June 2018. Large companies (59.0) were more confident than small companies (58.4) or medium-sized companies (55.6). Companies in Eastern Massachusetts (58.5) continued to be more optimistic than those in the west (56.3).

Elliot Winer, Chief Economist, Winer Economic Consulting, LLC, and a BEA member, said continuing weakness in the Company Index, Manufacturing Index and Employment Index underscores some of the long-term challenges facing Massachusetts employers beyond the day-to-day headlines.

“Hiring and retaining skilled employees is becoming a barrier to expansion for some companies. The short-term issues affecting confidence will eventually be overshadowed by the long-term demographics of having large numbers of baby boomers leave the work force,” Winer said.

State Policy Gains

AIM President and CEO John R. Regan, also BEA member, said that Governor Charlie Baker and the Massachusetts Legislature have made several decisions recently that boosted employer confidence. Those decisions included postponing the start of contributions for paid family leave and allowing the MassHealth assessment to lapse as scheduled in December.

“Employer have been encouraged by the willingness of state policymakers to meet businesses halfway on some of these complex issues,” Regan said.

“Our hope is that lawmakers will continue this mindful approach to the economy.”

Topics: AIM Business Confidence Index, Massachusetts economy, Massachusetts employers

Income Surtax Would Drive Out Employers, Revenue

Posted by Christopher Geehern on Jun 11, 2019 1:41:59 PM

StateMigration

 

As Massachusetts lawmakers gather tomorrow for another attempt to impose a massive income surtax on family business, a new analysis by Bloomberg news demonstrates the devastating impact of tax increases on economic activity.

Data from the Internal Revenue Service and the Census Bureau shows that business owners and entrepreneurs are heading for the exits in high-tax states and bringing their income to states such as Florida and South Carolina.

Bloomberg found that Connecticut, New York and New Jersey face the largest financial drains from the 5 million Americans who move from one state to another each year. Connecticut lost the equivalent of 1.6 percent of its adjusted gross income, according to Bloomberg, because the people who moved out of the Nutmeg state had incomes that were 26 percent more, on average, than those people who moved in.

Moreover, “leavers” outnumbers “stayers” by a five-to-four margin.

Massachusetts suffered a net loss of $1.4 billion in adjusted gross revenue from people moving in and out of the commonwealth. New York lost $8.4 billion and New Jersey, which recently adopted its own version of the so-called Millionaires Tax, lost $3.4 billion.

Florida posted a net income influx of nearly 3 percent of the state’s adjusted gross income in 2016. South Carolina, Idaho and Oregon were also among the largest gainers in the interstate shuffle, according to Bloomberg.

“The income surtax constitutional amendment to be debated tomorrow takes direct aim at owners of small and family owned business in Massachusetts. That sort of unfair tax would clearly accelerate the departure of the very people we need to maintain our economic growth,” said John Regan, President and CEO of Associated Industries of Massachusetts.

AIM opposes income surtax

A graduated income tax would take an estimated $2 billion each year from some 17,000 Main Street businesses and others that pay taxes at the individual rate. These companies are already drowning in more than $1.5 billion in new taxes and fees to pay for a financial shortfall in the Medicaid program and to fund the new paid family and medical leave program.

The data on our-migration from high-tax states is consistent with other studies of tax policy.

Connecticut in 2009 added a 6.5 percent income tax bracket for those earning more than $500,000 per year. The state followed up with a comprehensive $1.5 billion tax increase in 2011 to deal with a budget shortfall. A final round of tax increases took effect in 2015.

According to information compiled by Pew Charitable Trusts, tax revenue for all 50 states is averaging 6.3 percent higher than it was at the start of the 2008 recession. Connecticut tax revenue, on the other hand, is only 3.8 percent higher, despite the three tax increases.

Once the economic heavyweight of New England, Connecticut is the only state in the nation that has yet to recover the jobs lost during the economic downturn.

Income surtax laws have failed in other states as well.

Within three years of Maryland enacting its millionaires tax, 40 percent of the state’s seven-figure earners were gone from the tax rolls - and so was $1.7 billion from the state tax base.

Boston College researchers studied the migration of wealthy households to and from New Jersey. They concluded that wealthier New Jersey households did in fact consider the high-earner taxes when deciding whether to move to or remain in New Jersey.

The researchers’ data analysis found that from 1999 to 2003 - before the millionaires’ tax was imposed - there was a net influx of $98 billion in household wealth into the state. After the tax was implemented, an increasing number of wealthy families left the state, resulting in a loss of $70 billion in wealth.

Want updates on the income surtax debate? Contact Brad MacDougall, Vice President of Government Affairs at AIM, bmacdougall@aimnet.org.

Topics: Massachusetts economy, Income Surtax, Taxation

Employer Confidence Falls in May

Posted by Christopher Geehern on Jun 4, 2019 8:30:00 AM

Employer confidence weakened in Massachusetts during May amid renewed trade tensions and concerns among companies about increased operating costs from paid family leave and other government mandates.

BCI.May.2019The outlook among business leaders has moved in a narrow, overall optimistic, range for much of 2019.

The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 3.2 points last month to 57.1, its lowest level since October 2016. The Index has declined 9.5 points since May 2018.

All of the constituent indicators that make up the BCI weakened during May with the largest drop coming in employer views of conditions six months from now.

The erosion of confidence during the past 12 months has been driven largely by caution about the national economy and concern among manufacturing companies.

“The Business Confidence Index continues to reflect the Goldilocks economy in which we find ourselves – US GDP growth is expected to remain at a modest level of 2 to 3 percent and there is not much inflation or deflation. There are both encouraging signs and red flags,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

Several employers participating in the survey said regulatory costs have become a significant concern.

“The cost to operate has increased dramatically - higher wages, benefit costs, supply costs and cost of compliance with all the new regulations coming out of State House,” one employer wrote.

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators showed a broad-based retrenchment during May.

The Massachusetts Index assessing business conditions within the commonwealth fell 2.3 points to 60.9, while the US Index shed 3.3 points to 55.0. The Massachusetts reading has declined 9.1 points during the past 12 months and the US reading has dropped 14.3 points during the same period.

The Future Index, measuring expectations for six months out, tumbled 4.5 points to 56.0. The Current Index, which assesses overall business conditions at the time of the survey, lost 1.8 points to 58.2, 8.4 points lower than a year ago.

The Employment Index declined 1.2 points for the month and 5.1 percent for 12 months. Analysts say employers continue to struggle to find qualified workers in a state economy with a 2.9 percent jobless rate.

Non-manufacturers (60.0) were more confident than manufacturers (54.7). Small companies (58.4) were more bullish than large (55.0) or medium-sized companies (57.6), a reversal of the usual pattern. Companies in Eastern Massachusetts (59.3) continued to be far more optimistic than those in the west (54.0).

Elmore Alexander, Retired Dean of the Ricciardi College of Business at Bridgewater State University and a BEA member, said Massachusetts employers are reflecting general concerns about tepid national economic growth, renewed geopolitical tensions and slowing corporate spending.

“Few see an imminent recession, but most experts believe US economic growth will slow from 3 percent last year to 2.1 percent this year to 1.9 percent in 2020,” Alexander said.

Rising Costs

AIM President and CEO John R. Regan, also BEA member, said the national economic uncertainty comes at a time when Massachusetts employers are struggling with a series of expensive new employment law mandates such as the state’s $1 billion paid family and medical leave program.

“AIM has joined Raise Up Massachusetts and other groups in asking the Baker Administration to delay the scheduled July 1 start of paid leave by three months to provide employers time to consider how much of the cost they will share with workers and whether they wish to opt out of the state system. The delay is necessary to ensure a smooth rollout of this new entitlement,” Regan said.

Regan joined the BEA after being named President and Chief Executive Officer of AIM.

Topics: International Trade, AIM Business Confidence Index, Massachusetts economy

Employer Confidence Rises in April

Posted by Christopher Geehern on May 8, 2019 8:55:23 AM

Massachusetts employers grew more confident during April as the state and national economies regained their footing.

BCI.April.2019The Associated Industries of Massachusetts Business Confidence Index (BCI) rose 2.4 points to 60.3 last month. Confidence remains well within optimistic territory, though still 3.9 points below its strong reading of April 2018.

The April 2019 increase reflected growing employer optimism about economic prospects for the next six months and about the future of their own companies.

All of the constituent indicators that make up the BCI rose during April with one notable exception. The Employment Index fell 1.5 points to 54.4, suggesting that employer sentiment continues to be tempered by a persistent shortage of qualified workers.

“The Business Confidence Index continues to show a conflict between short-term economic optimism and long-term concern about the prospect of finding enough appropriately skilled workers to run Massachusetts businesses,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“The immediate news for employers is positive as economic growth in Massachusetts surged to an annual rate of 4.6 percent during the first quarter of 2019 and US growth came in at 3.2 percent.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators showed a broad-based strengthening of confidence during April.

The Massachusetts Index assessing business conditions within the commonwealth rose 1.5 points to 63.2, while the US Index gained 2.8 points to 58.3. The Massachusetts reading has declined 0.9 points during the past 12 months and the US reading has dropped 5.6 points during the same period.

The Future Index, measuring expectations for six months out, surged 3.1 points to 60.5. The Current Index, which assesses overall business conditions at the time of the survey, rose 1.7 points to 60.0, still 5.1 points lower than a year ago.

The decline in the Employment Index left that measure 5.4 points lower than in April 2018. One good sign for job seekers is that the Sales Index, a key predictor of future business activity, rose 3.9 points during the month.

Non-manufacturers (64.1) were more confident than manufacturers (57.3). Large companies (60.7), medium-sized companies (60.5) and small companies (59.7) all had similar confidence outlooks. Companies in Eastern Massachusetts (64.5) continued to be far more bullish than those in the west (55.5).

Edward H. Pendergast, Managing Director of Dunn Rush & Co. and a BEA member, said employer confidence reflects first-quarter economic growth that was stronger than most experts anticipated. That growth sent US stocks to record highs in April before this week’s selloff.

“The consensus on Wall Street is for slowing growth as the year progresses, but the economy is setting a solid and predictable pace that reassures employers that there is little immediate threat of recession,” Pendergast said.

Training and Education

AIM President and CEO Richard C. Lord, also BEA member, said the sluggish Employment Index underscores the urgency for business and government to collaborate on ways to train and educate the workers who will drive the economy in the future.

“The persistent shortage of workers will become more severe as large numbers of baby boomers continue to leave the work force. It is imperative that we address the next generation of workers, so we can extend opportunity broadly to the people of Massachusetts.”

Lord’s commentary is his final one before retiring as President of AIM next week.

Topics: AIM Business Confidence Index, Massachusetts economy, Massachusetts employers

AIM Honors Wayfair with 2019 Vision Award

Posted by Christopher Geehern on Apr 29, 2019 8:00:00 AM

Wayfair Inc., a Massachusetts-born technology company that has redefined how people shop for their homes, is the recipient of the 2019 Vision Award from Associated Industries of Massachusetts (AIM). Wayfair has more than 5,500 full-time employees in the commonwealth and continues to grow its presence in Boston and beyond.

WayfairFounded in 2002 when engineers Niraj Shah and Steve Conine started selling stereo racks over the Internet, Wayfair has grown into one of the world’s largest online destinations for the home. The company currently offers 14 million products from 11,000 suppliers and last year generated $6.8 billion in net revenue.

The AIM Vision Award recognizes companies, organizations and individuals who have made unique contributions to the cause of economic opportunity in Massachusetts. The award reflects AIM’s mission to stand for jobs, economic prosperity, innovation and a government that acknowledges that the private sector has the unique responsibility to create the common wealth for the people of Massachusetts.

The largest employer association in Massachusetts will present the award at its Annual Meeting on May 17 in Boston. Attorney General Maura Healey will deliver the keynote address.

“The 3,500 member employers of AIM are delighted to honor a company that was launched in Massachusetts and continues to create economic opportunity from one end of the commonwealth to the other,” said AIM President and Chief Executive Officer Richard C. Lord, who noted that the Pittsfield Wayfair facility is expected to employ 300 people.

“Wayfair is the prototype of the economic growth we love to see – a company with deep local roots that uses technology and great management to dominate a global market.”

In addition to growing its corporate headquarters in Massachusetts, Wayfair has also recently announced it will open its first-ever full-service physical retail store in the Natick Mall later this year.

“We are proud to have built our business in the Commonwealth of Massachusetts and delighted to accept the 2019 Vision Award from Associated Industries of Massachusetts,” said Shah, who is a native of Pittsfield.

The company has also become a major player in the community, structuring its social responsibility efforts around creating safe and comfortable living spaces for people in need. It maintains charitable partnerships with Habitat for Humanity, Homes For Our Troops, and other organizations.

Wayfair will join a distinguished list of AIM Vision honorees, including Fidelity Investments Chief Executive Abigail Johnson, Woods Hole Oceanographic Institution, General Electric, Bright Horizons Family Solutions, MassMutual, philanthropists Bill and Joyce Cummings, Boston University brain researcher Dr. Ann McKee and Nuance Communications.

AIM is the statewide business association in Massachusetts, representing the interests of employers form all sectors of the economy on public-policy issues.

Topics: AIM Annual Meeting, Massachusetts economy, AIM Vision Award

Employer Confidence Slips in March

Posted by Christopher Geehern on Apr 2, 2019 8:30:59 AM

Business confidence weakened slightly in March amid signs of both a cyclical global slowdown and persistent demographic factors limiting the growth of the labor force in Massachusetts.

BCI.March.2019The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 0.3 points to 57.9 during March. Confidence remains within optimistic territory but has lost 5.6 points during the past 12 months.

The decrease reflected employer concerns about economic prospects for the next six months. Those concerns outweighed growing optimism among manufacturing companies and rising confidence in the Massachusetts economy.

The March Business Confidence survey took place as the government announced that Massachusetts created only 20,000 jobs during 2018 instead of the 65,500 previously estimated. The US Bureau of Labor Statistics reports that average payroll job growth in Massachusetts fell from 1.3 percent in 2017 to 0.9 percent last year.

“Massachusetts employers continue to struggle with the challenges of a full-employment economy complicated by demographic issues such as the retirement of large numbers of baby boomers,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“U.S. economic growth appears to be slowing, as well as world economic growth, but recession fears are still low.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index moved in a narrow range during March.

The Massachusetts Index assessing business conditions within the commonwealth gained 0.9 points to 61.7. Confidence in the Massachusetts economy has declined 6.1 points since March 2018.

The U.S. Index measuring employer sentiment about the national economy slipped 0.5 points to 55.5, leaving it 9.7 points less than a year ago.

Employers were slightly more optimistic about current conditions than about the future. The Current Index, which assesses overall business conditions at the time of the survey, rose 0.6 points to 58.3 while the Future Index, measuring expectations for six months out, fell 1.3 points to 57.4. The Future Index has fallen 7.0 points during the past 12 months.

The Employment Index, measuring employer optimism about hiring, rose 1.2 points to 55.9.

Non-manufacturers (60.6) were more confident than manufacturers (55.4). Small companies (60.8) were more optimistic than large companies (55.2) or medium-sized companies (57.5). Companies in Eastern Massachusetts (60.0) continued to be more bullish than those in the west (55.0).

Northeastern University professor Alan Clayton-Matthews, a BEA member, said the downward revision of the Massachusetts job-growth numbers was consistent with demographic trends such as the large number of baby boomers retiring from the work force.

“The last New England Economic Project forecast projected a slowdown in payroll job growth from 1.7 percent in 2017 to 1.1 percent in 2018 and 0.6 percent in 2019 and a slowdown in labor-force growth from 1.6 percent in 2017 to 0.6 percent in 2018 and 0.4 percent in 2019. This forecast was largely based on demographic projections assuming a full-employment economy,” said Clayton-Matthews.

“The state economy seems to be running at full capacity, and the basic state indicators don’t suggest a lack of demand, though it’s hard to spot turning points until there is enough hindsight.”

Mixed Signals

AIM President and CEO Richard C. Lord, also BEA member, said employers remain concerned as Beacon Hill lawmakers undertake a broad discussion of how to fund expensive policy priorities such as transportation infrastructure, public education and clean energy. He noted that AIM will be part of a group assembled by the state Senate to look at the Massachusetts tax code.

“AIM undertakes these debates conscious of the oppressive cost burdens already facing Massachusetts employers. Massachusetts must develop a fair strategy to address its spending needs without harming employers who are already struggling to implement a $1 billion paid family and medical leave program along with the rising cost of both health insurance and energy,” Lord said.

Topics: AIM Business Confidence Index, Massachusetts economy, Massachusetts employers

Business Confidence Rebounds in February

Posted by Christopher Geehern on Mar 5, 2019 8:30:00 AM

Business confidence rebounded modestly during February as optimism about the state and national economies outweighed a darkening outlook among Massachusetts manufacturers.

BCI.February.2019The Associated Industries of Massachusetts Business Confidence Index (BCI) gained 0.5 points to 58.2 after dropping in January to its lowest level since October 2016. Confidence remains within optimistic territory but has lost 6.8 points during the past 12 months.

The February increase was driven by a 3.4-point jump in employer views of the state economy and a 3.3-point rise for the national economy. The government announced last week that the US economy grew at a 2.9 percent rate in 2018, matching 2015 as the biggest increase since the end of the 2007-2009 Great Recession.

“Employers remain generally optimistic about a state economy that continues to run at full-employment levels and a US economy that is projected to grow by 2.2 percent this year” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“At the same time, the erosion of confidence among Massachusetts manufacturers during the past 12 months raises some concern about the long-term sustainability of the recovery.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index were mostly higher during February.

The 3.4-point increase in the Massachusetts Index assessing business conditions within the commonwealth left that indicator at 60.8. Confidence in the Massachusetts economy has declined 7.7 points since February 2018.

The U.S. Index measuring employer sentiment about the national economy rose to 56.0, its highest level since November. The reading was still 10.9 points less than a year ago.

Employer views about the future were more optimistic than the present for the first time in 11 months. The Current Index, which assesses overall business conditions at the time of the survey, fell 0.5 points to 57.7 while he Future Index, measuring expectations for six months out, increased 1.5 points to 58.7.

Non-manufacturers (61.7) were significantly more confident than manufacturers (53.3). Large companies (62.3) were more optimistic than either medium-sized companies (57.1) or small companies (55.2). Companies in Eastern Massachusetts (59.6) continued to be more bullish than those in the west (56.3).

“Employers last month welcomed several developments, including the end of the government shutdown and the Federal Reserve’s decision to pause increases in interest rates,” said Sara L. Johnson, Executive Director, Global Economics, IHS Markit and Vice Chairwoman of the BEA.

“The overall picture of business confidence reflects the economy itself – slowing a bit but still strong overall.”

Mixed Signals

AIM President and CEO Richard C. Lord, also BEA member, said the comments provided by employers on the February AIM Business Confidence Index Survey show that many companies remain bullish about 2019, while others remain concerned about issues ranging from gridlock in Washington to the persistent shortage of skilled employees.

“There are plenty of mixed signals 10 years into the economic recovery,” Lord said.

“Massachusetts employers face rising wage costs, rising raw-material costs and the challenge of integrating new public-policy mandates such as an increased minimum wage and paid family and medical leave. It’s the right time in the business cycle for state and federal government to follow the lead of the Federal Reserve and pause the imposition of expensive new initiatives.”

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

Business Confidence Slides Again in January

Posted by Christopher Geehern on Feb 12, 2019 8:30:00 AM

Stabilizing financial markets and continued strong employment were not enough to brighten the outlook of Massachusetts employers during January as business confidence fell for the fifth time in seven months.

BCI.January.2019The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 0.9 points to 57.7, its lowest level since October 2016. Confidence has dropped 6.4 points during the past 12 months.

The retreat was led by a 7.3-point drop in employer views of the Massachusetts economy, and a 2.4-point drop in opinions about the national economy.

Overall confidence remains within optimistic territory, but every element of the AIM Index is now lower than it was a year ago.

A separate survey within the January Business Confidence Index found that while 71 percent of Massachusetts employers have seen some effect from the US government’s imposition of tariffs on goods form China and other nations, only 10 percent of companies characterize the effect as “significant” or a threat to the existence of their business.

The most common consequence of the tariffs has been an increase in raw-material prices, followed by changes to the supply chain, supply interruptions, products affected by retaliatory tariffs and loss of overseas customers.

“The Massachusetts economy grew at 2.1 percent during the fourth quarter of 2018 and continues to operate at near full capacity,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“At the same time, employers continue to confront uncertainty surrounding trade policy, demographic constraints on the labor market and the implementation of a sweeping paid family and medical leave program in Massachusetts.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The Index has remained above 50 since October 2013.

Constituent Indicators  

The constituent indicators that make up the overall Business Confidence Index were mixed during January.

The 7.3-point drop in the Massachusetts Index assessing business conditions within the commonwealth left that indicator at 57.4. Confidence in the Massachusetts economy has declined 11.5 points since January 2018.

The U.S. Index measuring employer sentiment about the national economy dropped 2.4 points to 52.7, a decline of 12.1 points year-over-year. It marked the lowest reading for the U.S. Index since November 2016.

The Current Index, which assesses overall business conditions at the time of the survey, fell 1.8 points to 58.2. The Future Index, measuring expectations for six months out, remained flat at 57.3 but has declined 9.3 points over 12 months.

Manufacturers (57.8) and non-manufacturers (57.7) were equally confident. There was also little difference in the confidence readings reported by large companies (57.9), medium-sized companies (57.7) and small companies (57.6). Companies in Eastern Massachusetts (59.4) were more bullish than those in the west (55.3).

Economist Barry Bluestone, retired Professor of Public Policy and Urban Affairs at Northeastern University and a member of the BEA, suggested that employers face two parallel sets of challenges - uncertainty about political issues such as tariffs and a more fundamental uncertainty about the limits of a full-employment state economy. He noted that wage and salary income growth was strong in the fourth quarter, rising 7.2 percent in Massachusetts on an annualized basis.

“A 3.3 percent unemployment rate, combined with an aging population and slow labor force growth will challenge the ability of Massachusetts employers to expand during 2019 and beyond,” Bluestone said.

Piling On Costs

AIM President and CEO Richard C. Lord, also BEA member, said the significant weakening of confidence in the Massachusetts economy also reflects frustration among employers with a cascade of expensive new state mandates, including a two-year MassHealth assessment, an increase in the minimum wage and the impending start of paid family and medical leave.

“We hear frequently from Massachusetts employers who feel under siege from both the sheer expense of these programs and the administrative burden they place on companies, particularly smaller companies,” Lord said.

Topics: AIM Business Confidence Index, Massachusetts economy, Massachusetts employers

Video Blog | Economic Outlook 2019

Posted by Christopher Geehern on Feb 1, 2019 9:11:06 AM

The AIM Economic Outlook Forum on January 25 looked at creative solutions to the persistent shortage of skilled workers in Massachusetts. Watch as WBZ radio morning news anchor Jeff Brown moderates a discussion with Robin LeClaire, President of Lampin Corporation in Uxbridge; Massachusetts Secretary of Labor and Workforce Development Rosalin Acosta and UMass Amherst Chancellor Kumble Subbaswamy.

Topics: Skills Gap, Massachusetts economy, AIM Executive Forum

The State of Massachusetts Business 2019

Posted by Christopher Geehern on Jan 29, 2019 10:12:55 AM

Associated Industries of Massachusetts President Richard C. Lord delivered his final State of Massachusetts Business address last Friday before an audience of 300 business leaders in Waltham.

Lord said that at a time when there are more job openings than job seekers in New England and throughout the United States, Massachusetts must summon all its creativity and innovation to solve the structural shortage of qualified workers.

 

Topics: Massachusetts economy, Richard Lord, State of Massachusetts Business Address

Subscribe to our blog

Posts by popularity

Browse by Tag