As the state’s budget impasse continues, fewer Connecticut businesses expect growth, according to a new Connecticut Business & Industry Association survey.
The 2017 CBIA 2nd Quarter Economic and Credit Availability Survey found that 29 percent of business leaders have a positive outlook for their firm, down from 37 percent in the first quarter.
Among business leaders surveyed, 57 percent expect stable conditions, up from 47 percent last quarter, while 14 percent had a negative outlook, down from 16 percent in this year’s first quarter.
The survey also found that 23 percent of businesses expect to increase their workforce, down from 26 percent in the first quarter, while 12 percent plan reductions, compared with 8 percent in the previous quarter. Two out of three survey respondents forecast no change in their workforce size, the same as in the first quarter.
“The survey is indicative of an economy that is growing, just quite slowly,” said CBIA economist Peter Gioia. “However, it’s clear that as the budget stalemate continues, more and more businesses are avoiding making major investments until they see signs of predictability and stability.”
“That means a budget with no tax hikes ”” sooner rather than later,” Gioia added.
DataCore economist Don Klepper-Smith said the survey highlights how critical the outcome of budget negotiations will be for the state”™s economy and job growth.
“Businesses generally remain optimistic with respect to their own sales and business activities, but less so when it comes to state finances and overall Connecticut economic growth,” he said.
“Importantly, businesses are looking for state finances to reflect some degree of fiscal discipline before they make big long-term commitments in-state.”
Credit Availability
Of those surveyed, 83 percent reported credit availability was not a problem during the second quarter. In addition, 19 percent characterized Connecticut”™s current credit conditions as excellent or good, while 61 percent called conditions average and 21 percent described them as fair.
One out of three survey respondents used financing in the last three months, up from 30 percent in the first three months of 2017. As in the first quarter, 86 percent of respondents were able to satisfy their borrowing needs.
National Issues
Forty percent of business leaders surveyed said low inflation had no impact on their business, while 37 percent said it was positive. Oil prices below $50 a barrel had a positive impact for 51 percent of those surveyed; 28 percent said it had no impact and 9 percent called it a negative.
About two out of three respondents, 68 percent, said federal tax reform – such as a 15 percent corporate tax rate – would be positive.
Repealing and replacing the Affordable Care Act would have a positive impact on 43 percent of responding businesses, the CBIA survey found. Obamacare’s repeal and replacement would have a negative impact on 17 percent of respondents, while 15 percent saw no impact from dismantling the 7-year-old health care law.
