An economic malaise is spreading through the Capital Region, prompting employers to report their lowest level of optimism since they got whipped by the tail end of the nation’s last recession, according to a Marvin and Company survey released today.
With employers being bombarded by disappointing news from Wall Street and the U.S. housing market, 54 percent of area employers expect business will increase in 2008. That outlook marks a decline from last year, when 63 percent of employers surveyed predicted business to increase.
Marvin’s 22nd Annual Business Climate Survey features the gloomiest outlook since 2002, when 54 percent of respondents forecasted an increase in business. But Marvin Director Kevin McCoy said the predictions in this year’s survey of 1,014 area businesses might have been tempered more by news about the national economy than by individual experiences.
McCoy noted how the region is usually slow in following the nation into and out of recessions. The nation last fell into an 8-month recession starting in March 2001. Technically, a recession is when the national economy experiences two consecutive quarters of negative gross domestic product growth. Global Insight, a Lexington, Mass., economic research firm, last month declared the nation was in a recession.
“If we’re behind and there is a recession, then maybe we won’t fall into that,” McCoy said at a news conference at Albany International Airport.
But area businesses are already seeing signs of economic softness. Fifty percent of companies reported increases in overall business last year, compared to 56 percent in 2006. During the same period, the number of businesses experiencing declines in business rose to 18 percent from 15 percent.
Despite the gloomy forecast, 94 percent of employers expect their work force levels in 2008 to increase or remain the same, compared to 96 percent last year. The region’s strong employment bases in the public and service sectors tend to shield it from economic downturns.
“The local economy tends to be a little more stable” than the national economy, McCoy said.
The Marvin report reinforces the findings of a survey of upstate chief executive officers the Siena Research Institute released in January. The Loudonville pollster surveyed 403 CEOs, of whom 41 percent said they expect economic conditions in New York to get a little worse in 2008. Most of the CEOs said they plan to maintain work force levels, forego expansion projects and focus on their core markets.