Business confidence falls to its lowest level in a year

Federal Reserve Board Chairman Jerome Powell speaks at a news conference at the Federal Reserve in Washington, DC, on May 3, 2023. – The Fed has been running a major campaign to raise interest rates since March of last year. Targeting higher inflation, which is a long-term goal of more than two percent. (Photo by Saul Loeb/AFP) (Photo by Saul Loeb/AFP via Getty Images)

Confidence among the state’s employers has fallen to its lowest level in more than a year, according to a survey of Massachusetts businesses.

The Massachusetts Associated Industries’ monthly business confidence index showed confidence among businesses fell 1.4 points from March to April, from 51.5% to 50.1%, a level the trade association said was “mainly even” with “50.” Make a mark that distinguishes optimism from pessimism.

“Businesses reported that some customers are postponing purchasing decisions as they assess whether the economy is headed for a soft landing or recession. At the same time, Friday’s report that U.S. employers added 253,000 jobs in April shows that the labor market is bracing for the severity of any slowdown,” said AIM’s Board of Economic Advisers. Sarah Johnson reports.

That 50.1% confidence score is eight points lower than employers reported last year. Confidence is 8.6 points lower than its sudden peak of 58.7 percent in November 2022.

According to those surveyed, the economy may be showing signs of slowing after the Federal Reserve’s 10th straight rate hike, but as the labor market continues to show no signs of slowing wage growth, employers are worried and wondering if they’ll be holding off. Jerome Powell’s “soft landing” will ever be hopeful.

“Maybe a soft landing, but I predict a big challenge in late summer or fall,” he said in a monthly survey.

Businesses are also considering the possible devastation of the US debt default and the global economy. Unless Congress reaches a deal to raise the national debt limit or cut spending, the nation could run out of money to pay the bills by June, Treasury Secretary Janet Yellen said.

“Employers may disagree about federal spending, but no one agrees that hitting the debt limit will cause significant economic damage. AIM members join others in calling for elected officials to put aside their differences and find a solution,” AIM President and CEO John Regan said in the survey.

AIM has surveyed more than 140 Bay State businesses to produce their monthly index, which they have published for more than 3 decades. According to AIM, business confidence reached historic highs in 1997 and 1998, with 68.5% confidence in both months, and a low of 33.3% in February 2009.