For Immediate Release

July 31, 2009

ECONOMY’S DECLINE SEEMS TO BE SLOWING

CBIA survey shows improvement in key indicators, but recession a long way from over

The Connecticut Business & Industry Association’s second-quarter 2009 economic survey shows that the economy’s downward slide appears to be slowing, and businesses are reporting improvements in many performance areas. But they are still concerned about the recession, and most don’t expect a recovery until next year or later.

Business executives responding to the survey reported slight improvement in production, sales, and productivity for their firms and were less pessimistic about future performance. A quarter reported increases in production/sales. Thirty-nine percent said production/sales for their firms remained stable, while 37 percent reported a decrease, down from 43 percent last year. The figures for productivity were similar, with a significant drop in the number of respondents (21 percent) reporting decreased production/sales numbers compared with last quarter (24 percent).

While they are slightly upbeat about their performance indicators, they are less optimistic about the economy. Two-thirds expect Connecticut’s economy to worsen, down from 71 percent last quarter and 92 percent in the fourth quarter of 2008. The number expecting the economy to remain stable grew to 27 percent, up from 18 percent last quarter. Only 7 percent expect improvement, down from 11 percent last quarter but up from 5 percent a year ago. 

Businesses are slightly more optimistic about the national economy with 15 percent expecting to see an improvement, down from 19 percent last quarter. Fewer than half (49 percent) expect worsening conditions, down from 62 percent last quarter and 74 percent a year ago.

Pete Gioia, CBIA’s vice president and economist, said he is encouraged by changes in businesses’ opinions in recent surveys but believes we are still facing major obstacles.  “Connecticut and the U.S. economies are facing a prolonged real estate market downturn and credit problems, and while we have seen some positive changes and a halt in the downward slide, we are still facing very difficult times,” said Gioia.

Nearly half of respondents said they expect an economic recovery next year in the U.S. (49 percent) and in Connecticut (44 percent). Nearly one third believe an upturn will come later. Thirty percent expect Connecticut and 27 percent expect the U.S. to recover from the recession in 2011. Twenty-two percent of respondents believe improvements in Connecticut’s economy will occur in 2012 or later, and 18 percent believe that to be the case for the U.S. economy. Only a small percentage (5 percent for Connecticut and 6 percent for the U.S.) expect the economy to recover later this year.

“With 70,000 people out of work and businesses closing in record numbers, we need incentives and policies to create a climate for investment and growth,” said Gioia.

The survey was conducted by CBIA in June 2009.  A total of 386 business people responded for a 14 percent response rate and margin of error of +/- 5 percent.

CBIA is the state’s largest business organization, with 10,000 members.

 

For more information contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com.

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