Business leaders upbeat on state economy, not so nationally

TUSCALOOSA — The state’s small business leaders appear to have a far better outlook for the state’s economy and businesses than those on the national level, according to a survey by the University of Alabama Center for Business and Economic Research.

The center’s most recent survey, the Alabama Business Confidence Index, dipped indicating expectations of a mild drop off from the last quarter’s economic performance.

“The outlook for the U.S. economy remained strongly contractionary,” said Susannah Robichaux, socioeconomic analyst for CBER. “This index has been negative for the past eight quarters and the lowest component index for the past nine quarters, indicating sustained expectations for worse national economic conditions.”

The ABCI for the fourth quarter of 2023 is 48.2, which is slightly below the third quarter’s neutral index but still a better outlook than the post-pandemic low of 45.7 in the first quarter of this year. An index over 50 indicates an expansionary forecast compared to the previous quarter, and the closer the number is to 100, the more confident the forecast.

discussed the effect that growing interest rates could have on the national economy.

“The rising interest rates by the Federal Reserve may finally start to slow the economy down now that business and personal savings built up during the pandemic are depleted,” said Ahmad Ijaz, CBER executive director. “Alabama’s economy is still doing relatively well, one reason businesses are more optimistic about the state’s economy than they are about the national economy.”

This quarter, five of the nine industry groupings had an index above 50 showing a positive outlook for their own industry’s sales, profits, hiring and capital expenditures.

Only three industries are forecasting a decrease in their sales compared to the previous quarter: wholesale trade, retail trade, and manufacturing.

CBER expects the state’s economy to grow 1.5% this year, about the same as in 2022 with both employment and state tax collections growing more slowly than last year.