Lee EBCS: Third Quarter 2022 Report
In times of growth and expected growth, businesses want to hire more and plan for extra investments that will allow them to meet up their demand. However, if businesses believe the economy will not continue to grow, they refrain form adding workers and investing given expected lower demand for their goods and services. The responses from businesses to our recurring questions show some mixed signals in the current economic environment, a similar picture to that of the country.
The National Federation of Independent Business (NFIB) reports a decrease in their Small Business Optimism index for June 2022, the sixth consecutive monthly decrease, with businesses reporting inability to find enough workers with job openings and hiring plans at higher levels. However, businesses also report sales decline and plans to reduce inventory. In Lee County, compared to the second quarter responses, a larger proportion of the respondents felt both economic and industry conditions are and would be worse in the year ahead, however, current hiring and planned investment continue to show strong numbers.
The Executive Business Climate Index (EBCI), a value that measures and gauges the current business climate in Lee County, peaked in the second quarter of 2021 at 75 but has since slowly declined in each subsequent quarter. The EBCI in 2022 Q3 was the second largest decline since the survey began in 2013, only above the decline reported in the 2020 Q2 EBCI. In both cases, future expectations presented similar levels, although for different reason. However, business owners indicated economic conditions over the past 12 months were worse in 2020 Q2 compared to the present quarter.
Overall, there is a blurred picture for both the US and Lee County economies, in which we see some signs of economic slow down along with strong labor markets. The Federal Reserve continues to adjust interest rate to control inflation with expectations of a “soft landing”. While the still some debate among economists on recession, business owners are starting to adjust to what they expect lies ahead.
Comment on our special topic: while most businesses report having some disaster plan, and their main concern relates to infrastructure (electricity, internet and water supply) the majority of businesses do not rely on local resources for disasters. However, research shows strong network and connection with such resources are important for business resilience.
We would like to thank all of the executives that participated in our survey. Without your continued feedback each quarter, our surveys would not be possible. Furthermore, we would also like to thank our sponsor, the Horizon Council, for helping make the survey happen.