Economists report “striking dichotomy”

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Business economists are generally optimistic about prospects for their own businesses, but are less positive about the national economy.

A January report from the National Association for Business Economics released the responses of 98 corporate and trade association economists polled between December 13 and January 9.

Each was asked about conditions in their own companies during fourth quarter 2007 and about what they see coming for the economy. Analysts like Ken Simonson, chief economist for the Associated General Contractors of America, said the results showed a “striking dichotomy.”

Here are the highlights:

  • Compared to the October 2007 survey, respondents were gloomier about the outlook for the economy as a whole, but were more upbeat about their own firms’ pricing, capital spending, and hiring plans.
  • Although most panelists expected the housing slowdown to continue, fewer respondents than in October expected their business to be affected.
  • Neither tight credit conditions nor the decline of the dollar has affected most respondents. For the 18th consecutive quarter, there were more reports of rising than falling profit margins, even though slightly fewer firms raised prices last quarter and cost pressures for materials and wages remained steady.
  • In the January 2008 survey, 29 percent of respondents said they expected their firms to increase spending on structures, 14 percent expect a decrease and 57 percent expect little or no change. In the October 2007 survey, the difference between increased and decreased spending was slightly greater – a “net rising index” of 18 percent of respondents, versus 15 percent this time, Simonson said.