Virus and Supply Chain Combine to Dim Biz Confidence
Confidence in the Massachusetts economy dipped slightly in November among employers, the fourth straight monthly decline recorded by Associated Industries of Massachusetts as fears of COVID-19 and continued supply chain disruptions dimmed corporate views.
One economist said the recent passage of legislation to spend $4 billion in American Rescue Plan Act and state surplus money should give the economy some momentum, but AIM CEO John Regan noted that Gov. Charlie Baker’s decision not to seek a third term will inject some uncertainty into the marketplace.
Employers registered a confidence score of 57.9 on AIM’s monthly business confidence index for November, down half a point from October and from 65.6 in July. The index is based on a survey of 140 employers across Massachusetts, with 50 being a neutral score. Since 1991, the index has gone as high as 68.5 and as low as 33.3.
The November index score is the lowest recorded since March, but is still 8.6 points higher than a year ago. The score has taken a recent tumble as a rise in COVID-19 cases, fueled by the Delta variant and now the arrival of the Omicron variant, have increased anxiety over the pandemic, and employers continue to struggle with supply chain delays and labor shortages.
Michael Goodman, a professor of public policy at the University of Massachusetts Dartmouth, said the ARPA spending bill on Gov. Baker’s desk and the new federal infrastructure bill “will add momentum to a state economy that slowed to a 2 percent annual growth rate in the third quarter.”
“In addition to boosting growth in the near term, these federal funds will allow Massachusetts to address longstanding and critical challenges including job training, transportation, housing and education,” Goodman said in a statement.
Regan, however, said the unfolding race for governor in 2022 should be watched closely now that Baker and Lt. Gov. Karyn Polito have decided not to seek reelection and there will be a new governor 13 months from now.
“Any change in the corner officer on Beacon Hill affects the confidence on Massachusetts employers,” Regan said. “Governor Baker and Lt. Governor Karyn Polito will leave a legacy of disciplined fiscal management and policies that have allowed Massachusetts to remain a pre-eminent center of technology and commerce.”
While employer views of the state’s economy remain optimistic, opinions on the U.S. economy turned pessimistic for the first time since January with a score of 48.8. Employers’ confidence in their own companies was essentially flat at 61.1, and the employment index was the only indicator to rise by three-tenths of a point to 56.2.
A regional confidence score for Central Massachusetts came in below the statewide number at 56.3. AIM intends to add regional indexes for Springfield and the North Shore.