Mass business confidence is reaching pre-pandemic levels
“This suggests that robust growth in the economy is underway,” said Sara Johnson, global economics expert at research firm IHS Markit. “We see the light at the end of the tunnel.”
The index remained stuck in negative territory for the remainder of 2020 after the pandemic hit, even though it recovered somewhat from its low last April. Johnson and other members of AIM’s council of economic advisers point to several reasons for the rebound, including the arrival of COVID-19 vaccines and congressional approval in early March. a $ 1.9 trillion federal stimulus package, the latest effort by Washington policymakers to accelerate the economic recovery. In Massachusetts, many business leaders were relieved see an agreement reached around the same time at State House to prevent a dramatic rise in unemployment insurance rates and to give tax relief to recipients of federal stimulus loans converted to grants.
AIM economic advisers also highlighted the state’s relaxation of trade restrictions over the past month.
“Maybe there is some wishful thinking built into this? Maybe, ”said Michael Goodman, economist at UMass Dartmouth, of the Employer Group Index. “But I think there is reason to be optimistic about the near-term future, even though this optimism [is] of the cautious variety.
In general, large employers tended to be more optimistic about the economic outlook than small businesses in the AIM survey, and those in eastern Massachusetts were more optimistic than those in the western part of the state.
Chris Geehern, executive vice president of AIM, said the poll shows its members are particularly excited about the economic outlook six months from now.
“There really is a feeling that all we need to do is get people vaccinated, keep things under control. [with the virus], and overall, the economy has an underlying strength, ”Geehern said.
A year ago, AIM staff members primarily answered questions from members that were about financial survival, such as how to get a federal loan from the Paycheck Protection Program. Now, Geehern said, the bigger question is when to bring people back to the office.
“It’s a luxury that they are looking at long term issues like this versus short term survival issues,” he said.
the latest available estimates show that the state’s unemployment rate fell again, to 7.1 percent, in February, as Massachusetts employers collectively added more than 50,000 jobs in the first two months of the year. But the total number of jobs in the state was still more than 300,000 jobs below pre-pandemic levels. Many business leaders recognize that the state still has a long way to go to recover these lost jobs. The national economy has benefited an unexpected hiring wave in March, but state-by-state figures are not yet available for that month. An encouraging sign: the Massachusetts Department of Revenue reported Monday that March’s tax revenue exceeded officials’ expectations by nearly 27%.
Nada Sanders, professor of supply chain management at Northeastern University, said there are still plenty of reasons to be cautious. She noted that the AIM poll does not reflect recent supply disruption with the Johnson & Johnson vaccine, the latest lockdowns in Europe, or the most recent increase more infectious variants of COVID-19.
“We’re seeing this huge pent-up consumer demand, and I think a number of companies are going to do well,” Sanders said. “I would temper just a bit given the fact that we just don’t know in which direction [the pandemic] will take . . . It changes in real time. “