News Column

Colorado Business Leaders Optimistic, Hesitant About Economy, Report Says

Oct. 2, 2012

Alicia Wallace

Although Colorado business leaders remain generally optimistic about the health of their firms and the economy, broader domestic and international concerns -- notably the United States potentially falling off the "fiscal cliff" -- have diluted expectations for growth, officials in the University of Colorado's Leeds School of Business announced Monday.

The Leeds Business Confidence Index, which measures executives' confidence in areas such as the national economy and hiring plans, fell to a level of 51.6 for the fourth quarter of 2012. During the third quarter, the overall index had a reading of 53.6.

The main index and other subcategories -- expectations related to the state economy, national economy, capital expenditures, hiring, sales and profits -- all posted readings above 50, indicating that attitudes remain positive.

"There are plenty of bright spots to point to," said Richard Wobbekind, executive director of the Leeds School's Business Research Division, which conducts the quarterly survey. "Housing seems to have established a bottom and is moving up in many parts of the country, construction jobs are up year over year ... and vehicle sales are up."

However, executives appear to be taking a "wait-and-see" approach to hiring and spending because of uncertainly swelling around the upcoming election, the ongoing Euro crisis and the "fiscal cliff," the consequences from the Budget Control Act of 2011, which stopped the U.S. from defaulting on its debt last year. Economists, including Wobbekind, have said that the effects of the act -- which include tax increases, spending cuts and expiration of unemployment benefits -- could drive the nation into another recession in 2013.

"It just has the ability to take too much steam out of what is a slow-moving engine at this point," Wobbekind said.

Wobbekind is optimistic that Congress and the White House will take actions to halt a plunge off the "cliff," but whether those compromises, cuts and extensions take place in the fourth quarter or the first quarter of next year remain to be seen.

If a "fiscal cliff" scenario is avoided, Wobbekind expects the economy could grow in the range of 2.5 percent to 2.8 percent next year and climb above 3 percent in 2014 and 2015.

"People are tired of hearing it's a slow process," he said. "You have a financial recession, it takes an awfully long time to heal. It feels like we are in the healing mode."

Ryan Tundra, president of Boulder-based Tundra Restaurant Supply, said any growth in the broader economy and any lessening in businesses' uncertainty could only help his company.

"We just, for the most part, continue to do what we do," he said. "We grow our business strategically in terms of offering more products, more services, we enter more markets.

"In a way, if there is a broader uptick, that's going to be incremental to the growth that we're forecasting."



Source: (c)2012 the Daily Camera (Boulder, Colo.). Distributed by MCT Information Services


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