Economic survey polls readers on economy, future

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by Clarissa French|ret||ret||tab|

SBJ Editor|ret||ret||tab|

cfrench@sbj.net|ret||ret||tab|

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In November, Springfield Business Journal sent out its first-ever SBJ Economic Survey, asking our readers for their insight into what is happening with the local and national economies.|ret||ret||tab|

A total of 700 questionnaires were sent out, and 207 responded, a response rate of almost 30 percent.|ret||ret||tab|

SBJ asked its readers to characterize the local and national economies, estimate the rate at which each will grow in 2004 and provide details on how the Bush tax cut is affecting their businesses.|ret||ret||tab|

We asked what our readers expect to happen with interest rates; whether they are planning to hire in 2004; and what kind of raises they plan to give. |ret||ret||tab|

We also asked them about health care: whether their companies provide this benefit, and if so, what share the company pays and how much rates are increasing for 2004. We also gathered historical data on past rate increases, and asked how readers will handle those increases in 2004. |ret||ret||tab|

Their responses are summarized below and expanded upon in several of our Economic Outlook articles. The surveys were anonymous, but participants had the option of volunteering to be interviewed about survey results. |ret||ret||tab|

Overall, survey respondents represented a range of industries. The greatest number of responses by business category came from Construction and Design, 17 percent; Financial Services/Accounting, 13 percent; Real Estate/Rental Properties, 11 percent; Manufacturing, 7 percent, Retail, 6 percent; Insurance, 6 percent; Health Care/Pharmacy, 5 percent; Advertising, 3 percent; Education, 3 percent; Law, 3 percent; and 2 percent each in Automotive, Government, Technology, Transportation and Wholesale. |ret||ret||tab|

Other industries/sectors represented in responses were Consulting, Human Services, Beauty Salon/Spa, Sales/Distribu-tion and Service.|ret||ret||tab|

Most of our respondents, 84 percent, are small companies employing fewer than 100 people.|ret||ret||tab|

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The state of the economy|ret||ret||tab|

How the economy is doing depends on what business you ask and the type of clients it serves.|ret||ret||tab|

The majority of SBJ readers (58 percent) stated that the national economy is better now than it was one year ago, and 25 percent said it is the same as a year ago. However, a significant number, 17 percent, stated that the national economy is worse now.|ret||ret||tab|

On the Springfield/southwest Missouri economy, 47 percent of respondents said it is better than it was a year ago; 41 percent said it is the same; and 12 percent said it is worse than a year ago.|ret||ret||tab|

Bob Hawn, the owner of Springfield Janitor Supply since May, says the economy is better both nationally and locally. |ret||ret||tab|

"Our sales are up substantially at this point, and they have held on at a consistent rate for six months. We're in way double-digit growth. It's literally getting better every day."|ret||ret||tab|

Tom Young, president and CEO of Young & Company Marketing, Advertising and Public Relations, agrees that things are looking up, based on what he's hearing in the marketplace and what he's reading in business and industry publications.|ret||ret||tab|

"Our businesses are better and I see positive things happening. And I have clients talking very positive for next year," Young said. "Two of our better clients one has experienced 22 percent growth this last year and another is experiencing record growth right now. And there's no signs that that's going to stop. If anything it's going to get better."|ret||ret||tab|

However, Kathy Iman, owner of KJI Enterprises, feels the national and local economies are worse than one year ago. Iman consults with senior citizens, helping them with bills, interpreting government forms and helping them with paperwork.|ret||ret||tab|

Her consulting business is part-time, and she works as a subcontractor to the state of Missouri, funded by grant monies. The rest of the time she works for accounting firm Mechsner & Company LLC. |ret||ret||tab|

Because her consulting work is grant-funded, she said she hasn't seen a negative impact on her business, but because she works directly with seniors, she sees a significant toll on individuals.|ret||ret||tab|

"So many people are struggling right now because of their investments. The interest they're drawing on their investments is so poor that they're not able to pay their bills," Iman said.|ret||ret||tab|

Many of her clients have few investments, mainly CDs and money market accounts, and "they're used to drawing maybe 4 or 5 percent and they use that 4 or 5 percent interest to pay their health insurance or their prescriptions; they're using that to pay their monthly bills, they're living off that money on top of their Social Security," Iman said. "When they get a renewal and it says you're going to draw 1.5 percent, it's very difficult for these people."|ret||ret||tab|

For example, she said, "I had a lady the other day that's blind and can barely get around in her house, and she was going, Well, you know I've been thinking, I probably need to try to find a job.' It's serious for these people."|ret||ret||tab|

Gary Turner, president of New Directions EAP of Springfield, has mixed feelings. He stated that the national economy is worse than a year ago, while the local economy is about the same.|ret||ret||tab|

Many of his company's major clients are in the manufacturing industry. "This was not a very great year for us until the last two weeks," he said. In the last two or three weeks, however, the company, which provides employee assistance programs, has added three new clients.|ret||ret||tab|

"It seems like a lot of the companies we do business with are starting to rehire," Turner said, but added a note of caution that rehiring is "not across the board."|ret||ret||tab|

"A lot of the companies, the manufacturing companies, laid off a lot of people and they're starting to bring them back, but I don't think that it'll be back up to where they were. Across the United States I just think there's a lot of manufacturing jobs that were lost that won't come back, that went overseas," he said.|ret||ret||tab|

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Interest rates, taxes and employment|ret||ret||tab|

SBJ readers expect rates to stay low in 2004: 61 percent expect rates to rise 0 percent to 1 percent and 31 percent expect rates to rise by 2 percent to 3 percent. Less than 1 percent said they expect rates to rise in the 4 percent to 5 percent range, and 6 percent expected no rate change.|ret||ret||tab|

Asked about the impact of the Bush tax cut package on their businesses, the majority, 69 percent, said it would have no effect. However, 17 percent said that as a result of the cut they will purchase new equipment, 7 percent will hire more staff and 1 percent plan to expand facilities. See the related article on the tax cut and its impact on page 5.|ret||ret||tab|

In terms of jobs, while the majority of readers 62 percent reported that employment will remain the same in 2004, 33 percent indicated they will increase employment and only 4 percent said employment will decrease.|ret||ret||tab|

Regarding compensation, although 17 percent of respondents said no raises would be awarded to employees in 2004, the majority of respondents 39 percent will give raises of 3 percent to 4 percent, while another 31 percent will give raises of 1 percent to 2 percent. Approximately 7 percent of respondents expect raises of 5 percent to 6 percent in 2004. One respondent indicated raises would range between 6 percent and 10 percent, while a few noted that raises were merit-based or that raises were undecided at the time of the survey.|ret||ret||tab|

For more information on jobs, see the related story on page 4.|ret||ret||tab|

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Expecting growth|ret||ret||tab|

The majority of SBJ readers, 80 percent, expect sales or revenue to increase in 2004, with only 3 percent anticipating a decrease. Approximately 43 percent of respondents expect revenue growth of 1 percent to 5 percent. Another 22 percent expect revenue growth of 6 percent to 10 percent, and about 7 percent anticipate sales/revenue growth in the 11 to 15 percent range. Fifteen percent expect no increase in sales/revenues, and about 3 percent expect sales/revenues to decrease. A handful expect revenue to increase at a rate higher than 15 percent.|ret||ret||tab|

Hawn estimates the national economy will grow by 3 percent to 4 percent and the local economy will grow by 1 percent to 2 percent, the outlook for his own company is much better.|ret||ret||tab|

He expects revenues to grow at least 20 percent in 2004, and plans to add staff.|ret||ret||tab|

He attributes his company's growth to inside sales and marketing programs, as well as his membership in a national buying group that allows him to compete with large national companies. |ret||ret||tab|

And while New Directions' Turner is conservative about the growth of the local and national economies, he is projecting 25 percent to 30 percent growth in his company's 2004 sales/revenues.|ret||ret||tab|

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Health care|ret||ret||tab|

Almost three-quarters of respondents 71 percent receive health care benefits through their place of employment. Twenty-five percent report their companies provide no health benefit.|ret||ret||tab|

Among companies health care benefits, the majority 29 percent expect rates to rise by 11 percent to 15 percent, followed by 24 percent that expect a rate hike of 6 percent to 10 percent, and 22 percent that expect rates to rise by 16 percent to 20 percent. Only 10 percent expect low increases in the 1 percent to 5 percent range, while 11 percent indicated their increases were either higher or lower than the ranges provided. The highest rate increase reported was 50 percent, and the lowest was 0, with at least two respondents indicating their rates would drop by 2 percent and 3 percent, respectively. |ret||ret||tab|

For Springfield businesses, double-digit rate increases for health care are nothing new. SBJ Economic Survey data shows that the average rate increases for health insurance were 16 percent in 2003, 15 percent in 2002 and 14 percent in 2001. |ret||ret||tab|

"This is to me the most serious problem I think business faces today: health insurance and what to do about it," Young said.|ret||ret||tab|

Hawn agrees. "That is one of my stresses: Where is this thing going? I can't end up paying $1,000 a month per employee. I can't do it."|ret||ret||tab|

Hawn said his rate increase is in the 11 percent to 15 percent range. Young is still waiting to find out how much his rates will increase in 2004. |ret||ret||tab|

"We're already talking to other carriers just to be ready," Young said. "We're happy with our insurance company but traditionally over the past few years, every year there's been a big increase."|ret||ret||tab|

Respondents noted that rates aren't likely to improve as workers age, as unhealthy habits continue to pervade U.S. society and as prescription drug costs continue to rise.|ret||ret||tab|

"I do not have an answer," Hawn said. "I think our government is going to have to step up to the plate. Nobody wants socialized medicine don't get me wrong, I have tons of friends who are doctors and they're scared to death, too but it's just brutal. I don't know where it's going. Are we living longer and getting well more? Yes, we are. But it gets to the point where a little guy like me can't afford it."|ret||ret||tab|

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The unexpected|ret||ret||tab|

Several sources said the uncertainty that emanates from the 9-11 terrorist attacks is significant economically.|ret||ret||tab|

"We're living in a different world now, and we're going to have to learn how to deal with it. I think we're always going to have that threat," Young said.|ret||ret||tab|

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Random factoid |ret||ret||tab|

Of companies that provide benefits, 43 percent pay 100 percent of employee premiums; 8 percent pay 70 percent, 80 percent or 90 percent levels; 5 percent cover 60 percent of premium and 15 percent split the cost evenly with employees.|ret||ret||tab|

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