A monthly index that seeks to measure the ups and downs of business confidence in Massachusetts was unchanged in December as the state’s employers fretted over political uncertainties.
The index is maintained by the Associated Industries of Massachusetts, or AIM, a trade group for Bay State employers. In December, the index posted a reading of 50.2, the same as November’s reading and up 2.4 from the reading for December 2012. Launched in mid 1991, the index uses a 100-point scale. A reading above 50 suggests an optimistic outlook among the state’s employers, a reading below 50 a negative one. The index reached its historic high of 68.5 on two occasions, once in 1997 and again in 1998. Its all-time low of 33.3 was recorded in February 2009.
In a statement, Raymond G. Torto, chair of AIM’s Board of Economic Advisors, commented on the index’s most recent reading.
“In terms of business confidence, 2013 was a lost year despite widespread evidence that the economy continued to strengthen over its course,” Torto said. “Political uncertainties, particularly around fiscal policy, weighed negatively, but this was also true in the previous year – in December 2012 we were on the edge of the ‘fiscal cliff.’”
The phrase “fiscal cliff” was much in the news in late 2012. It referred to the mix of steep tax increases and spending cuts that would have automatically taken effect if Congress and President Obama could not agree on a federal budget about a year ago. After much last-minute negotiating, the fiscal cliff was avoided just over a year ago.
In October, though, the federal goverment partly shut down for about two weeks as Congress wrangled over funding legislation.
As for local business sentiment in Dec. 2013, Torto said: “We are seeing notably pessimistic survey responses from small employers, which might reflect the impact on small business of the government shutdown. Smaller employers do not have the staying power to weather cash-flow disruptions.”