Tuesday, October 15, 2013
Walsh College Economic Sentiment Survey Reveals Cautiously Optimistic Stance on Economic Outlook
Walsh College alumni continue to see Michigan’s longer-term economic prospects on an upward trend since 2011, yet express caution when compared to the country as a whole. National economic sentiment has been marked by volatility since 2011, but has improved nearly 50 percent over the last 12 months, according to preliminary findings of the sixth semi-annual Walsh College Economic Sentiment Survey, conducted during the third quarter of 2013.
The Walsh Economic Sentiment Ratio©, a weighted ratio of positive-to-negative responses, with a value greater than 1.0 representing a relatively optimistic stance and a value less than 1.0 denoting a relatively pessimistic outlook – was 1.45 for the country as a whole and 1.05 for the state.
Survey respondents are slightly less optimistic regarding both state and national business conditions, a change from the fifth round of the survey when respondents saw business conditions improving over 12 months. The Walsh Business Sentiment Ratio© declined nearly 40 percent over the last six months for both the country (from 1.23 to 0.74) and state (from 1.05 now at 0.60). Expectations for the respective U.S. and Michigan business climates remain closely aligned. [See Table.]
Confidence in household finances is high, with 63 percent of respondents expecting their household condition to improve 12 months from now, and only 11 percent concerned that personal finances will deteriorate.
This round of the survey included a Special Module on the Patient Protection Affordable Care Act (PPACA), popularly referred to as “Obamacare.” When asked how PPACA would potentially impact the national and state economies five years from now, respondents were overwhelmingly pessimistic, with a ratio of 0.13 for the country and 0.14 for the state.
Overall, respondents believe PPACA will benefit some, but at a greater cost to the majority:
“More people will have access to medical care, which should create more jobs in the Health Care industry, AND it should improve the overall health of the citizens, which will increase productivity (less absence due to sick time).”
“Companies have been preparing for the increase in healthcare expenses starting about two years ago and have passed along these increased costs to the end user."
“I work in healthcare and the cost associated with mandates has been high... While I agree that our poor need affordable care I would have liked to see a different approach. I think this will be squarely on the back of the middle class and will not do our economy any good.”
For video commentary by Walsh College’s finance faculty, visit: www.walshcollege.edu/EconSurveyVideo. The survey is designed and implemented by the Walsh College Finance and Economics faculty. Participants include a representative sample of alumni.