PHOENIX, AZ - A recent report from BMO Economics on U.S. economic prospects for 2014 was considerably upbeat, given a combination of record levels of household wealth, lower debt, lower gas prices and improved prospects for employment.
"The clouds are parting, and therefore we're forecasting GDP growth of 2.9% for the coming year," said Michael Gregory, Head of U.S. Economics, BMO Capital Markets. "We foresee increased consumer spending and business investment along with export growth and improved household finances all playing a part in creating strong growth in 2014."
The survey was conducted by Pollara with an online sample of 601 American business owners (including an oversample of 50 Arizona owners) in November, 2013. A probability sample of this size would be accurate to +/- 4%, 19 times out of 20.
BMO Harris Bank released a study last week that found that business owners in Arizona are similarly optimistic for the prospects for success of their own businesses for the coming year and their outlook of the national U.S. economy in 2014. Ninety-five percent of Arizona business owners feel that their business will either grow or stay at the same level in 2014. Only 25% believe that the U.S. economy will worsen this year. Three-quarters (75%) believe that the U.S. economy will either improve or stay the same this year; 83% feel that the state economy in Arizona will either improve or stay the same.
"The good news is that business owners have confidence in the prospects of their own individual businesses. Projects that were put on the shelf five years ago are being pulled off and looked at again," said Tim Bruckner, Managing Director, Commercial Banking, Arizona, BMO Harris Bank. "Progress has certainly been made, but there is still some apprehension about the prospects for the overall U.S. economy."
When business owners in Arizona were asked about their expectations for the national economy, the answers were divided:
• 42 percent expect the economy to improve.
• 33 percent expect it to stay the same.
• 25 percent expect the economy to worsen.
The findings were similar when business owners were asked specifically about the state economy in Arizona:
• 45 percent of respondents feel that Arizona's economy will improve in 2014.
• 38 percent believe it will stay the same.
• 16 percent believe it will worsen.
Respondents were also asked to identify what they felt was the largest advantage to doing business in Arizona compared to elsewhere in the United States. Answers were varied, but the top four were:
• Climate/Weather (15%)
• More people/Large workforce (11%)
• Lower Taxes (8%)
• Good Business Climate/Environment (8%)
"We have a number of solid companies in Arizona that have weathered the economic downturn," added Mr. Bruckner. "Many businesses are in better shape than they were five years ago, with a stronger balance sheet and more efficient operations."
National Results from the Survey
When business owners throughout the country were asked about their expectations for the economy, the results were as follows:
• 37 percent expect the economy to improve.
• 34 percent expect it to stay the same.
• 29 percent expect the economy to worsen.
Owners of businesses with revenues over $20 million per year were significantly more optimistic, both in their own prospects and in their outlook for the economy:
• 68 percent feel their business will grow in 2014, vs. 53 percent of all businesses.
• 45 percent feel the U.S. economy will improve in 2014, vs. 37 percent for all businesses.
Survey findings can be found at the BMO Harris Commercial Resource Center: 2014 business outlook