MOBILE, Alabama — Alabama and Mobile-area business leaders are feeling a lot worse about the economy, another in a series of mounting signals that the state may be sliding back toward recession.
However, another contraction does not appear to be at hand. BBVA Compass Bank found this week that Alabama’s economy grew at a 1.7 percent annual rate from June through August.
Still, the decline in the University of Alabama’s quarterly business confidence survey is troubling, considering it correctly signaled the coming of recession at the start of 2008.
“We’re hoping this time it’s not a good predictor,” said Ahmad Ijaz, an economist with UA’s Center for Business and Economic Research, which took the survey of 288 business leaders.
Alabama and Mobile-area business leaders predicted that the state
and local economies would shrink in the fourth quarter, according to the Alabama
Business Confidence Index. Index readings below 50 anticipate
– Huntsville: 43.7
Source: University of Alabama Center for Business and Economic Research
The overall confidence index for 2010′s fourth quarter tumbled to 45.5 statewide, falling below the midpoint of 50 that divides predictions of expansion and contraction. That’s down from 51.4 in the third quarter and a post-recession high of 55.8 in the second quarter.
Executives surveyed in the Mobile area were only a little more optimistic, with the overall index falling to 46 from 52.6 in the third quarter.
The survey asks business people whether they expect the national and state economies to expand or contract in the coming quarter, and whether they expect sales, profits, hiring and capital investment to rise or fall in their own industry.
The outlook for the national economy was particularly bleak, falling to 37.8. But executives now also expect a shrinking state economy, shrinking profits in their industry, as well as contracting capital spending and employment in their industry. They still expect sales to expand, but just barely.
Among industries, retailers were most optimistic, while health care and manufacturing executives had the worst outlooks.
Ijaz said that a weak job picture continues to weigh on the economy. But asked if the economy was headed for recession, he said, “Probably not,” sticking to a prediction of weak growth.
“This time around, if you look at the underlying indicators, they’re a lot better than they were in 2007.”
Ijaz forecasts the state’s overall economy will grow 1.6 percent this year compared to 2 percent last year.
He did say that historically, chances of a recession become elevated when national growth slows below 2 percent. He said that there is some chance that the economy could back into a shallow recession, what he called “slowing down into a slowdown.”
Alabama Development Office Director Greg Canfield, speaking to the Press-Register’s editorial board Thursday, said the state’s economic recruiters have yet to see a sign of slowdown, saying if anything, activity among companies considering expansions is picking up.
For the national economy, there was some good news Thursday, as the U.S. Commerce Department said the economy grew at a 1.3 percent annual rate in the second quarter, an upward revision from the original 1 percent estimate.