Omaha-area businesses today are more optimistic about hiring and making capital investments than they were a year ago, according to survey results that also show far greater confidence in economic growth locally than nationally.
Spending forecasts of area business leaders remained guarded, likely due in part to unknowns about what Congress will do in the wake of November elections.
“The survey reflects improving economic conditions, but also shows some caution,” said Scott Strain, senior research director at the Greater Omaha Chamber of Commerce. “It goes to Omaha being insulated, but not isolated, to changes in the national economy. That is where the caution comes from.”
Strain and other economic experts were asked to reflect on results of the chamber's 2013 Economic Outlook survey that is being released today. This year's findings, to be used to recruit new business and help existing companies prepare for the future, drew 262 respondents, compared with last year's 213.
Overall, chamber members who voluntarily answered the questionnaire reported a better year in 2012, with 53 percent saying revenue was up and 56 percent expecting even better profits in 2013.
The survey was conducted during a time of a few high-profile building projects that likely boosted confidence, including the opening of CSG International's west Omaha office campus and the groundbreaking of commodity firm Gavilon's five-story corporate headquarters downtown.
Strain said the area's employment record also contributed to a brighter forecast. About 7,000 new jobs were added to the Omaha labor market during the last year, he said, which is a 1.5 percent increase over the previous 12 months.
And the number of home sales so far this year was up 16 percent compared with the same time frame last year, according to records compiled by the Omaha Area Board of Realtors.
Economist Chris Decker of the University of Nebraska at Omaha said indicators point to the Omaha-area economy continuing next year in a slow yet positive direction. He said electricity usage, for instance, suggests that manufacturing and commercial establishments are chugging along fine.
“I wish we could say, 'Let's all stand up and cheer. We've got robust growth,'” Decker said. “But slow and steady is still a story.”
The economic outlook survey revealed caution among the business community, but at a lesser degree than a year ago.
About 37 percent of respondents said they expected to beef up their employee count next year. That compares with last year's results in which 32 percent anticipated expanding their workforce.
This year's survey found that 32 percent expected to invest more next year in capital improvements, also an improvement over last year's 29 percent.
Ernie Goss, an economist at Creighton University, said that while responses this year weren't as negative as last year, they still aren't where they should be. “Businesses continue to be on the sidelines, and at this point in our recovery we should be doing much better.”
The bulk of survey respondents expected hiring and capital investment to stay about the same in 2013: 57 percent intended to make little to no change in their employee count and 58 percent said the same for capital investment.
Six percent anticipated dropping employees, and 10 percent said they expected to invest less in capital projects.
Also in the survey was a section asking about factors that businesses might find important in growing their companies in Omaha versus another place. Emerging as the top three: quality of life (including education, recreation, cost of living); tax burden on businesses; and health insurance costs.
Economists agreed that coming federal elections, and what happens afterward to tax rates and the regulatory climate, would influence business investment and economic growth.
“The main thing is the uncertainty from the political situation out there and how that is going to work itself out,” said Ken Lemke, an economist with the Nebraska Public Power District.
Even after the presidential election, he said, the impact of any new regulations or taxes might not be clear for months, further delaying significant spending.
Locally, a strong farm economy, a diverse base of businesses and an improved housing market have helped insulate Omaha and Nebraska from woes of the nation.
Lemke said 2012 has shaped up to be a “good year” for agriculture, and next year's performance should be “reasonable” depending on whether drought continues.
If tax reform is pushed through Congress during the lame-duck session, Goss said, confidence levels and the economy could surge. If not, he said, another recession looms. Such unknowns make it difficult, he and others said, to forecast economic performance.
Decker agreed, saying any economic prediction would be suspect if Washington does not avoid the “fiscal cliff,” the automatic tax increases and budget cuts scheduled for the end of the year. “If cooler heads prevail,” he said, “... the city of Omaha will continue to have a slow and steady economy.”
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Among the survey results
On the economy
Nearly half of respondents anticipated faster economic growth in the Omaha metropolitan area in 2013 compared with 2012, while only a fourth expected faster growth for the nation. Still, the Omaha business crowd was more optimistic this year than last year about the country’s future performance: 26 percent of respondents this year, compared with 18 percent last year, anticipated faster national growth in the year ahead.
A higher proportion of survey respondents this year reported better sales revenue at their company than the previous year — 53 percent compared with 50 percent in the 2012 outlook. Nearly 20 percent said business volume was worse this year; 27 percent said it was about the same. Looking ahead to 2013, 56 percent thought their business volume would be up, 7 percent thought it would be down, and 37 percent thought it would stay about the same.
One-third, or 33 percent, of respondents said they had more employees this year than last year, 17 percent said they had less, and half had about the same number. Looking forward, 37 percent said they expected to increase their workforce in 2013, 6 percent said they expected a reduction, and 57 percent anticipated no change.
On capital investment
Nearly 30 percent said they invested more this year than last, 14 percent said they spent less, and 58 percent said the investment was about the same. Looking ahead, 32 percent said they anticipated increasing capital investment next year, 10 percent said they expected a decrease, and 58 percent expected it to stay the same.