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Grant Thornton: Less Than Half of U.S. Businesses Optimistic

April 18, 2016, 07:21 AM
Filed Under: Economy

Less than one-half (net 46 percent) of U.S. businesses are optimistic about the future, according to the first quarter 2016 results of the Grant Thornton International Business Report (IBR). Figures throughout the world are more pessimistic, with only net 26 percent of respondents calling themselves confident.

The dim outlook is tied to factors like the turbulent presidential campaign and the “will they or won’t they” Federal Reserve; it is especially troubling given that the Dow Jones average is at near-record highs and holding steady – and U.S. unemployment rates are at lows not seen since 2008.

Even more concerning: Only 11 percent of U.S. respondents expect their companies to increase spending on research and development, and just 8 percent are confident that they’ll grow their exports in the next 12 months.

“There’s strong caution among managers of U.S. companies, many of which are vulnerable to global economic headwinds,” stated Mike McGuire, chief executive officer of Grant Thornton LLP. “Economic uncertainty will always put a damper on business investment and confidence. But it also creates opportunity; the key is having the vision to see the best path forward in the face of risk.”

Nichole Jordan, national managing partner of markets, clients and industry for Grant Thornton, echoes this sentiment: “With the near-term economic outlook decidedly mixed, forward-looking organizations may elect to focus on capturing operational efficiencies and managing risk, while making strategic investments in technology to generate long-term value and sustainable growth.”

Other notable findings from the study:

  • Share of firms expecting revenue growth lowest since 2009 – 30 percent of respondents don’t expect to see revenue growth in their businesses, marking the lowest figure in the study since 2009.
  • Raising prices not likely in the cards – Just 19 percent of respondents were confident they could charge more for products and services.
  • Financing could be hard to come by – Less than one in ten respondents (8 percent) were confident that they’d be able to access the right long-term credit in the coming months.

Encouragingly, IBR data reveal good news for wage growth, long a drag on consumer spending and overall economic growth. With inflation rates low, nearly one in five (19 percent) firms worldwide plan to award employees an above-inflation pay increase this year – the highest figure ever recorded. U.S. pay increase expectations followed a similar trend with 21 percent of firms planning to award an above-inflation raise in the next 12 months.

Visit Grant Thornton International for additional survey findings.

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