Author Archives: Ralph Nefdt

Ralph Nefdt

About Ralph Nefdt

Ralph Nefdt is the managing partner of Grant Thornton’s Phoenix office. He is responsible for overall operations, client relations and continued growth in Arizona. Nefdt has more than 25 years of experience working with public and private companies in a variety of industries including technology, consumer and industrial products, manufacturing, retail and distribution. For more information or for the detailed white paper on the Index, please visit www.gt.com.

Grant Thornton Business Optimism Index

Grant Thornton Business Optimism Index Reports Growing Confidence In Economy

Each year, Grant Thornton works with business leaders nationwide to gauge their optimism in the U.S. economy. This project, titled the Grant Thornton Business Optimism Index, was started in 2002 with three key measures over time:

  • U.S. economy: Business leaders’ perceptions of whether the U.S. economy will improve, remain the same or deteriorate in the next six months.
  • Business growth: Business leaders’ perceptions about the growth of their own business over the next six months.
  • Hiring expectations: Whether business leaders expect the number of people their company employs to increase, remain the same or decrease in the next six months.

The most recent survey, available now, was conducted in late 2011 by an outside polling organization, with nearly 400 senior executives from various industries across the country responding.

And there is good news!

While in recent years the responses have been understandably tempered and/or negative, current data shows we may have finally gotten through the worst.

According to the Index, business leaders in the United States have a growing confidence in the economy. Specifically, one-third of all surveyed believe the domestic economy will improve in the next six months, compared with just 18 percent in the third quarter of 2011.

The Index itself rose 11.8 points to 57.9, reflecting increased optimism around key economic measures: the U.S. economy, business growth and hiring expectations.

Some specific data over time:

5/2010 8/2010 11/2010 2/2011  5/2011  8/2011  11/2011 
OVERALL Business Optimism Index* 67.6 58.4 63.0 69.7 62.6 46.1 57.9
Believe U.S. economy will improve 63% 34% 47% 64% 45% 18% 33%
Believe U.S. economy will get worse 6% 16% 10% 4% 12% 46% 20%

Growth, we found, is also top-of-mind among our nation’s leaders.

In fact, 75 percent are optimistic about their companies’ growth in the next six months, up from 60 percent in the third quarter of 2011. Hiring appears to be on the rise as well, with 37 percent of U.S. business leaders noting that they expect to increase staff levels in the next six months, up from 28 percent in the previous quarter.

However, the U.S. optimism is still very reliant on how struggles occurring in the global marketplace, including Europe and China, are being dealt with.

Additional data collected over the past two years:

5/2010 8/2010 11/2010 2/2011 5/2011 8/2011 11/2011
Very or somewhat optimistic about own business 87% 76% 79% 87% 79% 60% 75%
Very or somewhat pessimistic about own business 13% 24% 21% 13% 21% 40% 25%
Plan to increase staff 44% 38% 43% 49% 40% 28% 37%
Plan to decrease staff 12% 15% 15% 10% 12% 25% 14%

When asked what public policy initiative would make business leaders most optimistic about in the country’s future, a job creation program was rated highest, as in the prior quarter.

Please rank in order the public policy initiatives listed below that if adopted would make you most optimistic about our country’s future. Rank from 1 to 5, with 1 being most optimistic and 5 being least optimistic:

Public policy initiative Most Optimistic
Job creation 43%
Deficit reduction 31%
European plan to promote international economic security 17%
Reduction in effective corporate tax rate 7%
Regulatory adjustments to improve IPO market access 2%

While we still have a long way to go, this data represents improved optimism in our nation’s future success, growth over time and economic stability.

For more information or for the detailed white paper on the Grant Thornton Business Optimism Index, please visit gt.com.