BOSTON (State House News Service) — Confidence among Massachusetts businesses ended 2022 on a down note, with the chief concern among employers shifting from rising prices to slowing economic growth and the threat of a long-discussed recession.
Associated Industries of Massachusetts reported Monday that its business confidence index shed 4.7 points in December to finish the year at 54 on its 0-100 scale, with readings above 50 considered positive territory.
The index ended the year 2.7 points lower than its level of December 2021, and AIM cited worries that central bank efforts to tame inflation by boosting interest rates will tip the economy into a recession.
"The path to 2 percent inflation will inevitably be painful," Sara Johnson, AIM Board of Economic Advisors chair, said in a statement. "Most economists forecast a recession in the first half of 2023, led by declines in residential investment, commercial construction, inventory investment, and consumer spending on goods."
The index draws its readings from a survey of more than 140 Massachusetts employers, and AIM said that many businesses continue to struggle to hire and retain employees. The labor crunch comes as Massachusetts finds itself trying to retain its residents and workers, including people moving to lower-cost states.
Economists are expected to weigh in this month at a hearing that lawmakers and the Healey administration are planning in order to get a sense of how much tax revenue state budget writers might responsibly pencil into the annual budget proposals that will be drafted and debated ahead of fiscal 2024, which begins July 1.
In each of the past two budget cycles, state officials have severely underestimated tax collections, leading to huge budget surpluses, supplemental spending bills, and historic tax refunds triggered by a tax cap law. Their low-ball forecasts have in effect prevented substantial debate over how to allocate the state's flood of cash -- additional spending vs. tax relief.
Written by Michael P. Norton/SHNS