AIM: Employers Wait Out Election Results

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As the election looms and business leaders await the results, the Associated Industries of Massachusetts Business Confidence Index held almost steady, dipping two-tenths of a point in October, to 51.1.

AIM said employers are waiting not only for the election results, but also action to address the "fiscal cliff" of federal spending and tax increases, scheduled to go into effect in January.

"Of course the election itself is uppermost in the public mind, but to some extent Massachusetts employers seem to be most concerned with what Congress will do between election day and inauguration day to head off a looming fiscal crisis," said Richard C. Lord, president and CEO of AIM and a Board of Economic Advisor (BEA) member. "Right now, they don't know what tax rates will be in two months, which makes planning difficult; and last year's political deadlock which brought us to this situation was not a confidence-builder, to say the least. And while a temporary fix may be necessary, it will not be sufficient – we need to see constructive agreement on a long-term solution, soon."

The sub-indices were mixed for the month, although they were all up from a year ago. AIM said the biggest drop was the indicator of national conditions, which fell 5.6 points to 39.4, its lowest reading of the year. The state's index of conditions was down 1.5 points, to 48.6.

AIM found that employers expect conditions to slightly improve in the coming months, despite concern over policy uncertainty in the short term, and are hoping for "some resolution after the election."

The Current Index fell by one-tenth of a point to 50.8, while the Future Index, measuring conditions for the next six months, was off 0two-tenths of a point, to 51.5.

All three company-related indices showed gains in October, with the broad Company Index, Sales and Employment all increasing about 50.