US businesses glum on worsening recession: Survey

WASHINGTON — As if we needed further confirmation, a survey released by the National Association for Business Economics concludes that the U.S. recession deepened in the fourth quarter of 2008, depicting the worst business conditions since the survey began in 1982.

"The survey’s measure of demand fell to its lowest level in the history of the survey," said Sara Johnson, IHS Global Insight. "Looking ahead to 2009, respondents grew more pessimistic about U.S. economic growth. Over half expect real GDP to fall by more than 1 percent this year, and only 3 percent project growth of over 1 percent.

Falling profit margins outnumbered rising margins five-to-one among respondents’ firms-the worst reading since 1982. With market prospects deteriorating, firms slammed the brakes on capital spending in the fourth quarter of 2008; the percentage of firms reducing capital expenditures (38 percent) was the highest in the history of the survey."

Some of the survey highlights:

Demand for goods and services increased at just 20 percent of respondents’ firms last quarter, the lowest percentage since the survey began in 1982. Demand fell at 47 percent of respondents’ firms, an all-time high.

Respondents continued to grow more pessimistic about the macroeconomic outlook as rapidly deteriorating global market conditions are hammering business profits.

The percentage of respondents reporting capital spending growth moved lower for the fourth consecutive quarter. For the first time since 2003, more respondents reported lower capital spending than higher.

And tight credit market conditions continue to impair the performance of the economy. Fifty-two percent of respondents indicated that the tightening of credit conditions has moderately or severely affected their businesses, while 78 percent reported that credit conditions have adversely affected their customers.

The entire survey can be accessed by clicking here.