A survey released Monday by the National Association for Business Economics confirmed 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. Job losses accelerated in the fourth quarter, and the employment outlook for the next six months has weakened further. 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."

The NABE Industry Survey report presents the responses of 105 NABE members to a survey conducted between Dec. 17, 2008, and Jan. 8, 2009, on business conditions in their firm or industry, and reflects fourth-quarter 2008 results and the near-term outlook.

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. Seventy-eight percent of respondents expect U.S. real GDP to be lower in 2009 than in 2008.

• Rapidly deteriorating global market conditions are hammering business profits. For the fourth consecutive quarter, reports of falling profit margins (52 percent of respondents) outnumbered reports of rising margins (10 percent).

• Job losses accelerated in the fourth quarter, producing the worst survey result in 17 years. Some 44 percent of firms cut payrolls, while only 14 percent added workers. Looking ahead, 39 percent of companies plan to reduce payrolls over the next six months, while 17 percent plan to increase employment. Only the services sector continues to create jobs.

• 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. Only 16 percent of respondents plan to raise capital spending over the next 12 months, with none of these expecting capital spending growth in excess of 10 percent. Forty-four percent of respondents expect capital spending to decline over the next year.

• 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.

You can read more about the survey at http://www.nabe.com/press/ind0901.pdf