The Lincoln Institute of Public Opinion Research, Inc. has been conducting the semi-annual Keystone Business Climate Survey of business owners and Chief Executive Officers since 1995. During that time the economy suffered through three major disruptions: the September 11, 2001 terrorist attacks, the financial crisis and subsequent Great Recession which began in 2008-2009, and multiple state budget impasses in the first term of the Wolf Administration. Nothing, however, compares to the economic damage done by the Wuhan Coronavirus pandemic.
In both the Spring and Fall surveys conducted in 2019 the biggest problem facing Pennsylvania businesses was finding enough qualified employees to fill available positions. Today, more than one and a half million residents of Penn’s Woods are unemployed. Looking ahead six months 22% of those participating in the Spring 2020 survey expect employment levels to drop even further, 46% expect them to remain about the same as they are now while 23% expect employment levels at their company to rise.
The key measure of Pennsylvania’s economic health in the Keystone Business Climate Survey is whether or not the owners/CEOs “think business conditions in Pennsylvania are better, the same, or worse than they were six years ago.” Unsurprisingly, 85% of respondents to the Spring 2020 poll said business conditions in the past six months have gotten worse, just 2% said conditions for their business have improved, 10% said business conditions have remained about the same.
By contrast, in the two surveys conducted in 2019 a majority of respondents said business conditions had remained the same, which was good because business confidence had climbed to a high level in 2018. Those participating in the 2019 polls were evenly split between saying business conditions had gotten better and those who thought it had gotten worse. Overall, 2019 was stable and generally prosperous.
Historically the previous low point in business climate confidence came in the Spring of 2009 during the Great Recession when 76% of respondents to the Lincoln Institute survey said business conditions in the commonwealth had gotten worse. That has now been eclipsed by the 85% in the current survey who say business conditions have gotten worse over the past six months.
Another low point came in the Spring of 2003 when 55% said business conditions had deteriorated as the economy suffered through the impact of the war on terror. Business confidence also hit a low point in the Spring of 2015 at 53% negative. In that case tax proposals by the Wolf Administration coupled by state budget stalemates drove business pessimism.
Business leaders are split when asked what will happen over the next six months. Thirty-six percent expect business conditions will be better six months from now, 37% expect business conditions to be worse. Another 22% expect business conditions to remain about the same – which this time means very bad.
Reflecting state unemployment statistics 40% of the business owners/CEO’s report employment levels at their business have dropped over the past six months, 45% say they employ about the same number of workers, while 7% have increase their employee compliment. The bounce-back in employment is expected to be slow. Over the coming six months 23% plan to increase the number of people they employ, while 22% expect a further drop in employment.
With many businesses shut-down sales, of course, dropped dramatically. Sixty percent of respondents to the Spring 2020 Keystone Business Climate Survey said sales at their company have dropped over the past six months, 12% reported increased sales, while 19% sales remained steady. Looking ahead six months again the outlook is divided: 28% expect to see sales increase, 34% forecast declining sales, 27% expect sales to remain about the same.
Impact of Wuhan Coronavirus Crisis
Governor Tom Wolf’s “order” requiring so-called “non-life sustaining businesses” to close resulted in 24% of the businesses participating in the Lincoln Institute survey to shutter their operations. Another 44% were forced to reduce operations, while 26% continued full operations.
Those business closures and reductions in operations resulted in 15% laying off their entire work force, 29% enacted partial lay-offs, while 46% were able to weather the economic storm without laying off any employees. Forty-six percent expect they will be able to re-hire a sufficient work force when the economy gets moving again, but 18% say they expect difficulty in hiring a sufficient work force.
The return to pre-COVID-19 business activity levels is likely to be a slow process. Just 13% expect to return to pre-crisis levels within one month; 24% project it taking three months to return to full operations; 17% expect a six month ramp-up. Fully 26%, however say it will take them a year to return to pre-COVID-19 crisis levels. Additionally, 12% said they did not reduce operations during the pandemic. In a glimmer of light, just 2% say the pandemic will result in closure of their business.
Reflecting on the Governor’s business closure “order,” 64% say they support the move, while 35% oppose it. Although generally supportive, respondents to the Spring 2020 Keystone Business Climate Survey also felt the list of businesses required to close was generally unfair. Fifty percent said the closure list was unfair, 39% felt it was fair and equitable.
Both the federal and state government enacted programs designed to help businesses weather the economic fall-out from the Wuhan Coronavirus crisis. Fifty-one percent of the businesses survey by the Lincoln Institute said they will utilize benefits and/or loan programs included in the Coronavirus Aid, Relief and Economic Security (CARES) Act. That is the $2 trillion stimulus program enacted by congress. Far fewer, 15%, will be utilizing funding from the Pennsylvania COVID-19 Working Access Capital PROGRAM (CWCA).
President Donald Trump gets high marks from the business owners/CEO for his handling of the Wuhan Coronavirus crisis with 66% expressing their approval. Vice President Mike Pence earned a 70% approval for his chairing of the national coronavirus response task force. Fifty-nine percent approve of Governor Tom Wolf’s handling of the crisis. Fifty-six percent approve of the actions of the Pennsylvania General Assembly, the U.S. congress received approval from 45% of the respondents.
Job Approval Ratings
In terms of their overall job approval rating, President Donald Trump received a 60% positive/34% negative rating; U.S. Senator Pat Toomey scored a 38% positive/28% negative; while U.S. Senator Robert P. Casey, Jr. trailed with a 24% positive/39% negative. Federal Reserve Board Chairman Jerome Powell turned in a 39% positive/13% negative/48% no opinion rating while U.S. Treasury Secretary Steven Mnuchin received a 47% positive/20% negative/33% no opinion rating.
At the state level Governor Tom Wolf posted a 49% positive/42% negative job approval rating. Among the statewide constitutional or “row” officers Attorney General Josh Shapiro earned a 27% positive/19% negative/55% no opinion job approval numbers; Auditor General Eugene Depasquale turned in a 23% positive/14% negative/64% no opinion rating; and State Treasurer Joe Torsella’s job approval rating stood at 19% positive/13% negative/68% no opinion.
Among legislative bodies, 46 hold a positive view of the job performance of the U.S. Senate, 39% disapprove. Twenty-six percent approve of the job being done by the U.S. House of Representatives, 58% disapprove. The Pennsylvania Senate posted a 34% positive/31% negative rating; while the Pennsylvania House of Representatives turned in a 35% positive/40% negative score.
Methodology
The Spring 2020 Keystone Business Climate Survey was conducted electronically by the Lincoln Institute of Public Opinion Research, Inc. between April 1, 2020 and April 24, 2020. There was a total of 175 responses of which 58% came from the business owner, 18% from the CEO/COO/CFO, and 3% from a state manager. Responses were spread out geographically with 25% coming from southeastern Pennsylvania; 17% from southwest Pennsylvania; 17% from south/central Pennsylvania; 15% from northwestern Pennsylvania; 13% from northeastern Pennsylvania; 5% from the Lehigh Valley, 5% from northcentral Pennsylvania and 2% from the Altoona/Johnstown region.
Complete numeric results of the Spring 2020 Keystone Business Climate Survey, as well as results of past surveys, are posted on line at www.lincolninstitute.org.
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