The job market is improving, wages are increasing, and even the prospect of a small uptick in interest rates is no reason for concern, reported the chief economists of some of the largest corporations in the U.S. According to the National Association of Business Economists quarterly Business Conditions Survey, the country’s economy is on a clear path to continued growth.
“Business conditions continued to improve during the third quarter, albeit at a marginally subdued pace from that of the second quarter,” said NABE President John Silvia, chief economist for Wells Fargo Securities, adding that respondents reported “strong expectations for continued economic growth” in the fourth quarter.
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The survey also indicated that hiring will continue, and that companies are not having much difficulty finding workers.
“Survey respondents are fairly positive about their organizations’ ability to fill open positions in light of an improving labor market,” said Jim Diffley, a senior director with information analytics firm IHS. “Two-thirds of respondents indicate their companies have had no difficulty in filling positions.”
The NABE survey polled 76 economists about the state of their companies and the overall state of the economy. While in some cases the findings weren’t as strong as they were in the second quarter survey published in July, the overall trend remains positive.
Nearly one in three businesses, 32 percent, reported that they added employees during the third quarter, while only 7 percent reported a decline in headcount. And, departing from the frequent complaint heard during the Great Recession and the years of recovery that followed, two-thirds of respondents reported that they were having no trouble filling open positions with qualified candidates.
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One reason for this could be the slow but steady increase in wage growth. In the third quarter, 24 percent of respondents reported that their businesses had raised wages and salaries. That marks a slowdown from the previous two quarters, but still represents an upward trend in compensation, which has been flat for many Americans for most of the past decade.
In what could be a positive sign for the economy, a quarter of firms reported that they expected their costs to rise in the fourth quarter of this year, and one-third said they expected to raise the price of the goods and services they provide. While that may sound counterintuitive, many economists believe moderate inflation would actually benefit the economy by, among other things, encouraging investment and driving wages higher.
As Federal Reserve policymakers move closer to increasing short-term interest rates from their current near-zero levels, respondents were asked how much of a threat a slight uptick in rates presented to their businesses. The answer: not much.
Only 16 percent of respondents said that an increase of half a percentage point or more in the near term would have a negative impact on them. A clear majority of 58 percent reported that it would take an increase of a full percentage point or more to have a materially negative effect on their businesses.
Finally, the prospect of another economic slowdown in Europe is a minor worry for most firms, the survey found. Only 7 percent of respondents said economic problems in Europe would have a significant negative effect on their businesses. However, 44 percent predicted a minor negative effect.
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