PNC Economic Outlook Shows Little Short Term Optimism

Pennsylvania small and mid-sized business owners are still not optimistic about the short term economy according to the latest PNC Economic Outlook survey, but they have hope in the long term.   

Just 14% of small business owners in Pennsylvania remain optimistic about their company’s prospects in the next six months, but 73% expect moderate growth over the next two years.

 In the short term, the hiring outlook is not bright– just 9% plan to increase their workforce.   Kurt Rankin, Senior Economist for PNC Financial Services Group says one of the reasons behind that is unemployment rates are starting to tick back up in Pennsylvania.  He says that’s leading to a lack of spending, which is keeping businesses from having a more positive outlook.

Rankin says what it really comes down to, as opposed to federal regulation debates, is consumer demand and consumer confidence in these local markets. He says small business owners are not very optimistic that the federal government has much to offer in supporting their own business prospects.  Only 17% of those surveyed indicate significant tax incentives for hiring new employees would impact their hiring plans.

Rankin says a key factor in consumer confidence is home values.  He says homeowners feel uneasy about ramping up spending as they see the wealth effects of their home values declining. Rankin says home prices have not yet bottomed out.

Rankin says only slow retail sales growth is expected in the near term. The pace of total top line inflation outpaced wage growth in August for the first time this year.  He says not only are new jobs not being created at a pace to spur demand, but those with jobs are starting to see an inability to keep up with top line inflation.