Area businesses provide feedback

Kansas City-area business leaders are reporting marginally better business conditions for themselves, their clients and the economy as a whole in the Greater Kansas City Chamber of Commerce’s year-end 2009 Regional Business Survey.

More are saying the recent recession will last longer than expected and prospects for sustaining the economic recovery remain uncertain.

A total of 382 regional business leaders responded to the latest Regional Business Survey, which had a 46 percent higher response rate than the inaugural survey in June.

Here are a few observations drawn from the latest survey, which was conducted Dec. 14-23:

• Overall business conditions. Higher percentages of respondents reported that business activity for themselves, their clients and the overall regional economy is “much stronger” or “stronger” than they did in the mid-year survey. Roughly eight times as many respondents reported that their business activity is getting stronger than those saying their business is getting weaker.

• Labor market indicators. More respondents said they had fewer employees now than six months ago, but 42.9 percent expect to have more employees six months from now.

• Selling prices. A total of 37.4 percent of respondents reported that their selling prices are “a little lower” or “a lot lower” than six months ago, up from 32.7 percent in the previous survey.

• Credit conditions. Since mid-year, 19.8 percent of respondents reported obtaining “all the credit wanted,” down from 25.6 percent. The percentage of respondents reporting that credit terms have tightened declined slightly over the past six months. However, 37.6 percent of respondents that have obtained credit since mid-year reported tightened credit terms, compared to just 2.4 percent reporting loosened terms.

• Problems facing businesses. Nearly half of respondents cited “unpredictability of business conditions” as the most immediate problem stemming from the recent recession, while another 41 percent reported slowing or lost sales. Long-term, they are most concerned with soaring public debt and long-term economic stagnation.

• Length of the recession. More survey respondents now say the regional recession started in the first or second quarter of 2008, a shift from mid-year responses favoring the second or third quarter of 2008. Notably, more than half don’t expect the regional economy to begin expanding again until sometime in 2010, and 20.8 percent don’t expect to see regional economic expansion until after 2010.

• Priorities for elected officials. Survey respondents say the top economic priorities for elected officials should be job creation, entrepreneurship/business formation, tax relief and education/workforce development.

• Public policy opinions. More respondents, 51.3 percent, believe repaid and unused funds from the Toxic Asset Relief Program should be used to reduce the federal deficit than for job creation. Separately, more than twice as many respondents, 42.2 percent, said they would welcome tax credits for hiring more employees, increasing capital expenditures, extending health care for employees or investing more in energy efficiency than those who wouldn’t tap such tax credits.

The chamber’s Regional Business Survey is a twice-yearly effort to gauge economic activity and attitudes in the region as part of a broader effort to provide unique economic data. The complete survey, including a sample of responses to open-ended questions addressing business concerns and advice for elected officials, is available at www.kcchamber.com.

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