Walsh College Economic Sentiment Survey Reveals Cautiously Optimistic Outlook

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TROY — Walsh College alumni see the Michigan economy as trending upward since 2011, yet continue to express caution regarding the state’s economic condition.

On the national front, economic sentiment has been marked by volatility since 2011, but has improved slightly over the past 6 months, according to preliminary findings of the fifth Walsh College Economic Sentiment Survey, conducted during the first quarter of 2013.

Designed and implemented by members of the Walsh College finance and economics faculty, participants include a representative group of Walsh College alumni responding to a variety of economic and business-related topics. The survey has been conducted semi-annually beginning in the first quarter of 2011.

Among those responding to the latest survey, the gap in economic sentiment has narrowed over the past six months, with 49 percent expecting the national economy to experience “good” or “mostly good” times during the next five years and 43 percent expected the same for Michigan. The Walsh Economic Sentiment Ratio — a weighted ratio of positive-to-negative responses, with a value greater than 1.0 representing a relatively optimistic stance and a value less than 1.0 denoting a relatively pessimistic outlook — was 1.10 for the country as a whole and .99 for the state.

Turning to business sentiment, survey respondents are more optimistic regarding state and national business conditions. The Walsh Business Sentiment Ratio has nearly doubled over the last six months for the country as a whole (from 0.63 to 1.23) and the outlook for the state of Michigan (now at 1.05) has moved into favorable territory for the first time since the survey’s inception. It is also noteworthy that expectations for the respective United States and Michigan business climates are becoming more closely aligned. Clearly, respondents anticipate improving business conditions over the next 12 months at both the state and national levels.

Confidence in household finances remains high, with 39 percent of respondents expecting conditions to improve and only 14 percent concerned that personal finances will deteriorate. This has resulted in a healthy Walsh Household Finance Sentiment Ratio of 2.73, a positive outlook that matches well with the optimism expressed toward near-term business conditions. With the state and national economies expected to improve, survey respondents continue to express confidence in the direction of household finances for the coming year.

“In general, this recent survey indicates an improved outlook for the economy and business climate since the second quarter of 2012,” said Walsh College Associate Professor Gregory Todd. “The newfound optimism of our survey respondents is encouraging and will hopefully be justified by continued gains in GDP, capital investment, and job opportunities.”

For video commentary on these results, visit www.walshcollege.edu/EconSurveyVideo

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