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Business confidence in Massachusetts drops again, report says
It’s the longest stretch of pessimism since the COVID-19 pandemic in 2020.
Business confidence in Massachusetts slid further in October, as companies grappled with rising prices, federal government disruptions, and ongoing uncertainty over tariffs, according to the Associated Industries of Massachusetts Business Confidence Index.
The last time the Business Confidence Index saw businesses report pessimistic territory for eight months was during the COVID-19 pandemic in 2020.
“The labor market is softening — employment has decelerated, and long-term unemployment has risen,” said Sara Johnson, chair of the AIM Board of Economic Advisors, which oversees the Business Confidence Index, in a statement.
“Because the labor market is a major pillar of consumer spending, any sign of widening job losses or weakening wage gains would be a red flag,” she continued.
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The AIM Index, which has been running since 1991, is based on a survey of more than 140 Massachusetts employers. It is on a 100-point scale, with 50 being neutral. A reading above 50 is positive, while a reading below is negative.
Companies that participated in the index expressed a variety of views.
One employer said, “Federal government contracting is decreasing for small businesses, and tariffs are hurting everyone.”
But another was more optimistic, saying, “October rebounded significantly from a slower September.”
Meanwhile, AIM says the federal government shutdown hinders economic analysis because federal agencies have suspended the collection and processing of most official statistics.
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In the release, Alan Clayton-Matthews, professor emeritus of Economics and Public Policy at Northwestern University, said that federal policy changes also impact state productivity.
“Tariffs and reductions in research-and-development spending create issues for productivity, while an aging demographic affects labor-force participation and tightening immigration policy affects pollution,” he said.
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