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National business survey shows low expectations

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By Kathy Canavan

Last year at this time, 78 percent of the respondents to the McDonald Hopkins Business Outlook Survey expected U.S. business conditions to improve. This year, only 44 percent anticipate improvement and 28 percent expect a decline.

The reasons for the 34 percent drop in confidence range from election year jitters and stock market turmoil to government regulations and political partisanship. “The future for the next 4 years is hinging on the election—no matter which way it goes,” said one of the business owners and executives who completed the sixth annual survey.

Carl J. Grassi, president of McDonald Hopkins, said most owners are more optimistic about the future of their own businesses than they are about the economy. About 63 percent say business conditions will improve at their companies.

Seventy-one percent of respondents say comprehensive tax reform is important to their companies, but the vast majority—77 percent—are not optimistic that the election will make it easier to achieve comprehensive tax reform. As one person commented, “A lot of talk from the candidates, but I think tax simplification is a long way off.”

Although data security incidents are on the rise, 67 percent of the respondents describe their companies as only “somewhat prepared” for an internal or external cybersecurity threat. Sixty percent have no plans to increase their security efforts.

The survey found that increasing health care costs are still at the top of the list of challenges facing companies, with 46 percent ranking it among their three greatest challenges. About 65 percent expect the Affordable Care Act to have a negative impact on their company’s bottom line. Business owners and executives also worry about retaining profit margins and government regulations “We continue to get buried with more and more government paperwork,” said one respondent. “It is nearly impossible to learn about and comply with the dozens of new regulations that get enacted, and the government doesn’t have the money or manpower to educate us about them.”

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