NABE: Last Quarter Was One Of The Worst Since Global Financial Crisis

July 28, 2020
Firms have imposed a number of measures to limit the negative financial impact of COVID-19, including freezing hiring and terminating and furloughing employees.

The National Association of Business Economics (NABE) releases its July 2020 Business Conditions Survey, which indicates last quarter was one of the worst since the global financial crisis – but better days may lie ahead. According to the report, firms’ outlooks over the next three months improved for sales, profit margins, prices, employment and capital spending. At the same time, respondents report that last quarter was the worst since the global financial crisis for sales, prices, and capital spending. 

“While most respondents in April expected inflation-adjusted gross domestic product to contract from the first quarter of 2020 to the first quarter of 2021, two-thirds of panelists in the current survey expect an expansion from the second quarter of 2020 to the second quarter of 2021,” says NABE President Constance Hunter, CBE, chief economist, KPMG. 

“Firms have imposed a number of special measures to limit the negative financial impact of COVID-19 on their firms, including freezing hiring and terminating and furloughing employees,” says NABE Business Conditions Survey Chair Megan Greene, senior fellow, Harvard Kennedy School. "One in three firms has resumed normal operations, but nearly as many respondents say they don’t expect their firms to return to normal operations for more than six months. The vast majority of respondents anticipate COVID-19 will lead to more flexible hiring and work arrangements in the future, with 80% reporting their firms will continue to have some degree of remote working for employees post-crisis.”

Other highlights from the survey:

  • The panel’s consensus outlook for the U.S. economy, measured by year-over-year growth in inflation-adjusted gross domestic product (real GDP), improved considerably in July compared to that in the previous survey.
  • The Net Rising Index (NRI) for sales—the percentage of panelists reporting rising sales minus the percentage reporting falling sales—remains generally unchanged, falling one point to -14 from -13 in April’s survey.
  • Profit margins improved slightly in Q2 2020 but are still at historically low levels. The NRI for profit margins rose 4 points to -25, the second-lowest reading since 2009.

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