National Association for Business Economics Industry Survey: A Significant Downshift – October 2008 – Summary

• “Demand for goods and services increased at 30% of respondents’ firms and fell at 35%, the first time since 2001 that more respondents reported declines than increases. This is consistent with other evidence that the U.S. economy fell into a recession in the third quarter. Weakness was especially pronounced in the goods-producing sector, where only 6% of firms reported increased demand while 61% reported declining demand.
• Respondents to the October survey were significantly more pessimistic about the macroeconomic outlook than they were in the July survey. A full 38% of respondents expect U.S. real GDP to be lower in 2009 than in 2008, and 79% expect growth of less than 1%. Only one respondent expects growth of more than 3% in 2009. Ninety percent of survey panelists said their forecast for 2009 became more pessimistic between July and October, compared to only 2% who said they became more optimistic. Thirty-eight percent became significantly more pessimistic, reflecting the deterioration in financial markets that occurred in September and October.”
• Tight credit market conditions appear to be having a growing impact on the economy. Forty-eight percent of respondents indicated that the tightening credit conditions had had a moderate or severe negative impact on their businesses, while 71% reported that credit conditions had had a moderate or negative impact on their customers. Slightly more than one-third of respondents stated that actions by the Federal Reserve of either lowering interest rates or liberalizing credit access had a positive effect on their business, with the finance sector experiencing the greatest impact.”
• Related postings on financial system