New Jersey’s economy continues to improve, but we still have a long way to go to reclaim our pre-recession status. That’s the message of NJBIA’s latest Business Outlook Survey of member companies and what they predict for 2015. In short, most member companies are feeling pretty good about themselves. The results of our latest member poll remain among the strongest of the last decade. But how long is the status quo sustainable, and what do we need to help businesses move into growth mode?
First, the good news. When it comes to their own businesses, most companies expect things to improve or at least stay the same in 2015 in terms of sales, profits and employment. More expect to increase their profits and sales than expect to see a reduction, and more expect to hire workers than to downsize.
Even more significantly, we are now seeing multi-year positive trends. For the last three years, about half of the members surveyed expected sales to improve over the previous year, compared with about one in five who expected sales to drop. Not only are the predictions optimistic, but the actual results are positive as well. Nearly half the companies surveyed said sales in 2014 were higher than in 2013. It’s the second year in a row more companies saw sales increase over the previous year, than those who said sales declined. Similar trends were spotted in actual employment and profit results.
Where member companies show less optimism is in decision making that lies outside the control of their individual businesses. Only three in 10 companies expect economic conditions in the US to improve in 2015. For New Jersey’s economy, just as many companies expect things to regress as expect things to improve, although half of those surveyed expect conditions to stay the same. It is important to note that these are still some of our best numbers in the last 10 years.
Closer to home, our survey results offer New Jersey policymakers plenty of opportunities to improve the business climate. Take taxes, for instance. The Governor and Legislature enacted bi-partisan business tax reforms in 2011 – reforms that NJBIA had advocated for years. Legislators even resisted the urge to roll them back during uncertain budget periods. That’s a big deal! But New Jersey’s business tax climate, including corporate, property and income taxes, remains one of the most challenging in the nation and leaves us at a competitive disadvantage with our neighboring states.
In its latest position paper, NJBIA’s research affiliate, NJPRO Foundation, explained how New Jersey is an extreme outlier in “death taxes,” as one of only two states with both an inheritance tax and an estate tax. These twin taxes are a major consideration when family-owned businesses decide whether or not to stay in the state and in decision-making regarding the future of their business.
Business confidence affects all aspects of decision-making; the size of payroll raises and training expenses, investments in growth and expansion and how aggressive to be in marketing. Uncertainty causes companies to be more conservative, which in turn contributes to economic stagnation.
For economic growth that is more sustainable, New Jersey businesses need a rallying point; a reason to be more positive beyond 2015. State government can help by being more balanced on businesses’ tax obligations, curbing mandates, continuing to cut red tape and enabling responsible growth. Businesses drive economic growth, and making them and New Jersey more competitive benefits everyone.