Washington lawmakers have 25 days to come up with a compromise or plunge the country over the fiscal cliff. The lack of a deal with less than four weeks left until the year-end deadline has caused industry groups to become vocal about the uncertainty over the country’s future tax structure and the starkly negative impact on manufacturing.
In survey results released yesterday, the National Association of Manufacturers (NAM) demonstrated the increase of pessimistic perspectives on the fiscal cliff among manufacturers. The NAM/IndustryWeek Survey of Manufacturers showed a considerable downward trend in many manufacturing factors over the course of 2012.
The survey revealed only 51.8 percent of responding manufacturers were somewhat or very positive about company outlook, compared to 88.7 percent saying the same thing in first-quarter 2012 — a 37.1 percent drop. Manufacturers holding an actively negative view rose to 39 percent, a six-month high.
Expectations for sales growth percentage on a year-over-year basis dropped from 4.7 percent more sales in the first quarter to just 1.0 percent in additional sales in this survey.
This quarter’s survey included some special questions for respondents designed to gauge industry opinions of the election results, the fiscal cliff and future debt ceiling issues.
“One thing was certain: businesses are highly skeptical that Washington will be able to address the nation’s long-term fiscal challenges,” IndustryWeek announced in its summary of the survey. Almost 75 percent of respondents said the election made them less optimistic for a deal, with about 28 percent fearing the cliff will not be avoided. Almost 16 percent were unsure if the cliff could be averted.
Additionally, fiscal cliff fears, articulated in the survey as “the prospect of higher taxes and reduced spending,” were cited by 62.9 percent of respondents as the reason behind their decision to reduce their business outlook. These same reasons caused 42.6 percent to reduce or slow business investment and 36.2 percent to reduce employment or stop hiring. Additionally, nearly 89 percent of manufacturers declared “a long-term budget deal that tackles the deficit and debt” as their top-priority wish with President Barack Obama and the new Congress. Following this, 82.1 percent of manufacturers hoped Washington would slow the growth of entitlements and 75.5 percent wanted lawmakers and the president to make a deal to avoid the fiscal cliff.
The NAM/Industry Week Survey of Manufacturers is a quarterly survey of 440 manufacturers from a variety of industries. To view the full survey results, click here.