As we come to the end of January 2009, with President Obama in office and stimulus packages as well as bailouts well under way, everyone is anxious to see the first effects. Industry experts’ outlook however, is grim, and things look like they will get worse before they get better.

“NABE’s January 2009 Industry Survey depicts the worst business conditions since the survey began in 1982, confirming that the U.S. recession deepened in the fourth quarter of 2008,” said Sara Johnson, IHS Global Insight.  “The survey’s measure of demand fell to its lowest level in the history of the survey. Looking ahead to 2009, respondents grew more pessimistic about U.S. economic growth. Over half expect real GDP to fall by more than one percent this year, and only three percent project growth of over one percent.  Falling profit margins outnumbered rising margins five-to-one among respondents’ firms—the worst reading since 1982. Job losses accelerated in the fourth quarter, and the employment outlook for the next six months has weakened further. With market prospects deteriorating, firms slammed the brakes on capital spending in the fourth quarter of 2008; the percentage of firms reducing capital expenditures (38%) was the highest in the history of the survey.”

80 per cent of firms confirmed slowing demand, making it the worst figures in 26 years:

Demand for goods and services increased at just 20% of respondents’ firms last quarter, the lowest percentage since the survey began in 1982. Demand fell at 47% of respondents’ firms, an all-time high. This confirms that the U.S. recession that began at the end of 2007 worsened significantly in the fourth quarter of 2008. Demand weakness was pervasive across sectors, but was especially pronounced in the goods-producing sector, where 79% of firms reported declining demand.

Nearly 80 per cent expect U.S. real GDP to decrease, again the worst outcome in 26 years:

Respondents continued to grow more pessimistic about the macroeconomic outlook. Seventy-eight percent of respondents expect U.S. real GDP to be lower in 2009 than in 2008. 

52 per cent see profits dropping, the worst in 26 years:

Rapidly deteriorating global market conditions are hammering business profits. For the fourth consecutive quarter, reports of falling profit margins (52% of respondents) outnumbered reports of rising margins (10%). This was the worst result since the spring of 1982.

Over 80 per cent have cut jobs, or foresee job cuts or payroll reductions:

Job losses accelerated in the fourth quarter, producing the worst survey result in 17 years. Some 44% of firms cut payrolls, while only 14% added workers. Looking ahead, 39% of companies plan to reduce payrolls over the next six months, while 17% plan to increase employment. Only the services sector continues to create jobs.

The trend throughout the survey reports are negative and plans for the near future are mainly focused on expecting worse conditions and adapting spending, investment, capital growth amongst other elements. As banks close the credit tap, businesses and consumers feel the effect:

Tight credit market conditions continue to impair the performance of the economy. Fifty-two percent of respondents indicated that the tightening of credit conditions has moderately or severely affected their businesses, while 78% reported that credit conditions have adversely affected their customers.

NABE industry members can read the full survey report here. It doesn’t take an economist to see that these results indicate a pretty clear picture of what this current recession means for the U.S. businesses and consumers. It is going to get worse, before it is going to get better.