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Economic Barometer Newsletter

Optimism Remains Steady Among Washington-Area
Business Leaders  
Q2 Business Pulse Finds Broad Positive Outlook

Despite mixed economic signals such as a continued recovery and moderate job gains on the one hand, and soaring gas prices and international uncertainty on the other, Washington-area business leaders remain optimistic as they look forward to spring and the start of the region’s tourism season.

The Washington Business Journal Business Pulse, conducted by Widmeyer Research & Polling in association with the Greater Washington Board of Trade, finds that nine in ten (90%) of Washington-area business leaders are positive about the region’s economy as they prepare for the second quarter of 2004, and 85% say they are positive about their industry.

“The watchword for the quarter appears to be stability,” said Marty McGough, head of Research and Polling for Widmeyer Communications. “Last summer we were seeing some jitters out there. But those really died down at the end of the year, and this past quarter the vast majority of people did about as well or better than they expected they would. It looks like confidence is holding strong, and people seem to be expecting good news to outpace the bad over the next three months.”

“It’s very encouraging that the region’s business leaders continue to view their firms’ prospects – and the area’s business climate – so positively. The stable survey results over the past two quarters confirm that Greater Washington’s economy is a ‘good news’ story,” said The Hon. Togo D. West, Jr., Chair, Greater Washington Board of Trade and Of Counsel, Covington & Burling.

Key Findings: More Business Leaders Say that Sales
and Profits Will Increase

By more than a10-to-1 margin (64% vs. 6%), area business leaders say they expect sales revenues to increase in the coming quarter. Last quarter, 63% said they expected sales revenue to increase.

Local executives are optimistic that their companies will increase their profitability, not just their sales. By more than a 5-to-1 margin (52% vs. 9%), business leaders expect profits to increase – not decrease. Last quarter, 56% said they expected profits to increase.

About one-third of area companies (34%) are planning to add staff in the coming quarter and only 6% say they will reduce staff. Last quarter, 37% said they are planning to add staff.

One-third (34%) say that capital expenditures will increase, not decrease (11%). Last quarter, 34% said that capital expenditures would increase and 7% said they would decrease.

More than one-third (35%) say that advertising expenditures will increase, not decrease (5%). Last quarter, 34% said that advertising expenditures would increase and 6% said they would decrease.

By more than a 2- to-1 margin (30% vs. 12%), business leaders say their company performed better – not worse – than they expected. More than half (58%) said their company performed as expected.

More business leaders say the presidential election will have a positive, as opposed to a negative, impact on the region’s business. More than 4 in 10 (44%) say the election will have a positive impact and 24% say it will have a negative impact. Fourteen% said the election will have no impact at all.

Methodology: The study of Washington area business executives was conducted on-line. Subscribers to the Washington Business Journal were sent an invitation e-mail and directed to a Web site. A total of 231 business leaders, over half of them CEOs, CFOs or COOs, completed the study. Respondents represented all major sectors of the D.C.-area economy, including banking and finance, business services, energy, healthcare, high-tech, manufacturing, real estate, retail and restaurants, sports business and travel. The margin of error for the study is +/- 6.5% at the 95 th confidence interval level.

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