U.S. economic developers’ outlook of economy worsens

August 29, 2012

Austin, TX (August 29, 2012) – According to a bi-annual survey of 212 economic developers across the U.S. conducted in July 2012 by Avalanche Consulting, economic developers report that prospect activity (defined below) increased in the first half of 2012, but expectations are that activity will decline in the second half.

Manufacturing activity grew the fastest, which bodes well for the sector’s future of continued job creation.  Health Care Services and Warehousing / Distribution also posted large increases, which reflects the continued growth of these two sectors as a share of the U.S. economy.

Over half (58%) of economic developers believe the national economy is in poor or very poor condition.  This reflects a reversal of improvements seen in survey responses six months ago, when sentiments in January were more positive after significant negativity during the summer of 2011 when the budget crisis occurred.

The perception of federal government policies also worsened.  A majority of economic developers (72%) believe federal policies are currently poor, an increase from 58% in the January survey and a near return to the negativity recorded in the summer of 2011.  Over half (54%) of economic developers still view their local economic policies favorably.

Definition of Prospect Activity

Prospects are companies that are considering an expansion/relocation and are competitively evaluating multiple cities as part of their decision.  Economic development organizations often assist these companies with their information needs, site and building search, workforce assessments, and/or financing and incentives.  Prospects are flagged as various types as they move through the decision process:

Lead – A company makes an initial request for information or indicates that an expansion/relocation decision process has begun.

Prospect – A formal “Request for Proposals” is usually sent, which includes the requirements for the project expansion/relocation.

Visit – A community is short-listed and company representatives visit multiple communities to gather and confirm information.

Announcement – A company makes a decision and issues a public statement announcing the winning community for the company’s expansion/relocation.

The survey also asks economic developers to indicate whether “Startups/Ventures” and “Closures/Layoffs” increased or decreased.

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The Economic Developers Index is a bi-annual survey of U.S. economic developers to gauge changes in prospect activity and perceptions of the economy.  While other surveys exist to measure sentiment of businesses or consumers, this survey is focused on economic developers, who have unique insights on the future of job creation in U.S. communities.

In July 2012, 212 qualified responses were collected for the survey, which was the 8th consecutive survey conducted.  The survey is done by Avalanche Consulting as a free service to the economic development community.  Only survey respondents and the media are provided copies of the complete report.

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