August 2011 Survey
Download full PDF of Survey
BACKGROUND AND OBJECTIVES
The annual Greater Reno-Tahoe Economic Outlook Business Survey has been conducted since 2004; prior to 2007 the study was called the Northern Nevada Business Outlook Survey.
The survey was originally designed jointly by EDAWN (Economic Development Authority of Western Nevada), the Reno Sparks Chamber of Commerce, InfoSearch International, and The Glenn Group. In 2009, the sponsorship of the survey shifted to the Center for Regional Studies at the University of Nevada’s College of Business in partnership with InfoSearch.
The questionnaire has been updated annually, including in 2009, to keep the content fresh and relevant. Twelve of the 26 current survey items date back to 2004 and have been retained to enable longitudinal comparisons. Other items have been added or revised over time to address key or emerging regional issues. The results of the six end- of-the-year surveys are detailed in this report.
The primary objective of the annual study has been to measure business leaders’ opinions about the regional business environment including existing and anticipated economic conditions, employment needs, and the advantages and challenges of conducting business in the Greater Reno-Tahoe area.
In 2009, questions were added to measure business leaders’ perspectives about topical issues such as digital media, health care legislation, the federal stimulus package, and carbon cap-and-trade legislation.
The annual study also includes the “Greater Reno-Tahoe Economic Outlook Index” – a summary indicator of business leaders’ perspectives of the outlook for the regional economy.
The 2009 online survey was sent to an email list of 1,990 senior-level
business leaders comprised of members of EDAWN, the Sparks Chamber of Commerce,
Nevada Business Connections, UNR Summit attendees, and city and county government
leaders in the region. It is possible that some of the initial recipients
may have forwarded the online survey invitation to other regional business
leaders. A total of 486 people out of the 1,990 (or more) responded to the
survey, for approximately a 24% response rate.
Additionally, 12 other regional business-oriented organizations (such as
the Builders Association of Northern Nevada, the Nevada Manufacturers Association,
and the Carson Valley Chamber of Commerce) were provided a link so that they
could directly email a survey invitation to their members. This shared link
accounted for 17 more respondents, to bring the total number of respondents
to 503 for the 2009 study.
Over 200 regional business leaders have responded
in each study year: 301 respondents in 2004, 391 in 2005, 305 in 2006, 281
in 2007, 235 in 2008, and, most recently, 503 in 2009. Factors that may have
contributed to the considerable jump in the number of respondents in 2009
include the shorter survey length, the change in sponsorship to the University
of Nevada, Reno, and/or the seriousness of the current economic conditions.
the Economic Outlook Survey has been an end-of-the-year study. Prior to 2009,
the online surveys were in the field in November and/or December to meet
a deadline for an economic forum. With the change in sponsorship, the 2009
survey was in the field from January 19 to February 4, 2010, after the 2009
Half the respondents (50%) identified themselves as either
the business owner (26%) or the President/CEO (24%). Additional titles of
respondents included executive (15%), manager/director (12%), partner (5%),
and other (7%).
In terms of geographic location, 62% of respondents reported
that their firm was in Reno, 18% in Sparks, 8% in Carson City, 9% in other
cities in the region (e.g., Dayton, Fallon, Gardnerville, Lockwood), and
3% in multiple cities in the region.
Overall Economic Outlook
- In 2009, the country was in the midst of a profound economic recession that has been described as the worst economic crisis since the Great Depression. It is not surprising then that the majority of business leaders (52%) characterized the overall economic conditions in the area as poor, with another third (33%) saying conditions were fair, and 13% saying they were very poor. Only 2% described the region’s economic conditions as good, and no respondent, out of 503 business leaders, said conditions were very good.
- About 9% of respondents indicated that overall economic conditions in the area had improved in 2009 over conditions in 2008, up from just 1% in 2008 who said they were better than in 2007.
- In 2009, nearly one-third of respondents (31%) indicated they expected overall economic conditions in the Greater Reno-Tahoe area to improve in the next 12 months, up from 19% in 2008 who anticipated improvement.
- In 2009, the Economic Outlook Index score (62.8) was higher than the 2008 score (45.7), yet was still below the 2007 score (70.1) and earlier scores.
- In other words, 2008 was when the economic outlook (looking forward to 2009) appears to have hit bottom, while 2009 appears to be when actual economic conditions may have hit bottom.
Impact of Recession
- In 2009, 36% anticipated that their firm’s revenues would increase during the next 12 months (up from 25% in 2008), while 21% anticipated that capital expenditures would increase (up from 11% in 2008).
- In 2009, about the same percentage of firms planned to increase facility size (10%) as planned to decrease facility size (11%).
- In 2009, 20% expected that their firm’s total number of employees in the area would increase during the next 12 months, while about the same percentage (21%) expected the total number to decrease. The primary reason to increase or decrease the total number of employees was a change in business activity. In 2009, 44% expected their firm to hire employees (for turnover or growth), similar to 45% in 2008. In 2009, more companies reported looking for sales/marketing staff than for any other type.
- Due to current economic conditions, nearly two-thirds of respondents (63%) reported that their firm had reduced travel outside the region, while half (52%) had cut back on the use of consultants.
- In 2009, the number one attraction to doing business in the area was the quality of life, while the number one challenge was increasing sales.
- In 2009, about two out of three respondents (64%) reported that their firm outsourced at least one business function. The two most common business functions to outsource were information technology and human resources/payroll.
- Seven out of ten respondents (70%) reported that their company currently uses one or more types of digital media; the most common type used was an e-blast (43%).
- Based on the health care legislation that was being considered at the time of the survey, the majority of business leaders (57%) expected the legislation to increase their company’s health care costs and over one-third (38%) expected it to increase their administrative costs.
- About one out of five respondents (21%) reported that their firm had benefited either directly (9%) or indirectly (12%) from the federal stimulus package.
- One out of four respondents (25%) indicated that they have a good understanding of the carbon cap-and-trade bill, 39% said they have a limited understanding, while 36% reported they have no understanding of the bill.
- About seven out of ten respondents (70%) reported that the availability of financing during the current economic recession has had some impact on their firm, primarily on their customers’ access to capital.
** please refer to the PDF downloads for more information
ECONOMIC OUTLOOK INDEX (EOI)
Greater Reno-Tahoe’s Economic Outlook Index (EOI) was designed to measure and track the change in the local economic outlook over time. The methodology used mirrors a national methodology and is based upon six components, which are scored as the percent giving favorable responses (e.g., “increased”), minus the percent unfavorable (e.g., “decreased”), plus 100. The total component score is the sum of the six components.
The EOI was established with the baseline 2004 survey at 100.0. Over time, the index goes up or down, based upon each time period’s total component score as a percentage of the baseline score. The economic outlook index appears it may have “hit bottom” in 2008, after four years of decline. This year, the index score (62.8) was higher than the 2008 score (45.7), yet still below the 2007 score (70.1) and earlier scores.
The change in the regional economic outlook roughly mirrors a national trend on expected economic conditions; some outlook or expectation scores dropped from 2007 to 2008 and then rebounded in 2009 on a national level as well. For example, the Conference Board’s Consumer Confidence Index reported a national consumer’s “Expectations Index” of 100.7, 92.6, 95.1, 85.2, 46.7, and 55.9 for approximately the same time periods, as shown in the chart below.