Entrepreneurship in Alabama at All-Time High

• May 22nd, 2023

TUSCALOOSA, Ala. — Small business entrepreneurship is healthy in Alabama, according to an analysis of websites registered with a popular web hosting platform. 

To better understand the nuances of Alabama’s entrepreneurial ecosystem, Dr. Nyesha Black, director of demographics for The University of Alabama’s Center for Business and Economic Research, partnered with GoDaddy’s Venture Forward research initiative to analyze new data from a recent study and found entrepreneurship is at an all-time high in Alabama. 

In Alabama, Venture Forward estimates that there are over 150,000 online ventures — businesses with GoDaddy-registered domains and active websites. Most of the ventures are microbusinesses with fewer than 10 employees. 

GoDaddy is an internet domain registration and web hosting company, and Venture Forward quantifies the economic impact made by entrepreneurs by providing insight into their needs, demographics, challenges and behaviors. 

“Technology reduces the barrier of entry into entrepreneurship in the digital space,” Black said. “It became increasingly important for me to quantify the impact these entrepreneurs have on Alabama’s communities and economy. Through our partnership with Venture Forward by GoDaddy, I hope to attract the attention of local decision-makers willing to act and support these entrepreneurs and further the case to increase broadband access and speed across the state.” 

Since the onset of COVID-19, new businesses started at an increased rate across the country. Venture Forward research finds the same phenomenon in Alabama. Key findings from the study include:  

• About one out of 10 microbusinesses want to grow into a corporation with a large employee base or a billion-dollar-valued company.  
• Gen Z and Millennial entrepreneurship rates nearly doubled when compared to pre-pandemic rates from 23% at the start of 2020 to 43% in 2023.  
• Among this new class of entrepreneurs in Alabama, Black entrepreneurs lead the charge as a fast-growing demographic across the state, currently at 30% of all Alabama online microbusinesses as of January 2023. 
• When asked about the rationale behind launching their business, Alabama respondents’ top three answers were to support a cause or hobby, be their own boss, and make extra money. 

“Studying Alabama’s online microbusiness we were able to uncover new insights about these local entrepreneurs,” said Alexandra Rosen, senior director of Venture Forward. “The strong growth in numbers statewide, including the increasing diversity of business owners and the unique agility to launch an online venture with less than $5,000, stood out when analyzing Alabama’s economy.” 

To learn more about Venture Forward’s partnership with The University of Alabama and Dr. Black and to view the full results of the Alabama survey, please visit the Venture Forward site. 

•  Business & Economics, Culverhouse College of Business, Research

The University of Alabama, part of The University of Alabama System, is the state’s flagship university. UA shapes a better world through its teaching, research and service. With a global reputation for excellence, UA provides an inclusive, forward-thinking environment and nearly 200 degree programs on a beautiful, student-centered campus. A leader in cutting-edge research, UA advances discovery, creative inquiry and knowledge through more than 30 research centers. As the state’s largest higher education institution, UA drives economic growth in Alabama and beyond.

Q2 2023 Business Confidence Remains Negative

• April 18th, 2023

Business leaders throughout Alabama still have an overall mildly negative forecast for Q2 2023, according to the latest Alabama Business Confidence Index (ABCI) survey. This is the fourth consecutive quarter that the index has been negative, though it is slightly less negative than last quarter’s ABCI. Business confidence has been declining since Q4 2021, but interestingly, the highest and lowest component indexes have been consistent these last seven quarters: hiring has been the highest index and is the only index to remain positive the entire time, and the US outlook has been the lowest index, consistently registering more than 10 points below the other indexes.

On the ABCI website, you can view the detailed ABCI metro reports for Birmingham-Hoover, Huntsville, Mobile, Montgomery, and Tuscaloosa; the full statewide report that includes an overview for Alabama and the ABCI broken down by industry and firm size; and access historical data. Read on for an overview.

CBER’s forecasters are anticipating very mild growth in 2023, with a 0.5-percent increase in Alabama GDP for 2023. Though positive, it is a slower rate of GDP growth than seen in 2021 (5.1 percent) and 2022 (1.6 percent). Alabama employment growth is expected to plateau in 2023, only growing by about 0.3 percent. Total tax receipts are forecast to grow by 5.3 percent in FY2023. While this is more growth than predicted for GDP and employment, it is still a notable decrease from last year’s 15.2-percent.

The forecasts from the metro areas ranged from moderately negative to mildly positive in the Q2 2023 survey. Business leaders in Huntsville had the highest ABCI at 52.0, making them the only metro with a positive outlook for the quarter. Mobile was not far behind, though, with a neutral ABCI of 49.6. Tuscaloosa had mild confidence in their negative forecast (45.7), which was tempered by mildly positive forecasts for industry sales and hiring. Montgomery and Birmingham–Hoover had the lowest ABCIs for the quarter at 43.8 and 43.0, respectively, with all of their component indexes registering at or below the neutral 50.

The industry index, which only includes panelists’ forecasts for their own industry sales, profits, hiring, and capital expenditures, ranged from mildly negative to moderately positive in the Q2 2023 survey. In Q2 2023, panelists in professional, scientific, and technical services and construction are continuing to forecast growth with mild confidence, but they are also joined by “All Other Services” and manufacturing, whose indexes grew significantly from Q1 2023 to reach moderately high levels of confidence in their positive outlook.

Though it remained negative, the index for retail trade had the highest increase from last quarter growing 9.4 points from its very negative Q1 2023 index to reach a moderately negative 43.8. Expectations for hiring in retail are positive, but business leaders in the industry are forecasting decreased capital spending with very strong confidence in Q2 2023. The outlook from business leaders in finance, insurance, and real estate was the lowest industry index for the quarter at a moderately negative 42.6. This was the only industry category to have negative forecasts for all of the component indexes.

Though the ABCIs by firm size all remained below 50, there were varied levels of confidence in the forecasts for the component indexes. Midsize firms, those with 20 to 99 employees, had the highest Q2 2023 ABCI which increased 6.8 points to reach an almost neutral 49.5 for the quarter. This comes after three quarters of the midsize ABCI being the lowest industry firm ABCI. Small firms, those with up to 19 employees, had a mildly negative ABCI of 48.8 for the quarter. Large firms had the lowest ABCI of the three groupings at a mildly negative 46.7, which is only 0.1 points above the Q1 2023 large firm ABCI, indicating a continuation of last quarter’s forecasts.

This makes 86 consecutive quarters that the Center for Business and Economic Research in UA’s Culverhouse College of Business has measured sentiment about the economy and industry prospects in the state. If you are a business leader in the state, be sure to do your part by registering to be an ABCI panelist and contributing to this unique forecasting tool in the Q3 2023 survey from June 1-17.

You can view past and current reports by clicking on the buttons above or following this link: https://cber.culverhouse.ua.edu/alabama-business-confidence-index/.

CBER’s Socioeconomic Analyst has been Elected to SDC Steering Committee

• March 22nd, 2023

We are excited to announce that CBER’s Socioeconomic Analyst, Susannah Robichaux, has been elected to the State Data Center (SDC) Steering Committee!

The SDC program is one of the Census Bureau’s longest and most successful partnerships. This partnership between the 50 states, the District of Columbia, Puerto Rico, the island areas, and the Census Bureau was created in 1978 to make data available locally to the public through a network of state agencies, universities, libraries, and regional and local governments. CBER has been the lead agency for the Alabama State Data Center (ASDC) since its inception in 1978.

The SDC Steering Committee consists of nine members, elected to represent the 56 states and territories in the State Data Center Program. These members advise the Census Bureau on the administration of the SDC Program; assist the Census Bureau with its surveys and programs; work with the Census Bureau to plan and conduct the Annual Training Conference; and help to improve the flow of information and ideas among member agencies and between member agencies and the Census Bureau.

Congratulations, Susannah!

Culverhouse Associate Dean Appointed to Branch of Atlanta Federal Board

• March 15th, 2023

Dr. Samuel Addy, associate dean for economic development outreach in the Culverhouse College of Business and senior research economist for the Center for Business and Economic Research, was appointed to fill out the remaining year of term on the board of directors of the Birmingham Branch of the Federal Reserve Bank of Atlanta.

“A key focus of our outreach efforts within the Culverhouse College of Business are those that make a positive impact on society and the greater community, and many of those efforts are led by Dr. Addy,” said Culverhouse Dean Kay Palan. “Dr. Addy’s appointment to the board is reflective of the important work he does here, and I look forward to the results of his contributions.”

Going forward, Addy will be eligible for two, three-year appointments on the seven-member Birmingham board.

“This is a win-win situation for the College of Culverhouse and UA,” Addy said. “This role will allow the opportunity to enhance and expand the positive impact our economic outreach at UA has on the state and beyond.”

The Federal Reserve System is overseen by a national Board of Governors who work with the 12 Federal Reserve Banks across the country that have a board of directors, and most have branch banks with individual boards of directors.

Directors provide a link between the system and the public, and their insights help to inform national monetary policy. In addition, directors perform an important corporate governance function for their respective reserve banks. They are expected to contribute to the Fed’s understanding of the economic conditions of their district and the effect of those conditions on the economy. Directors should be familiar with the economic and business community of their region.

Addy has worked with the Atlanta Fed and its Birmingham branch over the years, providing economic data and forecasting as well as information on workforce and business surveys from CBER.

The Atlanta bank’s focus on rural economic development within the six Southeastern states in its district will be an area Addy hopes to learn from and contribute to by relying on UA’s deep ties to the area.

“The breadth of what we do here at UA regarding economic development, particularly in rural areas, is highly visible, and I believe that is a big reason why I was appointed,” he said.

Addy has served in his current roles since 2015, but was previously associate dean for research and outreach from 2011 through 2015, the executive director of the Center for Business and Economic Research from 2007 to 2015, and has held various other leadership roles at the university since 1998.

He is a member of the Alabama Economics Club, University Conflict of Interest Committee at the University of Alabama, International Association for Energy Economists and the American Economic Association.

He earned his doctorate in mineral economics from Pennsylvania State University, his master’s degree in mineral engineering from the University of Minnesota, and a bachelor’s degree in metallurgical engineering from the University of Science and Technology in Kumasi, Ghana.

•  Awards & Honors, Culverhouse College of Business, Faculty & Staff

The University of Alabama, part of The University of Alabama System, is the state’s flagship university. UA shapes a better world through its teaching, research and service. With a global reputation for excellence, UA provides an inclusive, forward-thinking environment and nearly 200 degree programs on a beautiful, student-centered campus. A leader in cutting-edge research, UA advances discovery, creative inquiry and knowledge through more than 30 research centers. As the state’s largest higher education institution, UA drives economic growth in Alabama and beyond.

CBER’s Director of Socioeconomic Analysis & Demographics to Present at Auburn Outreach Retreat Experience

• March 8th, 2023

CBER’s Director of Socioeconomic Analysis and Demographics, Dr. Nyesha Black, will be a presenter at the Auburn University Outreach Retreat Experience on March 22, 2023. Dr. Black will provide an overview of Alabama’s historical demographics and share her projections for what the future might hold for Alabama’s populations.

You can read more about Dr. Black’s analysis of microbusinesses and digital entrepreneurship in Alabama in the 2023 Alabama Outlook or in her 2020 presentation at the Booker T. Washington Summit. If you are interested in having Dr. Black speak at your conference, meeting, or other event, please do not hesitate to reach out to her at ncblack@cba.ua.edu.

Negative Business Confidence in Q1 2023 ABCI

• February 6th, 2023

Business confidence throughout the state remained mildly negative in the Q1 2023 Alabama Business Confidence Index (ABCI) survey. With over 60 percent of panelists forecasting worse conditions, the outlook for the US economy was the lowest for the quarter at 34.4. This quarter, the indexes for all of the industry categories fell: industry profits and capital expenditures are expected to decrease with mild confidence while sales are forecast to continue at the same rate as last quarter. Industry hiring was the only positive index for Q1 2023 with a mildly positive index of 53.6, with 34 percent of panelists anticipating an increase in their hiring compared to Q4 2022.

CBER’s forecasters expect very mild growth in 2023. The rebound of Alabama GDP is slowing, with only a 0.1-percent increase expected this year, and employment in the state is forecasted to remain somewhat stable and only decrease by 0.3 percent. Despite that, CBER anticipates significant growth in the Alabama tax receipts due to strong consumer spending.

The ABCIs for Alabama’s metro areas are all below 50 this quarter, but level of confidence in those forecasts varied. Huntsville had the highest ABCI at a mildly negative 47.9, followed closely by Mobile at 47.0. Both metros had moderately confident hiring indexes, which set them apart from the other metros. Tuscaloosa had an ABCI of 45.6, with neutral expectations for sales and hiring. Birmingham-Hoover and Montgomery had the lowest ABCIs of 43.5 and 42.9, respectively. The indexes in these metros were all mildly to strongly negative, with the exception of Montgomery’s mildly positive hiring forecast.

Panelists in professional, scientific, and technical services had the highest industry index at a moderately positive 55.9, with strongly confident expectations for increased sales and hiring compared to the previous quarter. Business leaders in construction are also forecasting increased hiring and sales, though with milder confidence, leading them to be the only other group to have a positive industry index at 52.5. Five of the nine industry groups still have positive expectations for hiring in Q1 2023, but most industries are forecasting decreased profits and capital spending compared to their Q4 2022 levels.

All three firm size groupings had negative ABCIs in the Q1 2023 survey. Midsize firms, those with 20 to 99 employees, had the lowest ABCI at a moderately negative 42.7, while the ABCIs for small firms, those with up to 19 employees, and large firms, those with 100 or more employees, were only mildly negative. This is the third consecutive quarter that the midsize firms have had a lower ABCI than their counterparts. Midsize firms had the lowest values for all of the component indexes in the Q1 2023 survey except hiring, where their moderately positive index of 55.1 was the most confident of all the groupings’ forecasts.

The ABCI is an initiative of the Center for Business and Economic Research located in the Culverhouse College of Business, The University of Alabama. This makes 85 consecutive quarters that the Center for Business and Economic Research in UA’s Culverhouse College of Business has measured sentiment about the economy and industry prospects in the state. Be sure to do your part by contributing to this unique forecasting tool in the Q2 2023 survey on March 1-17. You can view past and current reports by clicking on the buttons above or following this link: https://cber.culverhouse.ua.edu/alabama-business-confidence-index/.

UA Economists: State Economy to Shrink Slightly in 2023

• February 6th, 2023

TUSCALOOSA, Ala. – Alabama’s economy will likely contract in 2023, but just barely, according to researchers at The University of Alabama.

Persistent inflation, labor shortages, lingering supply chain bottlenecks and international effects from the war in Ukraine will continue to drag national and state economic growth, according to the annual economic forecast from the Center for Business and Economic Research at UA.

Alabama’s economic output is projected to decrease 0.1% this year, a smidge better than the possible 0.2% slowdown projected for the United States in the report. The slight economic slowdown for the state comes after mild 1.3% growth in 2022 and stellar 5.1% in 2021 as the economy shook off the 3.2% pandemic-induced contraction in 2020.

“The economy, at some point, will slow down,” said Ahmad Ijaz, CBER executive director and director of economic forecasting. “Even if we go into a recession, it is only expected to be a mild one, hopefully, but that can change.”

Key to the essentially flat growth projection for this year is the possibility the Federal Reserve will be able to avoid an economic recession while raising interest rates, the so-called “soft landing” for the economy.

“Looking at the current data, it is very likely that the Fed will be able to engineer a soft landing as long as the consumers spending continues to grow,” Ijaz said.

Part of the Culverhouse College of Business, UA’s Center for Business and Economic Research has produced forecasts of economic activity in Alabama since 1980. These forecasts cover Alabama’s Gross Domestic Product, employment, and income by industry group and are published in the annual Alabama Economic Outlook. Forecast updates are run quarterly. The center incorporates data from the last 30 years, including cycles and recoveries captured over the years, into its statistical and economic models.

Along with annual dives into the national and state economy, including examinations of metro areas in Alabama, this year’s outlook includes a special look at the growth and challenges facing e-commerce and digital entrepreneurship in Alabama.

The 2022 Alabama Economic Outlook, available for free on the center’s website, reports consumer spending should grow at a modest pace as pandemic-era savings dwindle and interest rates eventually dampen the American consumer.

Sectors tied heavily to interest rates such as housing are likely already in a recession, which points to an uneven economy across industrial sectors. Agricultural, forestry, fishing and hunting should experience growth in Alabama along with several manufacturing sectors such as automobile manufacturing.

However, as long as consumers and businesses keep spending, the outlook for state taxes remains good, even if not as flush as the past two years, Ijaz said.

• Business & Economics, Culverhouse College of Business, Research

The University of Alabama, part of The University of Alabama System, is the state’s flagship university. UA shapes a better world through its teaching, research and service. With a global reputation for excellence, UA provides an inclusive, forward-thinking environment and nearly 200 degree programs on a beautiful, student-centered campus. A leader in cutting-edge research, UA advances discovery, creative inquiry and knowledge through more than 30 research centers. As the state’s largest higher education institution, UA drives economic growth in Alabama and beyond.

State Business Leaders Still Sour on Economy – Q4 2022 ABCI Results

• October 25th, 2022

TUSCALOOSA, Ala. – For the second consecutive quarter, state business leaders have a negative outlook on the economy, according to the latest quarterly survey by The University of Alabama.

The UA Center for Business and Economic Research’s latest Alabama Business Confidence Index, taken in early September, remains slightly negative following a similar outlook in the snapshot taken over the summer, the first negative outlook for the economy since early 2013.

“Panelists are still forecasting worse economic conditions in the U.S. with very strong confidence, in contrast with their more positive expectations for growth in industry hiring, sales, and capital expenditures,” said Susannah Robichaux, socioeconomic analyst for CBER.

The Alabama Business Confidence Index was 48.4, up slightly from last quarter, and marks the first time the index hasn’t dropped in a year. An index over 50 indicates a positive forecast compared to the previous quarter, and the closer the number is to 100, the more confident the forecast.

ABCI is gathered from a broad group of business executives across the state with six key indicators and a composite index. The statewide and national forecasts, along with industry-specific components like sales, profits, hiring and capital expenditures comprise the six indexes that combine to make the ABCI total.

Panelists continue to be more negative about the U.S. economy than the state’s economy, registering a 34.6 confidence index nationally and a moderately negative 46.3 index for Alabama. Still, those were greater than indices from last quarter.

Earlier this year, CBER economists had predicted Alabama’s economy would grow about 3% in 2022, but have since revised that outlook to 1.8% growth.

The report also breaks down responses from nine industry groups surveyed. The healthcare and social assistance industry, in stark contrast to the last two quarters, had a positive outlook, registering a 50.6 index. In the past two quarters, this industry had the most negative outlook out of all sectors.

“Panelists in the industry are optimistic that they will have increased hiring, sales, and profits, indicating expectations for a rebound from their two quarters of depressed forecasts,” Robichaux said.

Firms of all sizes had mildly negative outlooks for their companies.

“Panelists in large firms are forecasting growth in all of the industry components, while small firms had a negative profits index counteracting their optimism for sales, hiring and capital expenditures,” Robichaux said. “Mid-sized firms are still anticipating increased hiring in the fourth quarter of 2022, but the rest of their component indexes were negative.”

The breakdown of all the industry forecasts by sector can be seen in the statewide ABCI report on CBER’s website.

In addition to the statewide ABCI report, CBER also collects ABCI data to write individual reports for Alabama metro areas. These metro reports offer insight into the forecasts for each specific region. Interestingly, the business leaders in Tuscaloosa are feeling most confident of the three metro areas represented in the latest survey that included Huntsville and Birmingham.

Source: Susannah Robichaux, socioeconomic analyst for CBER, scrobichaux@cba.ua.edu

Press release written by Adam Jones, UA Strategic Communications.

U.S. Inflation Rate

• June 13th, 2022

U.S. inflation rate, as measured by consumer price index rose by 1.0 percent in May, as the year-over-year change accelerated to 8.6 percent, the highest level since December 1981. Price increases were mainly driven by shelter, gasoline and food.  Core CPI, which excludes food and energy rose 0.6 percent in May for an annual rate of 6.0 percent.

For a complete report go to:  https://www.bls.gov/news.release/pdf/cpi.pdf

U.S. Economy Posts Solid Jobs Growth in May

• June 6th, 2022

Total nonfarm payroll employment rose by 390,000 in May, according to the U.S. Bureau of Labor Statistics. Notable job gains occurred in leisure and hospitality (84,000), but still down by 1.3 million or 7.9 percent from February 2020; professional and business services (75,000), higher by 821,000 than in February 2020; transportation and warehousing (47,000); construction (36,000); healthcare (28,000); and manufacturing (28,000). Employment in retail trade was down by 61,000 in May.

In May, the unemployment rate was 3.6 percent for the third month in a row, and the number of unemployed persons was unchanged at 6.0 million. Prior to the COVID-19 pandemic in February 2020, the unemployment rate was 3.5 percent with 5.7 million unemployed.

For a complete report go to: https://www.bls.gov/news.release/pdf/empsit.pdf