Tuscaloosa Metro Area Report

Alabama Business Confidence Index™

First Quarter 2023

Neutral and Negative Forecasts from Tuscaloosa Businesses

Tuscaloosa’s ABCI registered at a mildly negative 45.6 in the Q1 2023 survey as business leaders anticipate a slower economic performance compared to last quarter. This is 8.4 points below Q4 2022’s mildly positive outlook. Metro business leaders are most pessimistic in their outlook for the US economy, which had the lowest component index by far. The forecasts for the Alabama economy, as well as industry profits and capital expenditures, were negative with moderate confidence, while industry hiring and sales had neutral indexes around 50, communicating expectations for a continuation of last quarter’s levels.

Index above 50 indicates positive outlook as compared to last quarter.
Index below 50 indicates negative outlook compared to last quarter.

Tuscaloosa Component Index Analysis

• Alabama Economy: The metro’s economic index for Alabama is moderately negative this quarter at 45.3. This is 7.2 points below Q4 2022’s mildly positive index and indicates expectations for a contraction in the state’s economy in Q1 2023.
• US Economy: This quarter, Tuscaloosa’s business leaders continue to have a very strongly negative outlook on the U.S. economy with an index of 38.0, which is 4.5 points below Q4 2022’s index. This is the fifth consecutive quarter that this index has been negative, indicating sustained pessimism about the country’s economic conditions.
• Industry Sales: Metro business leaders are forecasting a continuation of last quarter’s sales conditions with a neutral index of 50.5, after a 7.6-point decrease from Q4 2022. It is the metro’s highest index this quarter, with panelists pretty evenly divided in their forecasts for sales in Q1 2023 compared to Q4 2022.
• Industry Profits: Tuscaloosa’s industry profit’s index is moderately negative this quarter at 45.3 after an 8.5-point decrease from Q4 2022, indicating expectations for decreased profits this quarter.
• Industry Hiring: About 30 percent of area business leaders expect to increase hiring in Q1 2023, while 31 percent will decrease compared to last quarter. This has led to a neutral index of 49.5 for the quarter, which is 10.5 points below the Q4 2022 levels.
• Industry Capital Expenditures: The metro’s capital spending index decreased a dramatic 12.1 points to register at a moderately negative 44.8 in Q1 2023.

ABCI Tuscaloosa in Context

In the Q1 2023 ABCI, Tuscaloosa business leaders are forecasting a slight contraction compared to Q4 2022 with a moderately negative ABCI of 45.6. After the initial dip below 50 in Q3 2020 at the start of the \textsc{covid}-19 pandemic, Tuscaloosa’s ABCI rebounded fairly strongly, with moderate to strong confidence from Q2 2021 to Q1 2022. In the four quarters since then, the metro’s business confidence has oscillated between mildly positive to moderately negative from quarter to quarter. These ups and downs have been largely due to panelists’ alternating industry forecasts, since the US economic outlook index has remained consistently negative the entire time.

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.

The Center for Business and Economic Research would like to thank the Alabama business executives who completed the first quarter 2023 ABCI™ survey. This is the 85th consecutive quarter this report has been recorded, and it would not have been possible without your participation.
Be sure to log in during the March 1–15 survey window to record your opinions about economic prospects and industry performance looking ahead to the second quarter of 2023.

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This report was produced in partnership between the Center for Business and Economic Research at the The University of Alabama’s Culverhouse College of Business and the Chamber of Commerce of West Alabama.

Analysis provided by Susannah Robichaux, Socioeconomic Analyst, Center for Business and Economic Research, Culverhouse College of Business, The University of Alabama.