Eveline Lewis is the business department chair at Evangel University, where she’s taught since 2012. Previously, she worked and studied in China and the Philippines, and holds a doctorate in business administration from Anderson University in Indiana, as well as an MBA from Baylor University in Texas. Her expertise is in global management.
SBJ: Springfield Business Journal’s 2021 Business Confidence Index is at 147.3, the highest level in the three years readers have been surveyed. Why do you suppose local confidence is so high? (The 2019 BCI was 146.1, then post-pandemic BCI in 2020 was 81.7.) Do you think the current confidence is real or reflects hopeful expectations?
Lewis: The high level of confidence reflects the high expectations in the immediate future. Scholars generally agree that the index characterizes the economic activity efficiency as well as the economic development prospects. The index is associated closely with the concept of economic cycles, therefore we can see that we are expecting an economic boom after the pandemic. The latest data from Organisation for Economic Co-operation and Development, in May, shows that BCI for the U.S. as a country is at 101.9. Anything above 100 suggests an increased confidence in future performance. Locally, our confidence is higher than the national level. This shows we have higher expectations in the industrial, construction, retail and service sectors, as well as the economy as a whole, in our area as we recover from the dip due to the pandemic. This high expectation is understandable as people have started to go back to work, eat out, travel and do other economic activities that increase the demand for products and services.
SBJ: Are there certain business and/or consumer behaviors influencing this more than usual?
Lewis: We have faced an unprecedented challenge this past year and a half, but we are resilient, and we can adapt to a new normal. One aspect of this new normal is remote working. A Harris Poll survey suggests that more Americans will work remotely and will move to less densely populated areas in the aftermath of the pandemic. Companies have also changed their approach in having employees in the same office space; some companies even compensate their employees for not returning to occupy the office space. Springfield can be an attractive place for those seeking to relocate.
SBJ: What hidden economic landmines would you suggest businesspeople look for in the coming year?
Lewis: We still have supply chain issues that cause disruptions in the availability of products and services. This phenomenon, with pent-up demand, will continue to see price increases. The federal government’s current monetary policy to keep interest rates low … is an effort to keep the economy going strong. Further, our government also currently uses the approach of expansionary fiscal policy – in this case, increasing government spending. This will increase the expenditures on goods and services that will contribute to the increase of aggregate demand. Therefore, the inflation level is definitely something we need to watch.
SBJ: The smallest businesses (one to five employees) have a lower level of confidence – 94.4 on an index scale of 100. Why do you think that is and what could turn it around?
Lewis: In my opinion, it is related to supply chain issues and low unemployment rates. Small businesses have less robust supply chains, as they have limited networks compared to bigger businesses. With the disruption in the current supply chain, the cost of running businesses will be higher. They’ll most likely experience more hardship due to the limited supply of materials to produce their goods and services. Also, the unemployment rate locally – 3.5% in May – is lower than the national unemployment rate, 5.9%. With a low unemployment level, it is harder to find qualified employees to fill the positions that were vacated due to the lockdown and economic slowdown last year. Small businesses usually hire people in their immediate network. In order to improve the chance of finding good employees, small-business owners might start looking to a broader pool, including connecting to recent graduates from local universities.
SBJ: The highest level of confidence is from those in the business-to-business sector, at 103.9 on an index scale of 100. Why do you think that is and what could bring it down?
Lewis: I think the business-to-business sector sees the positive outlook due to higher orders, higher production and higher stocks of finished goods. Again, this is related to the market needs and the global supply chain disruptions. There is an opportunity to fill the gap by increasing our production. This sector confidence level can also be related to the current increase in government spending on infrastructure, education and health care.
SBJ: Locally, the goods sector has a much more positive outlook for growth than the services sector. What outside influences are at play to give that sense? Should service businesses be worried?
Lewis: The supply shortage, due to the global supply chain disruption, prompts businesses to increase their production. Many production elements of the goods sector are automated or can be automated, so there is a positive outlook and higher expectation in this sector. Springfield is well suited to address this need. The service sector will also see higher expectation once we all embrace the new normal.
Interview excerpts by Editorial Vice President Eric Olson, email@example.com.
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