Business
Surging energy prices and the war in Iran are dragging down employers’ outlooks.
Employer business confidence in Massachusetts returned to pessimistic territory in March, with surging energy costs and the war in Iran.
The drop in the Associated Industries of Massachusetts Business Confidence Index came as the U.S. added a surprisingly strong 178,000 new jobs last month, according to the U.S. Bureau of Labor Statistics report on Friday. The unemployment rate stayed relatively stable at 4.3%.
“The U.S. economy is still growing, albeit at a moderate pace,” said Sara Johnson, chair of the AIM Board of Economic Advisors, in a statement, noting the steady unemployment rate.
“We continue to see strong gains in labor productivity and company earnings,” she continued. “Meanwhile, federal tax policies are encouraging business investment.”
The AIM Index is a survey of more than 140 Massachusetts employers that has run since 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The state’s March rating was 47, down from 52 in February.
Companies that participated in the survey shared their views on the split-screen economy, with one saying the “spiking energy costs due to the war with Iran will increase costs for us across the board.” In contrast, another said, “Rebounding demand is bumpy but strong.”
Olena Staveley-O’Carroll, an associate professor of economics at the College of the Holy Cross, said employer confidence has steadily slipped over the past year, ever since the Trump administration announced tariffs that the U.S. Supreme Court later ruled unconstitutional.
“We’re seeing employers grow more cautious, though not overly pessimistic,” Staveley-O’Carroll said. “The economy has remained resilient so far, but rising geopolitical tensions, volatile trade policy, a slowing labor market, and the risk of tariff and energy price pass-through to inflation are giving them pause.”
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