Walsh College Economic Sentiment Survey Reveals Growing Optimism


TROY—Optimism concerning expectations regarding economic, business and household conditions for the U.S. and the state of Michigan is on the rise, according to preliminary findings just released from the third Walsh College Economic Sentiment Survey conducted during the first quarter of 2012.

Designed and implemented by members of the finance and economics faculty at Walsh College, participants include a representative group of Walsh College alumni responding to a variety of economic and business-related topics. “While there are many studies that measure economic sentiment, this study is distinctive in that it targets a population with graduate and undergraduate degrees in business disciplines,” said Walsh College Finance and Economics Chair Linda S. Wiechowski.

In general, respondents are cautiously optimistic about the country’s economic outlook, but fairly guarded concerning the state of Michigan. While 48 percent expect the national economy to experience “good” or “mostly good” times over the next five years, only 37 percent expect the same for Michigan. The Walsh Economic Sentiment Ratio, a weighted ratio of positive-to-negative responses, with a value greater than 1.0 representing an optimistic stance and a value less than 1.0 denoting a pessimistic outlook — was 1.62 for the country as a whole, but only .75 for the state.

The outlook regarding business conditions is relatively positive for the country, with 31 percent of survey participants expecting an improved business environment during the next 12 months. In contrast, 30 percent expect “continuously good” or “mostly good” times for Michigan during the same period. The Walsh Business Condition Sentiment Ratio for general business conditions was 1.22 for the country and only .74 for Michigan, indicating a significant disparity in expectations for the nation as opposed to the state.

Respondents appear to be very optimistic about their household financial situation 12 months from now, with 36 percent expecting conditions to improve and only 10 percent expecting a decline in their household finances. The resulting Walsh Household Finance Sentiment Ratio of 3.46 indicates a positive outlook, which is encouraging when considering the majority of those surveyed reside within the state of Michigan and expressed a negative outlook for the state’s economy.

In general, the results reflect a more optimistic outlook than measured in the previous survey conducted in the third quarter 2011. The results are also slightly better overall than the levels of confidence exhibited in the first survey conducted in the first quarter 2011. Moreover, respondents are more optimistic now than six months ago, with each ratio improving substantially from the second to the third survey.