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2016 Business Outlook: Confidence in US business conditions tumbles

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2016 Business Outlook: Confidence in US business conditions tumbles

Obamacare, margins and regulation lead list of concerns.

According to a survey of business owners undertaken by legal and business consultancy McDonald Hopkins, the percentage of US businesses that expect business conditions to improve has fallen dramatically, plummeting from 78% last year to 44% currently.

The reasons for the 34 percentage point drop in confidence range from election year jitters and stock market turmoil to government regulations and political partisanship. In fact, 28% expect a decline in business conditions this year, compared to only seven percent last year. "The future for the next 4 years is hinging on the election—no matter which way it goes," said one of the business owners and executives who completed the sixth annual survey.

"It is particularly interesting that business leaders are more optimistic about their own organizations than the business outlook overall," said Carl J. Grassi, president of McDonald Hopkins. In fact, 63% say business conditions will improve at their companies—a less than 10% decline from last year.

"Increasing health care costs are still at the top of the list of challenges."

Seventy-one percent of respondents say comprehensive tax reform is important to their companies, but the vast majority—77%—are not optimistic that the election will make it easier to achieve comprehensive tax reform. As one person commented, "A lot of talk from the candidates, but I think tax simplification is a long way off."

Although data security incidents are on the rise, 67% of the respondents describe their companies as only "somewhat prepared" for an internal or external data privacy or cybersecurity threat. And despite increasing concerns about terrorism and violence, 60% have no plans to increase their security efforts. 

The survey found that increasing health care costs are still at the top of the list of challenges facing companies with 46% ranking it among their three greatest challenges. Furthermore, 65% expect the Affordable Care Act to have a negative impact on their company's bottom line. Business owners and executives also worry about retaining profit margins (42%), and government regulations (40%). "We continue to get buried with more and more government paperwork," said one respondent. "It is nearly impossible to learn about and comply with the dozens of new regulations that get enacted, and the government doesn't have the money or manpower to educate us about them."



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