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Massachusetts business confidence drops as employers fret about the ‘fiscal cliff’

A monthly index that seeks to measure business confidence in Massachusetts fell 4.3 points in November as local employers fretted about the so-called fiscal cliff, a combination of steep tax increases and deep budget cuts that will go into effect early next year unless President Obama and Congress can devise an alternative plan.

The index is maintained by the Associated Industries of Massachusetts, or AIM, a group that represents Bay State employers. The index uses a 100-point scale. A reading above 50 indicates that the state’s employer community is predominantly optimistic, and a reading below 50 points suggests a negative outlook.

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The index posted a reading of 46.8 for November, down 4.3 from a reading of 51.1 in October; the index had a reading of 50.1 in November 2011, AIM said.

In a statement, Raymond G. Torto, chair of AIM’s Board of Economic Advisors, commented on the index’s November 2012 reading.

“The tax increases set to take effect unless Congress acts will affect virtually every business, and the automatic spending cuts will hit hard at both defense and non-defense sectors in Massachusetts – and serious macroeconomic effects are also projected,” Torto said. “After an election that did little to break the deadlock in Washington, we are very close to the edge. Whereas October’s results merely pointed to this concern, November’s treat an adverse outcome as a probability.”

AIM’s Business Confidence Index debuted in July 1991. The index’s historical high of 68.5 was achieved twice, once in 1997 and again in 1998. Its all-time low was 33.3 in February 2009.

Chris Reidy can be reached at
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