Avalanche Consulting’s annual Economic Development Activity Survey of 141 US economic developers revealed a slowdown in economic development activity growth in 2015, following a peak year of growth in 2014. Among the 141 economic development organizations participating in the survey, most reported increases in the numbers of leads and prospect visits between 2014 and 2015, but the rate of increase in those activities was slower than it was between 2013 and 2014.
For the majority of survey participants, expansion prospects proved to be the only economic development activity that increased its momentum in 2015. And, on a bright note, nearly half reported a decline in closures/layoffs.
Prospect activity in 2015 was uneven across industry sectors.
Manufacturing prospect activity accelerated to a five-year high, with Plastics and Food Processing prospects leading the way. But, momentum in Aerospace/Aviation, Energy, Industrial Machinery, Mining / Extraction, and Printing hit five-year lows. Among the service sectors, prospect activity for both Distribution/Warehousing and Health Care Services proved strong, and Financial Services prospect activity reached a five-year high.
Expectations for 2016 economic development activity are also more modest.
The Economic Development Activity Survey is conducted on an annual basis, and Avalanche tracks trends over time. Hopes for 2016 are less optimistic than they were for 2015. The share of respondents expecting an increase in activity in the next 12 months declined relative to last year’s survey.
Concerns about the health of the US economy increased significantly in 2015. Twenty percent of survey participants believe that the US economy will be “worse” or “much worse” 12 months from now—a fourfold increase compared to last year’s 5%. Respondents, however, are less bearish about the economies of their own communities. Nearly 60% of respondents characterized their local economic policies as “good,” the highest level reported in the Economic Development Activity Index in more than five years. In contrast, less than 10% of surveyed economic development officials believe federal economic policy is “good.”
DEFINITIONS
“Prospects” are companies that are considering an expansion or relocation and are competitively evaluating multiple cities as part of their decision. Economic development organizations often assist these companies with their information needs, site and building search, workforce assessments, and/or financing and incentives. Prospects are flagged as various types as they move through the decision process:
- Lead – A company makes an initial request for information or indicates that an expansion/relocation decision process has begun.
- Prospect – A formal “Request for Proposals” is usually sent, which includes the requirements for the project expansion/relocation.
- Visit – A community is short-listed and company representatives visit multiple communities to gather and confirm information.
- Announcement – A company makes a decision and issues a public statement announcing the winning community for the company’s expansion/relocation.
ABOUT THE INDEX
The Economic Development Activity Index is an annual survey of US economic developers to gauge changes in prospect activity, job announcements, and perceptions of the economy. While other surveys exist to measure sentiment of businesses or consumers, this survey is focused on economic development leaders, who have unique insights on the future of job creation in US communities. The most recent survey was conducted between February 1 and February 29, 2016. 141 communities responded to this 13th consecutive survey.
ABOUT AVALANCHE CONSULTING
Avalanche Consulting is the nation’s premier economic development strategist. The firm is the best in the business at translating complex research into economic development strategies and communications platforms. Avalanche is deeply driven to make a positive impact and seek clients who are equally inspired to energize their economies. Headquartered in Austin, Texas, Avalanche was established in 2005 and assisted more than 100 communities across the US and abroad.