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KADAC: Lehigh Valley Business Sentiment Index Falls to Historically Low Levels

by Janelle Hill May 6, 2020

The COVID-19 crisis has sent the Lehigh Valley Business Sentiment Index plummeting to levels not seen since before the Great Recession.

According to the Kamran Afshar Data Analytics Center (KADAC), the Lehigh Valley Business Sentiment Index (BSI) dropped 32 percent in April below its January 2020 level. 

“The valley’s business sentiment, which had given up a year’s worth of growth in 2019, gave up 10 years of gradual climb in April 2020, falling to 43.9—almost a point below its lowest level during the Great Recession,” Afshar says. 

The valley’s tight labor market is officially a thing of the past, but Afshar notes it’s not entirely due to the Coronavirus. Employment indices began dropping in the middle of 2019. By March of this year, the jobless rate jumped to 5.8 percent, and KADAC predicts it will hit 11 percent for April. But there is hope on the horizon. 

“The future thankfully is not as dark, and while there are more than the usual number of companies that are planning further layoffs, there are also almost twice as many who are planning to hire."

 Dr. Kamran Afshar, director of the Kamran Afshar Data Analytics Center at DeSales University (KADAC)

Continuing the downward trend, both actual and planned purchasing indices fell by more than 40 percent, and the revenue indices plummeted even further by 50 percent. To make matters worse, the index of expected revenues over the next six months dropped significantly more than actual revenues over the last six months.

According to Afshar, the data suggests the Lehigh Valley is experiencing a sharp recession. But the economic cycle is expected to be U-shaped, with recovery starting in the fourth quarter of 2020 and hopefully picking up steam in the first quarter of 2021.