Confidence among Massachusetts employers last month hit its lowest level since the Covid-19 pandemic closed down much of the commonwealth’s economy in March 2020.

The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 4.5 points during April to end the month at 41.5. A reading less than 50 on the 100-point Index indicates a pessimistic outlook.

The BCI was Much of the drop came from plummeting confidence in the national picture as employer views of the US economy fell to their lowest level since the Great Recession in 2009.

“The April confidence reading was consistent with a drop in national consumer confidence to a five-year low last month amid the back-and-forth on tariffs and uncertainty about federal tax and spending policies. Yet, AIM’s survey also indicated a relatively stable job market, consistent with national employment data,” said Sara Johnson, Chair of the AIM Board of Economic Advisors (BEA), which oversees the BCI.

Comments from survey participants showed employers grappling with the implications of changes to government policy.
” wrote one employer located north of Boston.

Another wrote: “Recent political developments have created significant new threats to our business. Costs for all our raw materials have risen significantly as have costs for tools and supplies. Funding cuts to our customer base … have already eliminated several orders and will reduce future business prospects.”

The AIM Index, based on a survey of more than 140 Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions, 1997-98, and its all-time low of 33.3 in February 2009.

Constituent Indicators

The constituent indicators that make up the Index all remined pessimistic range during March.

The confidence employers maintain in their own operations declined 3.0 points to 46.6. That figure was 7.2 points weaker than in April 2024.

The Massachusetts Index assessing business conditions within the Commonwealth fell 6.8 points to 37.9, leaving it 12.3 points lower than a year earlier. The US Index measuring conditions throughout the country dropped 7.0 points to its lowest level since April 2009.

The Current Index, which assesses overall business conditions at the time of the survey, lost 4.2 points to 43.7. The Future Index predicting conditions six months from now declined 5.0 points to 39.2.

The Manufacturing Index fell 5.4 points to 39.7. The Employment Index remained the strongest element of the report, declining 0.4 points to 47.8.

Large companies (42.9) were more optimistic than medium-sized companies (40.8) or small companies (40.0).

Olena Staveley-O’Carroll, Associate Professor of Economics at the College of the Holy Cross and a BEA member, said that minimum 145 percent tariffs on imports from China are so steep that much of the trade between the United States and China has ground to a halt.

“The availability of Chinese products and the price that consumers pay for them has not changed that much so far. But some companies are now starting to raise their prices. And the effects will become more and more obvious in the coming weeks,” Staveley-O’Carroll said.

Seeking Certainty

AIM President and CEO Brooke Thomson said the combination of tariffs, cancellation of research grants, review of federal infrastructure funding, and the uncertain fate of the Trump tax cuts all add up to a heaping plate of uncertainty for Massachusetts employers.

“Employers value certainty above all else and certainty has been in short supply recently,” Thomson said. “Many of our 3,400 AIM members find the sand shifting constantly under their feet, which makes it difficult, if not impossible, to plan for long-term growth.”