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Friday, Sep 22, 2023

CSU San Marcos Project Surveys Early ’22 Economic Trends

EDUCATION: Consumer Confidence Level in San Diego County Continues to Grow

Almost three years after the COVID-19 pandemic first began its assault on the success of businesses in San Diego County, the region’s overall economic trend looks to be moving in a healthy direction and in some sectors even eclipsing pre-pandemic status and numbers.
Businesses that keep San Diego’s economy rolling like tourism and hospitality and the craft brewing industry are finding their way back to normalcy, while companies in the biotechnology and medical device fields and business in general are also on the upswing.
Those are some of the findings unearthed by the San Diego Business Confidence Index survey, a poll conducted during the spring quarter by data-seeking undergraduate students from the College of Business Administration at California State University San Marcos.

Nathan Hart

“Business is back to normal,” said CSUSM student Nathan Hart, one of the students conducting the poll. “It seems to be transitioning back into the previous pre-pandemic numbers we’ve been seeing.”
As part of the university’s nearly 30-year-old senior experience program, CSUSM business administration students conduct the opinion survey, asking CEOs and managers from different types of businesses – general business, craft brewing, hospitality/tourism and biotechnology/medical devices – how they anticipate different work concerns and conditions in the next six months.
The university and San Diego Business Journal have been partnering on the students’ study of business confidence levels for seven years. Spring 2022 marked the 14th consecutive collaboration between the newspaper and university.
The confidence levels are measured twice a year through students’ outreach to different businesses throughout the county.

Ben Cherry
Interim Dean, College of Business Administration
Cal State San Marcos

“Overall, the Spring 2022 results indicate a very positive overall outlook for the San Diego business region,” said Bennett Cherry, interim dean of the College of Business Administration. “Employment, sales revenue and profit are all expected to increase resulting in a rise again in general business confidence — achieving highest score on the index since the college and SDBJ began tracking this in fall 2015.”
A central component of the survey results is a Business Confidence Index. Survey authors use data collected in each of the four surveys to calculate a numerical score for each index. Scores range from 0 to 100, with 50 considered neutral and greater than 50 being optimistic about the economy.
The general business confidence trend, Cherry noted, showed a 20-point swing from a low of 64.9 in fall 2020 to 84.9 in the spring of 2022. He also said 81.1 percent of respondents said they expected sales revenue to increase.
Each quarter, students aim to improve the project by capturing more participants, refining survey questions to match the current environment and exploring new industries. For the spring, survey topics included employee retention, expected profits and revenue, demand, COVID-19 impact, government subsidies impact and operations.
CSUSM students Hart, Yazmin Franco, Hannah Lawrence, Sarah Apostolof and Luis Barboza increased their outreach efforts compared to students previously in the program and achieved the highest responses to date. The survey data was captured in March and April, with the survey closing on April 15.
In addition to the 84.9 confidence level of general business, the students reported the latest confidence levels of those surveyed in the craft brewing industry was 88.6, tourism and hospitality 81.0 and biotech was 84.5.
Participating businesses had from March through mid-April to return their questionnaires. The students reported that they had the highest response rate to date in the most recent survey.

Yazmin Franco

Franco, who oversaw the craft brewing sector of the project, said that she and her colleagues were heartened by the uptick in responders and their confidence levels.
“Overall, we had such a positive number increase,” she said. “Some even showed a business confidence index higher than it had ever been. While some of the categories like biotechnology are relatively new, even those numbers are starting to steadily go up.”
Lawrence was primarily in charge of creating the group’s infographics, helping out where needed in all four of the focused sectors. She said her key takeaway from the survey’s findings shows the confidence levels of San Diego County business owners are making significant positive progress.
Some of the progress is related to consumers starting to feel more comfortable. Some is also in open job positions that are starting to get filled.

Hannah Lawrence

“As we come out of the pandemic, business is definitely increasing, and it’s very clear that people are ready to participate,” Lawrence said. “It’s definitely a broad spectrum of what business is going on. It’s not just within tourism and hospitality, it’s not just within general business or with the craft brewing, it’s across all different (sectors).”
The students presented their results to Cherry, faculty advisor Don Sciglimpaglia and others in person and recorded on a video presentation via Zoom.

General Business

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The CSUSM students were able to get 186 total responses out of about 550 San Diego County businesses they contacted for the spring 2022 data collection.
Commercial, industrial and professional occupations outside of biotechnology and medical devices, craft breweries, and tourism and hospitality were considered part of the general business category.
The students said they had great success communicating with local business owners through LinkedIn, although they also emailed contacts from their own database, much of that culled from local chambers of commerce. They also credited the CSUSM communications department for pushing out their survey.
Nearly 2/3 of the businesses that responded – 122 – were located in North County. Central San Diego had the next highest response with 53, East County had 6 and South County 5.
The outlook of general businesses – determined on a consumer confidence 100-point scale where 50 represents zero net change — has been trending toward the positive since 2015 and has bounced back from 77 last fall. The previous all-time confidence index high was 81 in spring 2021, but spring 2022 now shows the newest all-time high confidence index of 84.9.
Regarding employment confidence, nearly 2/3 said they expected their number of employees to increase over the next six months, 1/3 said it would stay the same and less than 2 percent felt it would decrease.
Looking at revenues expected in the next six months, 150 of the 186 respondents said they expected their business revenue to increase and 30 said they expected it to remain about the same, with only five expecting a decrease in revenue.
For profits in the next six months, 139 say they anticipate profits increasing, 36 say they expected it to stay steady, and only 10 think there will be a decrease.
When asked how they felt about their business being able to get back to pre-COVID-19 levels, 30 said they anticipated returning to the pre-pandemic levels within one to two years, 27 said things would return to normal within six to 12 months and 21 said between now and six months.
Asked if their business strategy has changed since the pandemic started, 137 respondents said yes. When asked if their business has adopted new technologies in response to the pandemic, 118 said yes, with Zoom meetings and internal and external software programs to collaborate with customers and employees being the most common response.
Seventy percent of businesses that answered – 129 – have incorporated hybrid and remote work into their work environment, and 50 of those are holding online meetings via Zoom, Microsoft Teams and by phone.

Craft Brewing

The students have been looking at this industry for nine semesters and said that craft beer continues to grow in popularity among residents and tourists. The spring 2022 report says that the craft beer industry contributes between $290 million and $360 million annually to the county’s economy.
“Known as the Craft Brew Capital of America since 2016, the importance of the health of craft breweries in San Diego is immense,” student Yazmin Franco wrote, noting that the industry took a hit from the COVID-19 pandemic, with some breweries going out of business.
In previous semesters, the craft beer industry confidence index has nearly finished with the highest degree of all categories, including a peak high of 94.57 in spring 2018. It reached its low at 63.05 in the fall of 2020, likely related to the pandemic’s effect.
The data collectors were able to gather 54 responses from 245 craft brewers they reached out to, including 25 from North County, 22 from central San Diego and six from East County.
The confidence level of businesses in the craft brew industry in spring 2022 was measured at 88.6, a significant increase from the fall 2021 index results of 75, but lower than the spring 2021 level of 90.7. This category has only been tracked since spring 2017.
Of those who weighed in, 36 said they expected their employment levels to increase in the next six months and 18 said they expected it to stay the same.
Looking at revenues, 47 of the respondents said they expected to see an increase in the next six months, seven said they thought it would stay the same and none anticipated a decrease. For profits expected in the next six months, 45 said they expected their business profits to increase, six thought they would stay the same and three anticipated a decrease.
The craft beer survey also asked businesses about their thoughts about returning to pre-pandemic levels of business. Fourteen businesses said their businesses actually grew during the pandemic, 13 said they expected to return to normal in 1 to 2 years; 12 said from now to 6 months, nine said 6 to 12 months and six said they expected to never return to pre-pandemic levels.
Forty respondents said they had implemented new technologies that made operations easier. Seventeen businesses cited using online ordering, 11 said canning, 10 incorporated the use of iPads and handheld devices and six implemented contactless payment.
Asked about brewery distribution, 38 said they expected to increase distribution in the next six months.

Tourism and Hospitality

The tourism and hospitality sectors are responsible for bringing millions of tourists from around the world to the city, the students said, and include hotels, resorts, casinos, restaurants and theme parks.
The confidence trend shown in the confidence index for spring 2022 hit 81, up from 78.2 in fall of 2021, but down from the all-time high of 90.9 in spring 2021. This sector has been included in the students’ reporting since 2018.
The group initially sent out its questions to 150 businesses, and received 101 total responses, comprised of 38 from North County, 28 from central San Diego, 18 from South Bay and 17 from East County.
The tourism and hospitality confidence index for spring 2022 went up slightly, from 78.2 in fall of 2021 to 81, but below the index number of 90.9 from spring 2021.
The students said that they surmised that the tourism and hospitality businesses within San Diego County will continue to grow and prosper throughout the next six months and although tourism and hospitality was greatly affected by the pandemic, nearly all businesses expect visitor numbers to increase, and quickly, even within the next six months.
Looking at employment concerns, of 101 responses received, 64 said they expected their employee numbers to increase in the next six months and 36 anticipate it staying the same.
Seventy-two businesses expect their company’s sales revenue to increase in the next six months, 23 say they think it will hold steady. As for profits, 63 businesses say they anticipate an increase, 33 said it will stay the same.
The COVID-19 pandemic has greatly affected the tourism and hospitality industry, but 47 respondents said they expected to return to pre-pandemic levels in 6 to 12 months, and 29 say they anticipate pre-pandemic levels to return from now to six months.
Half of the respondents said their strategy has changed since the pandemic started, half said they are doing things the same way.
Respondents overwhelmingly said they expect attendance and visitor numbers in San Diego County to increase in the next six months. Eighty-one said more will come and 17 said they anticipate their numbers to stay the same.

Biotechnology and Medical Devices

The newest category, biotechnology/medical devices, was added in Spring 2021, and has proven to be the most challenging of all the segments.
While biotech is a major driver of the innovation economy in San Diego County – there are about 700 firms in the region doing biotechnology/medical device work, the students reported – there is more learning and research to be done to build the relationships and increase the number of contacts now and moving forward for future students surveying and analyzing results.

Don Sciglimpaglia
Faculty Advisor

“This was an extremely difficult segment to research,” said Sciglimpaglia. “[The students] built a large database of key email addresses and phone numbers. In addition, we were able to contact prior MBA students using LinkedIn who work in this area.”
The spring 2022 group was able to elicit 60 responses, up from 15 the first go-around in spring 2021, and a little lower than the 62 responses from fall 2021.
Thirty of the companies that responded were located in North County, 24 in Central San Diego, three in East County and two in South Bay, with one not providing that information.
The confidence level has been growing for this sector, as students reported the confidence index trend has risen from 74.4 in spring 2021 to 80.1 in fall 2021 to 84.5 in spring 2022.
Key findings included 43 of the 60 biotech/medical device companies expecting to increase the total amount of their employees in the next six months and 13 anticipate their employee level to hold steady.
For revenues, 46 of the respondents said they felt there would be an increase in the next six months, and 14 expected it to stay the same. Looking at profits, 42 said they foresee an increase in the next six months, and 15 said they expected it to say the same.
Seeking to understand the effects of COVID-19 in the bioscience community, 27 of the respondents said their business grew during the pandemic. Eleven said they anticipate business to return to pre-pandemic levels in one to two years, and 10 from six to 12 months. One respondent said their company expects business to never return to pre-pandemic levels.
Surveyors also found that just over half the respondents (34) have changed their business strategy since the beginning of the pandemic, with 24 of them adopting new technologies (mostly virtual meeting tools) in response.
Surveyors asking about investment in research and development said that a little more than half of the respondents reported an increase in R&D in the past year, with 25 saying their investment stayed the same over the last 12 months.

Click here to view Consumer Sentiment Infographics PDF


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