Virginia Economic Outlook Index Remains Near Pre-COVID Level in Q4 2021; Most Employers Feel Impact of Omicron Surge

CEOs Expect Sales and Employment to Increase Over Next 6 Months with Capital Spending Nearly Flat
January 31, 2022

UNIVERSITY OF RICHMOND — Most CEOS have experienced at least a minor impact from the Omicron variant on their business. That’s the latest from the quarterly CEO Economic Outlook Survey conducted by the University of Richmond’s Robins School of Business and the Virginia Council of CEOs.

About 84% of CEOS reported a minor impact from Omicron. Nearly 60% of CEOs expect sales to increase and just over 60% expect employment to increase over the next six months.

The survey found expectations over the next six months for sales and employment are positive although those expecting growth in sales were down slightly compared with the end of Q3 2021.Expectations with regard to capital spending were primarily flat.

More than half (59%) of CEOs indicated that they expect sales to increase over the next six months.

  • 10% expected sales to be “significantly higher.”
  • 49% expected sales to be “higher.”
  • 8% expected sales to be “lower.”
  • None expected sales to be “significantly lower.”
  • 33% indicated they expected no change.

Approximately 41% of CEOs expect capital spending to increase over the next six months (compared with 47% last quarter), while nearly 15% expect capital spending to decrease. More than 44% expect capital spending to remain flat. 

About 62% of respondent CEOs expect employment to increase over the next six months. Additionally, 30% expect employment to remain flat while only 8% expect employment to fall. 

Taken as a whole, the results pertaining to sales, capital spending, and employment continue to be positive although the overall Economic Outlook Index decreased (93.7 versus 102.2) relative to the results from the end of Q3 2021. 

The survey also asked CEOs how the current COVID-19 surge related to the Omicron variant impacted their business. Their response was as follows:

  • No impact – 16%
  • Minor impact – 63%
  • Significant impact – 21%

Employers indicated that the impact was largely due to employee absenteeism and related costs.

Additionally, CEOs were asked what percentage of their workforce is working remotely relative to pre-COVID. They reported that

  • A higher percentage will be working remotely: 46%
  • No change in the percentage working remotely: 43%
  • A lower percentage will be working remotely: 11%

“The survey results suggest that CEOs continue to be optimistic about the next six months, particularly with respect to predicted sales and employment. The overall index has returned to the levels just slightly below that experienced for several quarters pre-COVID,” said Rich Boulger, associate dean at the Robins School, who administers the survey and collects the responses. “Specifically, the index is currently 93.7 versus the average of 99.2 in the 13 quarters prior to Q1 2020.”

“I’ve heard from many CEOs that the Omicron surge is making it difficult to keep staffing levels up to normal. That seems to be the primary reason for the 8-point drop in the index” said Scot McRoberts, executive director of VACEOs. “COVID aside, these small business CEOs are seeing growth and opportunity in the next six months.”

For additional information about the CEO Economic Outlook Survey and a specific breakdown of the data, click here (PDF).