According to JPMorgan Chase’s recently released 2023 annual Business Leaders Outlook survey, the majority of small and midsize U.S. business leaders anticipate a recession in 2023, with 65% of midsize businesses and 61% of small businesses indicating as such.
Inflation has forced small and midsize businesses to re-evaluate approaches to pricing, sourcing materials and running operations. The heightened recession expectations come as businesses nationwide continue to combat inflation. 91% of midsize businesses are experiencing inflation challenges, while 45% of small businesses list inflation as a top challenge for the year ahead, up from 20% one year ago. Inflation has had widespread impacts, including:
“Inflation has been a challenging headwind impacting businesses of all sizes, across all industries,” Ginger Chambless, head of research commercial banking at JPMorgan Chase. “While we have seen some encouraging signs that inflation has started to moderate and should cool over 2023, businesses may still want to consider adjustments to strategies, pricing or product mixes to help weather the storm in the near-term.”
Mixed Economic Views
Small businesses remain more optimistic in their economic outlooks than midsize business leaders, who expressed much more downbeat views compared to last year.
Midsize businesses’ optimism for the global economy declined to 8% from 34% one year ago and the number optimistic about the national economy fell to 22% from 50% at the start of 2022. Nearly half of small businesses expressed optimism for the national and global economy at 49% and 45%, respectively, which is similar to last year’s sentiment.
High Performance Expectations
Small and midsize business leaders’ outlook for their own company’s performance remains high, with 72% of small businesses and 66% of midsize businesses expressing optimism for the year ahead. More than 69% of small businesses expect increased revenue and sales in the year ahead and 65% anticipate greater profits in 2023. Similarly, 63% of midsize businesses expect increased revenue and sales in 2023 and 51% predict greater profits.
“Following the challenges of the last few years, it’s encouraging to see the resilience of small business owners and leaders,” Ben Walter, CEO, business banking at Chase, said. “The next economic cycle is always right around the corner, so our role is to help small business owners plan ahead so they can succeed in good times and bad.”
Help Still Wanted
Concerns of a recession and dimmed economic outlooks largely aren’t restraining 2023 hiring plans, as 51% of small business leaders anticipate hiring full-time employees and 50% of midsize business leaders expect to increase headcount. To hire and retain employees, 67% of midsize businesses plan to increase wages and/or benefits and 43% plan to offer upskilling and training opportunities, while 42% of small businesses expect to increase wages. Small businesses’ primary drivers for full-time hiring plans include expected sales growth and improved financial positions.
“While businesses may be cautious in their economic outlooks, their actions display a focus on growth and investing in their employees,” John Simmons, head of middle market banking & specialized industries, JPMorgan Chase Commercial Banking, said. “Businesses are signaling that they’re practiced in being nimble and prepared for several different scenarios, which are keys to operating effectively in today’s economy.”
New Year’s To-Do List
Businesses may consider focusing on the following considerations in their 2023 planning:
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