Most midsize business leaders negative about economy, expect recession this year

Fewer than 8% of midsize business leaders in the United States have a positive outlook about the global economy today, down from nearly one-third a year ago. Moreover, nearly two-thirds expect a recession this year.

“But the news isn’t all doom and gloom,” according to the 2023 Business Leaders Outlook Survey from J.P. Morgan Chase. “Most leaders (66%) are still optimistic about their own company’s performance. Nearly 90% expect to add or keep employees. And supply chain challenges have eased somewhat: 39% say it has gotten easier over the past 12 months to source materials and ship goods.”

More than 90% of midsize company leaders say their businesses were experiencing challenges because of inflation, and 45% of small-business owners cite rising prices as their top concern, a 20% increase from last year’s survey.

“Inflation has been a challenging headwind impacting businesses of all sizes, across all industries,” says Ginger Chambless, head of research for JPMorgan Chase Commercial Banking. “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.”

Businesses may consider focusing on the following considerations in their 2023 planning, the company says:

• Stay in tune with economic trends. Although business leaders undoubtedly are familiar with today’s top economic headlines, they will want to keep a close eye on whether current trends related to the Federal Reserve, consumer spending, inflation, labor markets and more continue, abate or reverse in the year ahead.
• Recession-proof the business Regardless of when or if a recession ultimately materializes, businesses can take steps today to remain flexible, bolster their balance sheet and even find opportunities amid volatility.
• Optimize working capital. Working capital is a key indicator of businesses’ financial health, and maintaining it is even more crucial in times of economic volatility. To manage working capital more effectively, businesses may want to consider using supply chain finance and dynamic discount solutions, implementing more efficient inventory management and reworking current debt to reduce liabilities.

Read more: C-suite confident in their ability to achieve near-term growth during recession

“While businesses may be cautious in their economic outlooks, their actions display a focus on growth and investing in their employees,” says John Simmons, head of Middle Market Banking & Specialized Industries for JPMorgan Chase Commercial Banking. “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.”