Performance expectations remain high despite
labor and inflation challenges
New insight from Innovation Economy leaders
finds increased optimism, but concerns around raising capital
remain
Following a year marked by banking industry disruption,
geopolitical risks and sustained macroeconomic challenges, small
and midsize business leaders are sharing a more balanced outlook
heading into 2024, while pulling back from previous predictions of
a near-term recession, according to JPMorgan Chase’s 2024
Business Leaders Outlook survey released today.
Expectations for a recession, widely held by both small and
midsize business leaders at the start of 2023, have moderated
following a year of better-than-expected economic growth. In the
new survey, 40% of midsize and 51% of small business leaders
anticipate a recession in 2024, or believe we’re already in one,
down from 65% and 61% respectively, one year ago. However, almost
as many midsize business leaders (38%) say they don’t anticipate a
recession in the year ahead as those that do, while 30% of small
business leaders don’t anticipate a recession.
Amidst mixed economic signals, midsize business leaders are
nearly evenly split in their outlook on the national economy, with
31% optimistic, 34% pessimistic and 36% remaining neutral. While
this year’s optimism is higher than the 22% reported a year ago, it
remains at historically low levels for the survey. When it comes to
the local/regional economy, the outlook is rosier but still mixed,
with 44% expressing optimism and 35% remaining neutral. For small
business leaders, optimism for the national economy slightly dipped
from 49% one year ago to 43% today, and perspectives on the local
economy followed suit with 46% expressing optimism compared to 50%
previously.
Optimistic
Neutral
Pessimistic
Middle Market Business
Leaders
National Economy
31%
36%
34%
Local/Regional Economy
44%
35%
20%
Small Business Leaders
National Economy
43%
25%
32%
Local/Regional Economy
46%
29%
25%
“Despite the volatility of 2023, it has been encouraging to see
the resilience of US businesses and the firm pace of US consumer
spending growth that has contributed to the year’s stronger
economic picture,” said Ginger Chambless, Head of Research,
JPMorgan Chase Commercial Banking. “Over the last few years,
business leaders have not only become adept at managing through
tough times and recovering from speedbumps, but confident in their
ability to manage and lead through crises given how practiced
they’ve become. These learnings will set them up well to weather
future uncertainty.”
Business leaders are maintaining upbeat projections for their
own companies in the year ahead with more than two-thirds of small
and midsize business leaders optimistic about their company’s
performance. The majority of midsize business leaders are expecting
increased revenue/sales (61%), though these expectations are more
tempered compared to previous years. Meanwhile, the 69% of small
business leaders expecting increased revenue/sales is in-line with
the highest levels recorded by the survey. Both small and midsize
leaders anticipate greater profits (66% and 55%, respectively).
Optimistic
Neutral
Pessimistic
Middle Market Business
Leaders
Company Performance
67%
24%
10%
Small Business Leaders
Company Performance
69%
21%
10%
Labor and inflation top list of concerns
Small and midsize businesses continue to be vexed by some of the
key issues they've faced for years, namely labor and inflation,
even as they have tried to adapt and solve for these challenges.
More than half of midsize business leaders (54%) cite labor-related
issues—including shortages, retaining, recruiting and hiring—as one
of their most significant challenges, followed by uncertain
economic conditions (47%), revenue/sales growth (39%) and rising
interest rates (36%). The labor challenges come as 86% of midsize
business leaders say they expect to add to or maintain their
current headcount in the next 12 months.
“Today’s business leaders are not strangers to the challenges
before them, and have remained nimble and primed for opportunities
despite continued uncertainty,” said John Simmons, Head of Middle
Market Banking & Specialized Industries, JPMorgan Chase
Commercial Banking. “The most resilient leaders focus on continuous
improvement, iterating with each challenge to make strategic
investments in their operations, adopt new technologies and focus
on their people to move their business forward.”
More than one-third of small business leaders (35%) report
inflation as one of their most significant challenges, with rising
taxes (19%) and the ability to grow sales/revenue (18%) also top
concerns. The inflation worries persist as 90% of small business
leaders say it has had at least some impact on their expenses, and
the majority expect rising costs in areas like labor, energy and
materials to continue. Despite this, 41% of small business leaders
said that inflation will motivate them to accelerate their business
plans, rather than scale back on (26%) or maintain (33%) current
operations.
“Small business owners continue to demonstrate resilience,
proving time and time again why they are the lifeblood of the US
economy,” said Ben Walter, CEO of Chase for Business. “Despite
nagging inflation and concerns of recession, the majority of small
business owners feel like they can weather any storm, and even
expect to increase in revenue in 2024.”
Warming up to AI
While businesses’ adoption of artificial intelligence (AI)
tools, such as generative AI and language processing software, is
not yet widespread, business leaders are giving more consideration
to them to support a growing number of functions. Of the 46% of
midsize businesses currently using or considering adopting AI,
popular applications for the technology include business operations
(69%) and internal/external communications (63%). Nearly half are
currently or considering using AI for financial
management/accounting (48%) and human resources/training purposes
(47%).
While small businesses find social media tools, virtual meeting
platforms and cloud technologies more essential to their business
than AI, it ranks as the technology they’re most likely to add in
the coming year, with 46% of small businesses planning to do
so.
Innovation Economy companies remain optimistic
US-based founders, CEOs and CFOs of Innovation Economy (IE)
businesses were also tapped for their insights. The participating
IE businesses consisted of high-growth, venture-backed, founder-led
startups and companies in the Technology, Disruptive Commerce &
Internet, Life Sciences, HealthTech and Climate Tech
industries.
Founders and entrepreneurs are resilient and optimistic by
nature, which is reflected in the IE survey findings: 43% are
optimistic about the national economy in the year ahead and 50% are
optimistic about the local/regional economy. Similarly, IE business
leaders are bullish on their prospects, with 74% expressing
optimism for their company’s performance.
While the majority of IE business leaders (67%) note that
declining tech valuations have had a negative impact on their
ability to raise capital, most (54%) are confident they have raised
enough capital to hold off on raising additional funds over the
next year. Twenty-four percent note they plan to raise new equity
in 2024.
Despite this optimism, IE business leaders do anticipate
challenges in the year ahead, including the availability of capital
and credit (52%). They are also confronting the same challenges as
midsize business leaders related to revenue and sales growth (48%)
and uncertain economic conditions (46%).
When asked about their long-term vision or goal for their
company, 50% of IE respondents say it is to be acquired and 15%
expect to go public via an initial public offering (IPO).
For more information on the Business Leaders Outlook survey,
please view the midsize and small business and
Innovation Economy reports.
Survey Methodology
JPMorgan Chase’s Business Leaders Outlook survey was conducted
online from November 9-20, 2023, for small businesses (annual
revenues between $100,000 and $20 million) and from November 16 –
December 7, 2023, for midsize businesses (annual revenues between
$20 million and $500 million). In total, 1,829 business leaders in
various industries across the US participated in the survey. For
year-over-year trends, current data is compared to data collected
in the fourth quarter of previous years. The results of this online
survey are within statistical parameters for validity, and the
error rate is plus or minus 3.1% for the small business findings
and plus or minus 3.5% for the midsize business findings, both at
the 95% confidence level. In addition, 155 Innovation Economy
companies participated in the survey. 40% of responding companies
are between five and 10 years old and 66% of respondents reported
revenue under $20mm. For these companies, the results of the online
survey are within statistical parameters for validity, and the
error rate is plus or minus 7.9%, at a 95% confidence level.
About JPMorgan Chase
JPMorgan Chase & Co. (NYSE: JPM) is a leading financial
services firm based in the United States of America (“U.S.”), with
operations worldwide. JPMorgan Chase had $3.9 trillion in assets
and $317 billion in stockholders’ equity as of September 30, 2023.
The Firm is a leader in investment banking, financial services for
consumers and small businesses, commercial banking, financial
transaction processing and asset management. Under the J.P. Morgan
and Chase brands, the Firm serves millions of customers in the
U.S., and many of the world’s most prominent corporate,
institutional and government clients globally. Information about
JPMorgan Chase & Co. is available at www.jpmorganchase.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20240104057105/en/
Media Contacts: Midsize Businesses: Melinda Bonner,
melinda.bonner@chase.com Small Businesses: Devi Kinkhabwala,
devi.kinkhabwala@chase.com Innovation Economy: Eileen Nolan,
eileen.nolan@jpmorgan.com
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