Survey: Business leaders hold mixed outlook on recession likelihood as pessimism wanes

Listen to this article

While business leaders remain mixed in their outlook on the state of the economy and the chance of recession, overall pessimism has declined from the beginning of the year despite continued challenges, according to a new JPMorgan survey.

JPMorgan Chase’s Midyear Business Leaders Outlook survey measured the economic outlook and sentiment for 625 business leaders in various industries across the United States who work for middle market companies with annual revenues between $20 million and $500 million. The data collected in the midyear survey in June was compared with the data collected from the end of 2022 to measure changes in attitudes and trends.

Despite the continued impacts of inflation and climbing interest rates that raise costs and impact business decisions for business leaders, just 45% of midsize business leaders expect a recession before the end of the year, a decline from 65% in December. However, this leaves 20% of respondents who are uncertain whether one will occur, while 36% still expect a recession this year.

Pessimism regarding the global economy has dropped since the start of the year, with the percentage of business leaders who hold negative outlooks about the global economy for the next year down to 39% from 60%, while 46% of respondents hold neutral outlooks. While just 15% of respondents were optimistic about the global economy, this number was at 8% in December.

In terms of the national economy, pessimism dropped from 43% to 37%, while just 29% of respondents are optimistic about the state of the national economy, up from 22% at the end of last year. However, the average level of optimism about the national economy from 2012 to early 2020 was 66%, and these levels have not been reached since the beginning of the pandemic.

Tom Regnante, Maryland Market Executive for Middle Market Banking and Specialized Industries at JPMorgan Chase, said that the economy’s stronger start to the year than expected and positive results across the board have contributed to a less pessimistic economic outlook from business leaders, both throughout the United States and in Maryland.

Despite overall macroeconomic concerns that persist, 67% of leaders are optimistic about their own company’s performance, with 85% expecting to add or keep staff as more than half expect sales and profits to increase by the end of the year.

In the survey, business leaders cited labor shortages, inflation and competition as the primary threats to their companies and their success, citing rising costs and the impact of inflation as they attempt to grapple with the current state of the economy.

Regnante said Maryland-based business leaders may be feeling more optimistic after seeing inflationary pressures subside marginally, and seeing a better economy on a global scale. Inflation declining overseas has a special impact on Maryland, which benefits from a high volume of imports, specifically in Baltimore.

“This is on the heels of a record year in 2022 on the Port of Baltimore, which is a major economic engine for the state of Maryland,” Regnante said. “So that’s just one example of where some of that optimism might be coming from and the overall feeling that the global economy has certainly improved relative to this time last year.”

Maryland’s diverse economy with a highly educated workforce also has a sophisticated workforce with highly paid workers, which insulates the state from some of the economic challenges that other states face, according to Regnante.

However, Regnante also acknowledged some of the challenges in the region, with a tight labor market in a state with a highly concentrated population.

Regnante said that while Maryland business leaders observe macroeconomic issues and acknowledge the economic challenges that exist, they are also focused on their local business and what they can control.

“I think the businesses generally feel good about what they have in their local outlook, but are also mindful about what’s going on around the world and working close to home to keep the businesses going strong,” Regnante said.

Inflation and interest rates lead to continued pessimism, despite the decline over the past six months, according to Regnante. If business leaders see improvements in inflation numbers, the labor shortage, and a decline in interest rates, this may lead to a further increase in optimistic business outlook.