Midyear business leaders outlook improves slightly

Business leaders are slightly less worried about a recession this year, according to JPMorgan Chase & Co.’s 2023 Midyear Business Leaders Outlook survey.

A total of 45 percent of business leaders say the nation is already in a recession or expect a recession before the end of 2023, down from 65 percent who felt that way at the beginning of the year. Additionally, 35 percent do not expect a recession at all, while 20 percent are uncertain whether one will happen or not.

Coupled with that, 39 percent of business leaders are pessimistic about the global economy, down from 60 percent at the beginning of the year, while 46 percent are neutral on the outlook. Only 15 percent are optimistic.

That mirrors the outlook on the national economy, where 37 percent of business leaders are pessimistic, down from 43 percent. Only 29 percent are bullish on the national economy, up from 22 percent six months ago.

Those sentiments mirror those of local Central New York business leaders, says John Huhtala, market executive for middle-market banking and specialized industries at JPMorgan Chase in Syracuse.

While there are challenges, “I think the good news is they remain bullish on their own economies,” Huhtala says. Across Central New York, a large number of businesses are planning to expand in some way whether it’s through increased employment or by expanding with new products or to new regions.

Two-thirds of survey respondents (67 percent) remained confident in their company’s performance for next year, with 59 percent anticipating increased revenue/sales and 51 percent predicting increased profits.

The economy is still presenting challenges to businesses, he says, namely in the form of rising costs, fear of recession, and inflation. Additionally, businesses are still contending with labor issues as well as increased competition.

“We’re seeing that locally as well,” Huhtala says.

Some businesses have struggled to pass the increase in costs along to the customers, he notes. In some cases that might be due to existing contracts or other hurdles causing it to take longer to integrate increases, he says. But the reality is that costs have risen, and those increases need to be passed along to customers.

Inflation and cost increases topped the survey list of concerns nationally. A total of 79 percent of business leaders say their costs of doing business have increased since the beginning of the year, and 75 percent say they will continue to raise their prices to mitigate costs. Another 68 percent indicated they want the federal government to pause interest-rate hikes.

There is also no denying the continuing labor shortage, which started before the pandemic and continues today. “There’s a skills mismatch,” Huhtala says. There are lots of jobs in certain fields, like engineering and finance, and not enough people trained in those fields to fill the jobs, he says.

One new area in the survey with some surprises is business use of artificial intelligence (AI), Huhtala says. Business leaders are split on the adoption of AI within their business operations with 38 percent saying they are already using or considering it. Of those who have adopted or considered AI, 53 percent are integrating AI tools into business operations, while 46 percent are using the new technology for internal/external communications, and 29 percent are using AI for human resources/training. Just 46 percent of business leaders say they don’t use or plan to use AI in their businesses.

“It’s a popular tool,” Huhtala says. For some businesses, the use of AI can help overcome other issues, such as labor shortages.

JPMorgan Chase conducted the survey from June 14 through July 5 for middle-market companies with annual revenues between $20 million and $500 million. A total of 625 business leaders participated.