PROVIDENCE – Business leaders’ economic outlook has plunged to historic lows amid inflation and supply chain woes, according to a survey from JPMorgan Chase & Co. published on Monday.
Just one in five business leaders who responded to the 2022 Business Leaders Outlook Pulse survey expressed optimism about the national economy in the year ahead – the lowest in the 12-year history and down 75% from a year ago. Despite the dark shadow cast over national business sentiment, however, local businesses remain more optimistic, particularly about their own future success, said Christopher Stevens, JP Morgan’s executive director for commercial banking in Rhode Island.
“Locally, our businesses are continuing to perform and are hoping to grow their credit facilities this year,” Stevens said.
He chalked up the more positive local attitude to Rhode Island’s historically low unemployment rate and ample federal stimulus dollars, along with a strong post-pandemic recovery by the manufacturing industry.
Still, political unrest that has sent markets plunging and exacerbated supply chain woes and inflation are putting pressure on profit margins both locally and across the country.
One hundred percent of those surveyed nationwide said they are facing business challenges, with inflation and labor issues taking center stage. More than seven in 10 of those surveyed said their costs have increased – primarily due to employee retention and hiring and supply chain problems – and are passing those cost hikes on to their customers, according to the survey.
Despite this economic pain, more than eight in 10 businesses still expect to grow their business over the next year, either by entering new markets or strengthening innovation including through new or expanded service and product lines, the survey stated.
Whether the next annual survey will reflect a better economic outlook depends, said Stevens, noting that the U.S. Federal Reserve’s suggestion of future interest rate hikes may dampen lending activity and business growth. Meanwhile, ongoing conflict in Ukraine and domestic political discord may also hurt perceptions of economic growth, he said.
Chase in its survey suggested that businesses take a closer look at ongoing geopolitical events and supply chain problems to “facilitate growth,” while also taking inventory of existing debt financing and strategic partners.
The survey reflects responses from 1,536 leaders of middle market companies, defined as those with annual revenue from $20 million to $500 million.
Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.
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Source: pbn.com
