Survey: Many Business Leaders Still Anticipate Recession in 2023

The likelihood of a recession has been bandied about in business circles for several months now. Adding credence to that possibility, the majority of just under 1800 small and midsize U.S. business leaders surveyed by JPMorgan Chase anticipate such a downturn in the coming year, according to the financial giant’s just-released 2023 annual Business Leaders Outlook.

Of those surveyed, 65 percent of midsize businesses and 61 percent of small businesses expect a recession in the year ahead.

The heightened recession expectations come as businesses nationwide continue to combat inflation. Nearly all midsize businesses (91 percent) say they are experiencing inflation challenges, while 45 percent of small businesses list inflation as a top challenge for the year ahead, up from 20 percent one year ago. Inflation has forced small and midsize businesses to re-evaluate approaches to pricing, sourcing materials and running operations and has had widespread impacts, including:

* Passing Costs onto Consumers: 83 percent of midsize businesses have passed at least some increased costs onto consumers and buyers, while 68 percent of small businesses have raised prices on select or all products and services.

* Rising Business Expenses: 94 percent of small businesses say inflation has impacted expenses, with 38 percent noting that expenses have increased by 11 percent or more. Leading cost drivers for both small and midsize businesses include wages and benefits costs for hiring and retaining employees, shipping and other supply chain-related expenditures, including costs of raw materials.

* Bracing for Longer-Term Increases: 82 percent of midsize businesses are likely to continue to increase prices to mitigate costs, while the majority of small businesses expect that higher costs for labor, rents, shipping and materials are here to stay.

“Inflation has been a challenging headwind impacting businesses of all sizes, across all industries,” said Ginger Chambless, Head of Research, 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.”

Click here to read the full survey results.