Businesses Expect Continued Growth Despite Softening Economic Outlook
Friday, January 25, 2019
Most small and midsize U.S. businesses have a positive outlook for the domestic economy and expect their businesses to continue growing this year, according to the annual JPMorgan Chase Business Leaders Outlook report.
They’re most optimistic about their own prospects, as the economic expansion stretches to a full decade and they’ve had a full year to digest the corporate tax cut. In all, 84 percent of midsize businesses and 74 percent of small businesses are optimistic about their company performance.
“Businesses are being more cautious as they focus their growth plans on what they can control,” said Jim Glassman, senior economist at JPMorgan Chase. “They’re investing back into their business and preparing for disruptive forces like emerging technologies.”
The majority of businesses – 73 percent of midsize ones and 55 percent of small – remain optimistic about the national economy, though that’s down 16 points and 8 points from a year ago, respectively.
“Businesses remain optimistic about the global outlook, but are more cautious than they were last year because of trade tensions, uncertainty around tariffs and where we are in the economic cycle,” Glassman said.
Just 39 percent of midsize businesses and 38 percent of small businesses are optimistic about the global economic outlook for 2019, down 30 points and 13 points, respectively.
Investing for Growth: Nearly all businesses – 91 percent of small and midsize companies – plan to maintain or increase their capital expenditures. That’s because 81 percent of midsize companies expect their revenue/sales to increase in 2019 and 74 percent expect higher profits. Among small businesses, 60 percent expect revenue/sales growth and 58 percent expect to see higher profits.
Help Wanted: Two-thirds (66 percent) of midsize companies plan to hire more full-time personnel and 80 percent plan to increase compensation in the next year. Small businesses are more conservative: Just over one-third (36 percent) plan to add full-timers and 41 percent will increase compensation.
Good Help Hard to Find: Midsize businesses rank the limited supply of talent as their #1 challenge, and it’s become more challenging over the last few years. More than half (54 percent) of midsize businesses report being very or extremely concerned. Small business are concerned but to a lesser degree: 28 percent are very or extremely concerned about potential challenges due to a limited supply of candidates.
Taking on Technology: Company leaders are already preparing to face disruptive technology changes and challenges: 75 percent of midsize companies and 52 percent of small ones have taken actions such as:
- Designated in-house person/team for identifying threats and opportunities.
- Developed proactive counter measures.
- Collected additional data for analysis.
- Created a contingency plan.
- Implemented regular firewall testing.