The majority of midsize (65%) and small (61%) businesses are expecting a recession this year, according to JPMorgan Chase’s 2023 Annual Business Leaders Outlook survey released Thursday.
The heightened anticipation of a slowdown comes as most respondents indicated they were already taking steps to offset inflation, according to the survey release. Most (83%) of midsize businesses are passing at least some of the costs on to consumers and buyers and 68% of small businesses are selectively raising prices and the majority of small businesses are expecting higher costs for labor, rents, shipping and materials to persist.
Ginger Chambless, head of research, JPMorgan Chase Commercial Banking, isn’t expecting any letup in rising prices. “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,” Chambless said in a statement.
Despite some recession-watch contrarians, the JPMorgan survey findings dovetail with a growing number of forecasters penciling a downturn into their 2023 calendars.
Last month the National Association for Business Economics (NABE), citing a survey of professional forecasters, said the odds of a U.S. recession in 2023 exceed 50%, with the downturn most likely to begin during the first quarter of the year amid a cooling in the labor market, CFO Dive previously reported. In October Fitch Ratings predicted that the U.S. economy will start to shrink during the second quarter of 2023, saying the downturn would prove “relatively mild by historical standards.”
The JPMorgan survey’s respondents did signal some optimism: their relatively dim view of the economy wasn’t damping hiring plans with half (50%) and just over half (51%) of small and midsize businesses respectively planning to increase headcount this year.
“While businesses may be cautious in their economic outlooks, their actions display a focus on growth and investing in their employees,” stated John Simmons, head of Middle Market Banking & Specialized Industries, JPMorgan Chase Commercial Banking. “Businesses are signaling that they’re practiced in being nimble and prepared for several different scenarios, which are keys to operating effectively in today’s economy.”
About 1,799 business leaders across industries participated in the survey which was conducted online in November.