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Business leaders see profits rising despite recession fears: survey

January 5, 2023 Published by

Just In | The Hill 

Majorities of midsize business leaders expect their sales and profits to increase this year but also believe the U.S. could slip into recession, according to a survey conducted by JPMorgan Chase.

In an online survey of 791 business owners and executives, 65 percent of respondents said they believe a recession is likely and only 8 percent said they were optimistic about the economy in 2023. 

Even so, 63 percent of business leaders said they expect to see higher sales and 51 percent are expecting higher profits next year despite the dour outlook. Only 14 percent of respondents expected revenue to fall and 24 percent expected profits to fall in 2023.

“Following the challenges of the last few years, it’s encouraging to see the resilience of small business owners and leaders,” said Ben Walter, CEO of Chase Business Banking, in a Thursday statement.

 “The next economic cycle is always right around the corner,” Walter said.

While the U.S. economy powered through high inflation and rising interest rates in 2022, a growing number of economists expect the country to face at least a brief recession by the second half of 2023. 

The Federal Reserve is on track to keep boosting interest rates with the goal of slowing the economy enough to keep bringing inflation down from four-decade highs, but at the cost of higher unemployment. Fed leaders have expressed optimism that a historically strong labor market can handle higher joblessness, but have not ruled out the chance of their rate hikes causing a steep increase in layoffs.

Inflation is also expected to remain high throughout 2023, pinching household budgets as annual price growth continues to fall from a peak of 9.1 percent in June. The Fed aims for annual inflation of roughly 2 percent, well north of the November annual inflation rate of 7.1 percent.

“Inflation has been a challenging headwind impacting businesses of all sizes, across all industries,” said Ginger Chambless, head of research for JPMorgan Chase Commercial Banking, in a Thursday statement.

“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.”

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