JPMorgan Chase Survey: Intensified Challenges Push Business Leaders’ Optimism to Record Lows
27 June 2022 - 9:02PM
Business Wire
Most still expect a boost in revenue even as
they navigate inflation and labor shortages
As the U.S. economy faces decades-high inflation, soaring
interest rates and continued supply chain and labor shortages,
midsize business leaders across the country are increasingly
cautious in their economic outlooks, according to JPMorgan Chase’s
2022 Business Leaders Outlook Pulse survey released today. More
than 1,500 midsize business leaders participated in the survey
fielded between May 25 and June 10, 2022.
Just about 1 in 5 business leaders (19%) say they’re optimistic
about the national economy for the year ahead, the lowest
percentage recorded in 12 years of survey data, and down from 75%
one year ago. In line with this dampened outlook, pessimism around
the national economy jumped to 51% from 10% a year ago. When it
comes to the global economy, business leaders have an even more
muted outlook, with only 9% expressing optimism.
Despite dim views on the economy, many business leaders remain
confident in their own companies. More than 7 in 10 (71%) are
optimistic about their company’s performance and 55% feel upbeat
about their industry’s performance, though down from 88% and 82%,
respectively, one year ago. Nearly three-quarters of survey
respondents (73%) anticipate increased revenue/sales for the year
ahead. However, the outlook for profit growth has been hurt by
higher costs, with only 57% expecting increased profits compared to
71% at this time last year.
“The first half of 2022 has really tested business leaders with
pricing pressures and increased interest rates, on top of the
supply chain- and labor-related issues they were already facing,”
said Ginger Chambless, head of research, JPMorgan Chase Commercial
Banking. “While it’s surprising to see how drastically sentiment
has shifted, it is important to note that business leaders are
still mostly upbeat when it comes to their companies and areas that
they can more directly control.”
Challenges Have Intensified in 2022 In the latest survey,
100% of respondents said they’re currently facing business
challenges. Business leaders cite the higher cost of doing
business, including inflation, as their top challenge (71%),
followed closely by labor issues (70%), including recruiting,
hiring and retaining employees and labor shortages. Notably,
business leaders described several factors that contribute to these
challenges as more significantly impacting their companies compared
to six months ago. Inflation is worse than six months ago according
to 86% of respondents, along with rising interest rates (65%).
Passing Increased Costs onto Consumers Rising costs are
nearly impossible for business leaders to escape – in fact, 99%
report that their costs of doing business have increased. More than
7 in 10 business leaders point to increased costs from retaining
employees (77%), supply chain issues (74%) and hiring employees
(71%), as the main drivers behind these increases.
With their bottom lines impacted, more businesses are in turn
passing along at least some of the rising costs to consumers. More
than three-quarters of businesses (76%) are raising prices, and 42%
have passed along at least half of their increased costs to
consumers and buyers in the form of higher prices. This trend is
not expected to subside in the near-term, as 81% of respondents say
they are likely to continue to increase prices to help mitigate
higher costs.
Growth Plans Remain in Motion Despite continued
challenges, business leaders nonetheless have their sights set on
growth, with 83% expecting to grow their business over the next
year. While down from the 90% expecting growth at the end of 2021,
more businesses are planning on expanding into new global or
domestic markets (63%), and bolstering product innovation (53%),
including expanded or new product and service lines, compared to
six months ago.
“As has so often been the case in the past two years, business
leaders are reacting to today’s challenges by shifting their
strategies and taking calculated risks to continue expanding and
innovating their businesses,” said John Simmons, head of Middle
Market Banking & Specialized Industries, JPMorgan Chase
Commercial Banking. “They’re setting their expectations high and
embracing new opportunities to grow even as they navigate this new
set of challenges.”
Mid-Year Adjustments As companies calibrate their
strategies for the second half of 2022 and beyond, the following
factors may help facilitate growth:
- Look to Long-Term Trends: While pricing pressures and
supply chain bottlenecks are unlikely to subside in the short term,
the remainder of 2022 may provide a good window into the potential
severity of these challenges for the coming years. Businesses will
want to most closely follow the impact of recent Federal Reserve
interest rate hikes, which typically take several months to affect
economic behaviors, and the impact of ongoing geopolitical events
on supply chains. Learn more here.
- Set Up to Scale: As businesses remain focused on growth,
they may want to take inventory of their infrastructure for
scaling, including which forms of debt financing they’re using, who
their strategic partners are and how intentional they are in
equipping employees with the tools and knowledge to carry out their
strategic plans. Learn more here.
For more information on the financial solutions available to
guide business growth, visit jpmorgan.com/commercial-banking.
Survey Methodology JPMorgan Chase’s Business Leaders
Outlook Pulse survey was conducted online from May 25 – June 10,
2022, for middle market companies with annual revenues between $20
million and $500 million. In total, 1,536 business leaders in
various industries across the U.S. participated in the survey. For
year-over-year trends, current data is compared with data collected
in the second quarter of 2021 and for six-month trends, current
data is compared with data collected in the fourth quarter of 2021.
The results of this online survey are within statistical parameters
for validity, and the error rate is plus or minus 2.5%, at a 95%
confidence level.
About JPMorgan Chase JPMorgan Chase & Co. (NYSE: JPM)
is a leading financial services firm based in the United States of
America (“U.S.”), with operations worldwide. JPMorgan Chase had
$4.0 trillion in assets and $285.9 billion in stockholders’ equity
as of March 31, 2022. The Firm is a leader in investment banking,
financial services for consumers and small businesses, commercial
banking, financial transaction processing and asset management.
Under the J.P. Morgan and Chase brands, the Firm serves millions of
customers in the U.S., and many of the world’s most prominent
corporate, institutional and government clients globally.
Information about JPMorgan Chase & Co. is available at
www.jpmorganchase.com.
© 2022 JPMorgan Chase & Co. All rights reserved. JPMorgan
Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/cb-disclaimer for
full disclosures and disclaimers related to this content.
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Media Contacts: Melinda Bonner:
melinda.bonner@chase.com
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