Small-business owners are feeling better about their prospects -- but only a little bit. A recent survey of small- and midsize-business leaders suggests fears of a 2024 recession are less acute, though concerns about general economic uncertainty remain high.
JPMorgan Chase's 2024 Business Leaders Outlook survey, released Thursday, suggests leaders are ready to look past the erratic and difficult events of 2023, marked by banking industry disruption, two wars that carry meaningful geopolitical risks, as well as sustained macroeconomic challenges. The report suggests a more balanced outlook heading into 2024, based on responses from about 1,800 business leaders running companies with annual revenue between $100,000 and $500 million surveyed from mid-November to early December. Here are some important takeaways:
Recession Predictions Are Receding
A 2024 recession may or may not arrive, but fewer respondents expect it. About 40 percent of midsize- and 51 percent of small-business leaders believe we will see a recession this year, or believe we're already in one. That's a big shift from last year, when 65 percent of midsize-business leaders and 61 percent of small-business leaders saw a recession in the offing.
Economic Outlook
Size matters when it comes to looking a year out. Midsize-business leaders had divided, yet proportional, views on the 2024 national economy, with 31 percent optimistic, 34 percent pessimistic, and 36 percent remaining neutral. Small-business leaders were less upbeat, as optimism for the national economy this year dipped to 43 percent from 49 percent one year ago. Closer to home, regional and local economic outlooks were a bit cheerier: Forty-four percent of midsize- and 46 percent of small-business leaders had positive views.
Company Performance
In-house, things look good from the corner offices. More than two-thirds of small-business leaders (69 percent) and midsize-business leaders (67 percent) said they felt good about their company's performance.
Challenges
The same issues keep the same people up at night: About 54 percent of midsize-business leaders said labor-related issues were a major concern, and 47 percent cited uncertain economic conditions. Other worries included revenue or sales growth (39 percent) and the possibility of rising interest rates (36 percent). Inflation topped the list of small-business bugbears at 35 percent, followed by rising taxes at 19 percent, and concerns about growing sales or revenue at 18 percent.
"Despite the volatility of 2023, it has been encouraging to see the resilience of U.S. businesses and the firm pace of U.S. consumer spending growth that has contributed to the year's stronger economic picture," said Ginger Chambless, head of research for JPMorgan Chase Commercial Banking. "Over the past few years, business leaders have not only become adept at managing through tough times and recovering from speed bumps, but confident in their ability to manage and lead through crises given how practiced they've become. These learnings will set them up well to weather future uncertainty."
Technology forecasts also fell in line with generally forward-looking approaches, particularly regarding business uses of artificial intelligence applications. Though generative AI and language processing software are getting more headlines than small-business use cases, 46 percent of the midsize businesses currently using or considering adopting AI tools are concentrating on their use in operations (69 percent) and internal and external communications (63 percent). About half of those businesses are also considering using AI for accounting and finance functions and human resources and training. About 46 percent of small-business leaders said they were considering adding AI tools to their digital toolkits, though most said they still considered social media tools, virtual meeting platforms, and cloud technologies essential to their businesses.
And, as they've been for decades, small-business owners were credited with persistence, especially when it spawns a little hard-won optimism.
"Small-business owners continue to demonstrate resilience, proving time and time again why they are the lifeblood of the U.S. economy," said Ben Walter, CEO of Chase for Business. "Despite nagging inflation and concerns of recession, the majority of small-business owners feel like they can weather any storm, and even expect to increase in revenue in 2024."
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