The annual survey “Prospects for Business Executives 2023”, conducted by JPMorgan Chase, shows that the majority of the leaders of small and medium-sized companies in the US believe that there will be a recession in the country in 2023 and that they will have to continue facing the ravages of high inflation.
JPMorgan Chase conducted the online survey in November of 1,799 executives at small ($100,000-$20 million annual revenue) and mid-sized ($20-$500 million annual revenue) companies from various industries in the United States.
According to the results, the financial institution indicates that 65% of medium-sized companies and 61% of small ones expect a recession for the next year.
While nearly all midsize businesses (91%) are experiencing inflation challenges, 45% of small businesses see inflation as their top challenge in the coming year, up from 20% a year ago.
The survey found that 83% of midsize businesses have passed on at least a portion of increased costs to consumers and shoppers, while 68% of small businesses have raised prices for some or all products and services. .
94% of small businesses say inflation has affected expenses, and 38% say expenses have increased by 11% or more. The point is relevant, considering that the main cost drivers, for both small and medium-sized companies, are salaries and benefits to hire and retain employees, transportation and other expenses related to the supply chain, in particular raw material costs.
Additionally, businesses are bracing for long-term increases, with 82% of midsize businesses likely to continue raising prices to mitigate costs, while most small businesses expect rising labor costs, rentals, shipping and materials are here to stay.
“Inflation has been a headwind that hurt businesses of all sizes and industries,” said Ginger Chambless, director of research at JPMorgan Chase Commercial Banking. “While we have seen some encouraging signs that inflation has begun to moderate and should cool through 2023, companies may still need to consider realigning strategies, pricing, or product mixes to help to weather the storm in the short term“.
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