Business leader optimism hits record low amid soaring inflation, labor shortages
Executives surveyed by JPMorgan Chase cited inflation, labor shortages as top challenges
Stephen Moore, visiting fellow at the Heritage Foundation, argues the economic situation could get worse depending on fiscal and monetary policy moves in the second half of the year.
Business leaders' confidence in the outlook of the economy has plummeted over the past year according to JPMorgan Chase, which found that optimism among executives of mid-sized firms has reached a record low as soaring inflation and labor shortages continue to take a toll.
JPMorgan's 2022 Business Leaders Outlook Pulse, released Monday, found that only 19% of respondents are optimistic about the national economy for the year ahead, which marks the lowest reading in the survey's 12-year history.
Business leaders' confidence has hit a record low, with midsized firms expressing concerns over sky-high inflation and labor market woes. (iStock / iStock)
The bleak outlook is vastly different from last year's survey, when 75% of respondents expressed optimism for the economy looking forward.
At top of mind for business leaders now is inflation – which sits at a four-decade high – with 71% citing rising costs as their most significant challenge, and 99% reporting that their cost of doing business is up.
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Labor market issues were the second-biggest concern cited by respondents, with 70% telling JPMorgan they were facing challenges in areas like recruitment and retention.
JP Morgan Chase & Co. corporate headquarters in New York City (REUTERS/Mike Segar/Files / Reuters Photos)
"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.
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"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," Chambless added.
Some 71% of respondents expressed confidence about their own firms' performance in the coming year, down from 88% last year. The latest showed that a majority, 55%, were optimistic about their respective industries, down from 82% last year.
Leaders of midsized-firms join small business owners in hitting record-low optimism for the U.S. economy over the next year. (iStock / iStock)
JPMorgan's survey covers over 1,500 business leaders managing companies with revenues between $20 million and $500 million. The company conducted the survey from May 25 to June 10, 2022. It marks the third survey released this month indicating that economic confidence has hit a record low.
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The National Federation of Independent Business (NFIB) Optimism Index released June 14 showed that small business optimism dropped for the fifth-straight month to a record low of 93.1 for the index, and the University of Michigan's consumer sentiment index released last week showed that the figure dropped 14.4% between May and June to 50 – the lowest reading since the survey began in the late 1970s.