JPMorgan survey: 2 in 3 businesses bracing for recession

PROVIDENCE – Nearly 2 in 3 business leaders are bracing for a recession this year, according to a new survey by JPMorgan Chase & Co.

The heightened recession fears come amid gut-punching inflation levels, according to the 2023 Business Leaders Outlook Survey published on Thursday. Indeed, 91% of midsize businesses (defined as those with $20-$500 million in annual revenue) say they have been hurt by inflation, leading to rising expenses including hiring and retaining workers, shipping and raw materials. More than 8 in 10 have already passed some of these cost increases on to their customers, and expect to raise prices again as inflation continues to eat away at their profits.

Small businesses, defined as those with annual revenue of $100,000 to $20 million, appear to be faring better, with fewer reporting inflation and supply chain woes. Optimism among small businesses has also not wavered below 2022 levels, with nearly half of small business leaders hoping for a rosy outlook in the year ahead. In contrast, economic optimism among midsize-business leaders plunged from 34% to 8%, year-over-year.

That’s in part because small businesses have been shielded from national and international economic volatility, said Christopher Stevens, JPMorgan’s market executive of middle market commercial banking in southern New England. 

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“What is interesting in the data, and in talking to companies locally, is that small businesses, even those that were disproportionately affected by the pandemic, are still pretty positive,” Stevens said.

That positive outlook is even stronger when it comes to their own companies’ performances, with two in three business leaders (both small and midsize) expecting revenue and sales to increase in the year ahead. 

That holds true in Rhode Island, where the state was able to defy its  historic “first in, last out” recessionary pattern after the pandemic, at least in terms of core manufacturing and construction industries, Stevens said.

“The temperature here was very good compared to other New England states,” he said. “I think that has influenced companies’ personal outlooks.”

Despite looming recession predictions, hiring plans aren’t slowing either, with half of small and midsize businesses planning to grow their staff in the year ahead. Midsize businesses were more likely to increase waves and benefits to help find and keep workers – 67% compared with 42% of small businesses. 

“While businesses may be cautious in their economic outlooks, their actions display a focus on growth and investing in their employees,” John Simmons, head of middle market banking and specialized industries, said in a statement. “Businesses are signaling that they’re practiced in being nimble and prepared for several different scenarios, which are keys to operating effectively in today’s economy.” 

The survey reflects online responses from 1,800 small and midsize-business leaders. 

Nancy Lavin is a PBN staff writer. You may reach her at