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Monday, July 19, 2021
Businesses of all sizes are feeling great about the economy
Optimism about the U.S. economy is abundant right now.
Consumers haven't been this confident in their prospects since the pandemic began. And for the country's biggest businesses, of course, it doesn't take a look much beyond the performance of the S&P 500 (^GSPC) and the tightening of credit spreads to see how strong businesses conditions are today.
But recent data also shows there's confidence all across the spectrum, for businesses big and small.
Published on Monday, JPMorgan Chase’s 2021 Business Leaders Outlook survey revealed that 88% of business leaders surveyed by the bank are optimistic about their firm's prospects over the next six months, the most on record for the 11-year-old survey.
"After enduring the challenges of the last year and a half, businesses are feeling overwhelmingly positive about what's ahead,” said Jim Glassman, head economist at JPMorgan Chase commercial banking. The survey covered 1,375 business leaders from middle-market companies, or those with annual revenues between $20 million-$500 million.
The bank's survey also shows that three-quarters of respondents are optimistic about both the national and their local economies, up 40 percentage points from last year.
Meanwhile, last week the National Federation of Independent Business (NFIB) published its small business optimism index for the month of June, which topped Wall Street expectations and moved above 100 for the first time since November. The report also showed 15% of respondents felt the next three months are a good time to expand — the highest percentage since February 2020.
Both reports, however, cited challenges in hiring and concerns over inflation as top-of-mind hangups for business leaders big and small.
JPMorgan's survey showed that some 81% of businesses the firm heard from plan to increase staff over the next six months. The NFIB's data found that 63% of small businesses either did, or tried to, hire workers in June. JPMorgan's survey also notes that accelerated retirements — a topic we've previously discussed in The Morning Brief — are creating staffing challenges.
And as a host of data have shown— from the jobs report to inflation readings and job opening surveys — the economy's recovery from its COVID-induced recession has been anything but a smooth ride. But employers competing over labor and complaining about wage demands going up is a champagne problem when we're just 15 months removed from an almost overnight shutdown of the economy that put more than 20 million Americans out of work.
Or as JPMorgan's Glassman stated, "The focus now is on navigating growing pains to harness the momentum of the economic recovery, which is comparatively a good problem to have." And we have seen the other side.
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