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Only 19% Of Business Leaders Are Optimistic As Recession Fears Loom

   DailyWire.com
NEW YORK, NEW YORK - FEBRUARY 24: The Wall Street street sign is seen on February 24, 2022 in New York City. U.S. stocks opened this morning dropping after Russia began its attack on Ukraine. The Dow Jones opened 800 points down while the S&P 500 fell 2 percent and is down 14 percent from its record high set in January. Oil prices also dropped more than 5 percent. (Photo by Michael M. Santiago/Getty Images)
Michael M. Santiago/Getty Images

A mere 19% of midsize business leaders are optimistic about the national economy due to inflationary pressures and other challenges, according to a JPMorgan Chase survey released on Monday.

The investment bank’s Business Leaders Outlook Pulse survey represents the highest degree of pessimism in the 12 years since the survey began. Though 71% remain optimistic about their own company and 55% have a positive outlook on their own industry, the figures showed declines from respective 88% and 82% readings one year ago.

“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,” Ginger Chambless, head of research for JPMorgan Chase Commercial Banking, explained. “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.”

Indeed, as the Consumer Price Index (CPI) rose 8.6% between May 2021 and May 2022, the Producer Price Index (PPI) — which tracks inflation for businesses — rose 10.8% over the same period. The rise in price levels has accelerated due to the Russian invasion of Ukraine and related spikes in energy prices.

In response to high inflation, the Federal Reserve began hiking interest rates from near-zero levels earlier this year — most recently, by a 0.75% increment that represented the boldest move to combat inflation in nearly three decades.

While 99% of business leaders report higher operating costs, 76% are passing more of their expenses to consumers by raising prices. Among the causes for the higher prices are efforts to retain employees, supply chain issues, and hiring, with 77%, 74%, and 71% of business leaders respectively noting such problems.

The number of respondents expecting growth for their company fell from 90% at the end of 2021 to 83% in the most recent survey. However, more businesses are planning overseas expansions or product innovations.

“As has so often been the case in the past two years, business leaders are reacting to today’s challenges by shifting their strategies and taking calculated risks to continue expanding and innovating their businesses,” John Simmons, head of Middle Market Banking & Specialized Industries at JPMorgan Chase Commercial Banking, added. “They’re setting their expectations high and embracing new opportunities to grow even as they navigate this new set of challenges.”

In a Conference Board survey of international CEOs released earlier this month, more than 60% said that “they expect a recession in their primary region of operations before the end of 2023 or earlier,” while 15% said that “their region is already in recession.”

“There is this gap between how consumers are viewing this — they’re not as worried as CEOs are,” Conference Board Chief Economist Dana Peterson told The Wall Street Journal. “But CEOs are trained to look 12 to 18 months down the line. Most consumers? The next few months, or three to six months, is really what they’re thinking about.”

Yet consumers are by no means optimistic either. The University of Michigan’s benchmark Survey of Consumers recently showed that consumer sentiment plummeted to its lowest point since 1952. According to Survey of Consumers Director Joanna Hsu, results were similar across income, age, education, region, and political leanings.

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