Think an economic downturn is on its way? According to results released Tuesday from Provident Bank‘s 2023 Economic Outlook Survey, 67% of small to medium-sized business owners agree with you, thinking a recession is likely.
The survey polled 1,000 small to medium-sized business owners and executives and explored predictions for 2023’s economic outlook in addition to measuring respondents’ thoughts on the likelihood of a looming recession and the effects inflation and rising interest rates had on their organizations in 2022.
What’s causing those beliefs? The COVID-19 pandemic (27%), inflation (23%) and the current presidential administration (14%) were cited among the most widely believed causes of a recession.
Inflation (16%), supply chain-related delays (13%), rising wages (12%), trouble attracting and retaining talent (11%) and economic fallout of the pandemic (9%) were noted as the most widely anticipated challenges for businesses in the upcoming year. Respondents felt the most challenging issues facing the nation’s leaders and the incoming Congress are inflation (57%), climate change (37%) and crime (28%).
“As bankers, it’s incumbent on us to help our customers prepare for a possible downturn in the economy,” Anthony Labozzetta, CEO and president, Provident Bank, said. “It’s also essential for businesses to know that they can rely on their bank for trusted advice and solutions on how to best navigate a potentially challenging economy.”
Despite anticipated challenges in the coming year, there was still a strong spirit of optimism when it came to their own businesses. When asked how they thought their business specifically would look like in a year, 78% reported they expected to be in “better” or “much better” shape.
Adding to the optimism, 68% reported that they expect to increase their hiring in 2023. Projected sales growth (17%), reasonable labor costs (15%) and a need for skills not possessed by current staff (14%) were among their motivations for bringing on new employees.
Other survey findings include:
- 87% of professionals surveyed said rising interest rates have had a negative impact on their business;
- 72% of respondents from the Midwest believe it is likely that the U.S. will be in a recession in 2023, while only 59% of respondents from the Northeast believe it is likely;
- 66% of executives across all regions of the U.S. (Midwest, Northeast, South and West) believe housing prices in their local region will rise in 2023; and
- 56% said projected sales growth was a crucial factor behind their decision to increase hiring in 2023.