While reports are plentiful regarding a declining national economy and the possibility of a recession by early next year, U.S. businesses are displaying a level of confidence not normally associated with down times.
So says a report published by the U.S. Chamber of Commerce in which the group’s chief economist, Curtis Dubay, notes that “businesses of all sizes, sectors, and industries report feeling pessimistic about the future of the economy.”
Yet, adds Dubay, those same businesses “continue to hire, raise wages, and make new investments, and they expect to continue to do so.”
This same duality also applies to consumer behavior: “Usually, when consumers feel badly about the economy, they pull back on spending,” writes Dubay, before noting data showing that total spending increased faster than inflation in August.
Moreover, in September, retail sales “grew at the same pace as our stubbornly high inflation, which remains near a 40-year high at 8.2%.
For businesses, according to a U.S. Chamber Middle Market Index, 48% of middle market executives surveyed said they expected to see an increase in revenue.
The numbers are similarly bullish in the small business community: “The number of small business owners and decision makers saying the economy is in poor health is now more than twice as much as those saying it’s in good health.”
Yet, continues Dubay: “Small businesses generally report positive sentiment about the overall health of their businesses, contributing to secondhand pessimism.”
That “secondhand pessimism” comes when respondents have been following reports in the media centering on a national economic decline but may not be seeing it in their own businesses.
In fact, according to a recently released Conference Board Survey of chief executive officers, some 44% said they expected to increase their workforce in the next 12 months, with a substantial 85% saying they expect to increase wages by 3% of more.
Noting that the fortunes of both large and small businesses can “change quickly,” Dubay adds that “for now, it’s a good sign that the pessimism is secondhand where it can cause much less trouble.”
By Garry Boulard
