Fall Economic Outlook Survey

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PNC Survey Shows Small Business Owners Optimistic Despite Inflation, Recession Worries

Small and mid-size business owners and executives have an optimistic outlook about the near-term future of their businesses as they ride out inflationary pressures, supply chain disruptions and political and geopolitical uncertainties related to the national and local economies, according to the latest PNC semi-annual Economic Outlook survey, now in its 20th year and concluded Aug. 8.


Optimism for Own Business: The survey showed that business leader expectations about their own companies remain strong with nearly half (49%) feeling highly optimistic – similar to the spring survey – while the share of those feeling pessimistic has risen to 7% from a historic low of 2% in the spring.

Inflation Worries Continue: Concerns about inflation and the impact of price hikes on their businesses remain top of mind among owners and executives. Price increases are in the works among nearly two-thirds (63%) of businesses – a survey high. Of the businesses expecting to raise their prices, more than a third (36%) expect to raise consumer prices to their customers by 5% or more in the next six months. More than a third (36%) of all business leaders expect consumer prices to increase by 5% or more in the next 12 months, up from one in four last spring.

Raising Prices Because Conditions Allow: The primary rationale for price hikes has shifted from an effort to keep up with rising non-labor costs (38% vs. 63% last spring) to favorable market conditions (44% vs. 22% last spring). Fewer than a fifth (18%) point to rising labor costs. Price pressures on their businesses, and elevated supplier costs and capital spending also are factors.

Recession Worries Elevated: At the same time, business owners are expressing concerns that a recession is on the horizon. Almost seven in 10 (69%) fear a recession is likely in the next 12 months.

Challenges Remain In Supply Chain: Disruptions to the supply chain continue to be a concern for business owners and have affected nearly half (47%) of those relying on a supply chain. To address these issues, many businesses are using a range of strategies including broadening the base of suppliers (33%) and stockpiling inventory (27%).

Outlook on Regional and National Economies: Optimism Tempered: The outlook for the national and local economies has improved slightly since the spring but remains lower than last fall. More than a fifth (22%) are highly optimistic about the national economy while 23% are pessimistic; more than one-half (54%) are moderately optimistic.

Raises on the Rise: Four in 10 expect to increase employee compensation, up from 30% in spring. Expectations for compensation increases are highest in the manufacturing sector (53%) compared to 39% for service, 36% for wholesale/retail and 35% for the construction sector. 


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