As radio prepares for the fourth quarter amid an economy sending out plenty of mixed signals, a new survey of the small and mid-sized businesses that drive much of industry revenue gives reason to be optimistic. Rather than hunkering down, half (49%) of small and mid-sized business owners said they are highly optimistic about the near-term prospects for their own business.
That is a similar level of optimism to PNC’s semi-annual Economic Outlook survey in the spring, although it does show those feeling pessimistic has risen to seven percent from a historic low of two percent in spring.
“The outlook for the national and local economies has improved slightly since the spring but remains lower than last fall,” the PNC report says. The data shows 22% of business owners are “highly” optimistic about the national economy while 23% are pessimistic while more than one-half (54%) are moderately optimistic.
Despite being hopeful, small and mid-sized business owners and executives still have plenty of concerns. Topping the list are inflation and the impact of price hikes on their businesses. Continued price increases are in the works among nearly two-thirds (63%) of those surveyed, with more than a third (36%) expecting to raise consumer prices by five percent during the coming year. The increases are to keep up with non-labor costs, higher supplier costs, and capital spending.
In a sign that advertising sales may take some extra effort, seven in ten (69%) said they are making other business adjustments to address higher inflation, including cutting costs. But while most owners and executives are optimistic about their companies, nearly seven in ten (69%) fear a recession is likely in the next 12 months in the U.S. And nearly half (47%) of those who rely on a supply chain say it remains a problem.On the positive side, fewer business owners face staff shortages while four in ten expect to increase employee compensation, up from 30% in spring.
"This survey demonstrates that business owners see conditions as generally still solid despite concerns over high inflation," said PNC Chief Economist Gus Faucher. “The business leaders surveyed are indicating that they are now increasing prices because they can, rather than because they have to. This reflects continued strong demand across the economy, despite higher interest rates.”
PNC views the likelihood of recession as “low” in the near term, according to Faucher, with an elevated 45% probability of recession over the next two years. "There has been much discussion and debate about the probability of a recession in the near-term and business owners clearly are considering this possibility," he said.
The telephone survey was conducted from July 5 to August 8 by Artemis Strategy Group among businesses with self-reported revenue of $100,000 to $250 million. 500 interviews were conducted nationally with a margin of error of +/-4.4%.
Download the full PNC Economic Outlook report HERE.