Small-to-Medium-Sized Business Owners, Executives Believe Recession Likely in 2023

As inflationary pressures continue, investors, policymakers and economists alike debate whether the US is entering, already entered, or will soon enter a recession.

The results of the 2023 Economic Outlook Survey by Provident Bank, which polled 1,000 small-to-medium-sized business owners and executives tallied predictions for the economic outlook. They also measured respondents’ thoughts on the likelihood of a recession and the effects inflation and rising interest rates have had on their businesses in 2022.

The results found that 67% believe the US is likely to enter a recession this year. The pandemic polled the highest at 27%, while inflation and the current administration polled at 23% and 14%, respectively, as causes for the recession.

Respondents believed inflation (16%), supply chain related delays (13%), rising wages (12%), trouble attracting and retaining talent (11%) and economic fallout of the pandemic (9%) were the most widely anticipated challenges for businesses this year.

Meanwhile, 87% of professionals said rising interest rates have had a negative impact on their business and 66% of executives across all regions of the US (Midwest, Northeast, South, and West) believe housing prices in their region will rise in 2023.

Despite these expected challenges, there was still a bit of optimism when it came to their own businesses. When asked how they thought their business would look like in a year, 78% reported they expected to be in “better” or “much better shape.”

In addition, 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.