Most Small Businesses Expect A Recession This Year—Here’s How They’re Getting Ready For It

Most Small Businesses Expect A Recession This Year—Here’s How They’re Getting Ready For It


Nearly two-thirds of small and midsize businesses anticipate a recession in 2023, according to research published by JPMorgan Chase on Thursday, signaling a tough year ahead for industry and consumers alike as rising costs and months of persistently high inflation spook business leaders and drive prices up.

Business leaders think a U.S. recession is likely in 2023, a survey found.

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Key Facts

Some 61% of small businesses and 65% of midsize businesses—respectively defined as having annual revenues between $100,000 and $20 million and $20 million and $500 million—anticipate a recession in the year ahead, according to JPMorgan Chase’s Business Leaders Outlook, a survey of nearly 1,800 business leaders across various U.S. industries conducted in November and December.

Leaders of both small and midsize businesses listed inflation as a key concern, with almost all (91%) midsize company leaders saying their businesses are facing challenges due to inflation and nearly half (45%) of small business leaders citing inflation as a top challenge for the year ahead, up from 20% last year.

Inflation has driven up bills for things like rent, labor, transport and materials and most leaders said they are passing at least some of these growing costs onto consumers, with 83% of midsize firms and 68% of small firms upping prices on products and services.

Prices are unlikely to come down soon and could even increase further, the survey suggests, with the majority of small businesses not expecting their own operating costs to shrink and 82% of midsize firms likely to keep passing growing costs on to consumers by increasing prices even more.

Despite economic concerns, business leaders said they planned to continue investing in their workers, with half of small firms anticipating new full-time hires and half of midsize firms expecting to grow headcount in 2023.

In addition to hiring new workers, more than two thirds (67%) of midsize firms said they planned to boost employee wages or benefits and 42% of small companies expect to increase wages.


Though broadly aligned on the prospect of a recession in 2023, business leaders surveyed by JPMorgan Chase were less unified in how they felt the national and global economy would fare in the coming year. Leaders of midsize businesses, who are more likely to operate on national and international scales, were much more pessimistic than their counterparts at smaller firms. Just 8% of midsize business leaders expressed optimism for the global economy for the coming year, down from 34% a year ago. Just over a fifth (22%) said they were optimistic about the national economy, down from 50% at the start of 2022. In contrast, 49% of small business leaders were optimistic about the national economy and 45% were optimistic about the global economy, levels that are largely unchanged from last year.

What To Watch For

Despite concerns over inflation and a looming recession, as well as divergent beliefs in the outlook of global and national economies, leaders of both small and midsize businesses are largely optimistic as to their firm’s prospects. Some 72% of small business leaders and 66% of midsize business leaders said they were optimistic for the year ahead. Nearly 70% of small businesses expect to grow revenue and sales in 2023 and nearly two-thirds expect greater profits. Around half of midsize businesses predict greater profits in 2023, the survey found, with 63% expecting to increase revenue and sales.

Key Background

Economists increasingly, though not universallybelieve the U.S. is teetering on the brink of economic recession. Some believe it has already fallen into one. The Covid-19 pandemic and Russia’s invasion of Ukraine, alongside a number of other factors, have disrupted the global economy and pushed inflation to some of the highest levels in decades, driving prices and the cost of living upwards. Aggressive action and interest rate hikes from the Federal Reserve to curb inflation has hit stock and housing markets particularly hard. The economic downturn has prompted many firms to start streamlining their workforce through layoffs or hiring freezesparticularly sectors like tech that depend on advertising revenue (marketing budgets are often one of the first to be cut when companies tighten belts). The U.S. is far from the only country with a troubling economic forecast and many other nations are facing their own economic woes. The U.S. actually appears set to fare far better than other similar nations, particularly in Europe, which have struggled with soaring energy costs following the disruption of Russia’s energy exports.

Further Reading

Recession Fears Hit New High Even As Inflation Slows—Here’s What Fund Managers Predict For 2023 (Forbes)

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