(BPT) - By Ginger Chambless, Head of Research, JPMorgan Chase Commercial Banking
The first half of 2022 has tested business leaders with decades-high inflation, sharply rising interest rates and ongoing supply and labor shortages.
In light of these challenges, less than 1 in 5 business leaders (19%) are optimistic about the national economy for the year ahead, according to JPMorgan Chase’s 2022 Business Leaders Outlook Pulse survey — the lowest percentage in 12 years of survey data. But despite today’s pressures, business leaders are embracing change and remaining nimble in order to position their companies for success. In fact, more than half (71%) remain optimistic in their own company’s performance.
JPMorgan Chase recently surveyed more than 1,500 midsize business leaders to understand their economic outlook and business challenges heading into the second half of the year and how they plan to navigate the evolving landscape.
Here are three ways business leaders are tackling today’s economic challenges and positioning their companies for the year ahead.
1. Calculated Expansion
Business leaders are betting on themselves and staying the course with regards to expanding and innovating their businesses.
An overwhelming majority of business leaders surveyed (83%) expect to grow their business over the next year, with more than half planning global or domestic expansion (63%) and product innovation (53%) to fuel growth. Due in large part to these strategies and resilience to drive their business forward, nearly three-quarters of business leaders (73%) anticipate increased revenue in the year ahead.
2. Making Strategic Adjustments
With the survey showing that rising interest rates (65%) and inflation (86%) are more significantly challenging companies compared with six months ago, business leaders must balance what’s happening in the macroeconomic environment with their company-specific strategies. This includes following the implications of recent Federal Reserve interest rate hikes — and how they affect economic behaviors — and the impact of ongoing geopolitical events on energy prices and supply chains.
Business leaders could use this time to re-assess some of their key strategic and operational practices, including supplier networks, capital structures and whether they are most efficiently deploying their labor force to execute business plans.
3. Adapting to Inflation Pressures
Business leaders are grappling with a major shortage of skilled workers, continued supply chain disruptions and the worst inflation in 40 years, all of which are diminishing their national economic outlooks.
Rising input and production costs are forcing business leaders to make adjustments to protect margins, including automating more processes, strategic stockpiling and prioritizing sales of their most profitable products. Unsurprisingly, more than three-quarters of businesses (76%) have raised prices in response to inflation, and 42% have passed along at least half of their increased costs in the form of higher prices. Since inflation isn’t expected to subside in the near-term, more than 4 in 5 business leaders (81%) expect to continue to increase prices to help mitigate costs.
Though the economic outlook for the months ahead is uncertain, today’s business community continues to prioritize growth, while remaining at the ready to face the challenges that come their way.
To learn more about how JPMorgan Chase is helping business leaders build for the future, visit jpmorgan.com/2022midyearoutlook.