On LI, business leaders balance optimism and economic concerns

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Business leaders on Long Island are balancing optimism about their businesses despite tempered concerns about a recession.

That’s according to JPMorgan Chase’s 2024 Business Leaders Outlook survey, wich looked at outlook about the economy despite continued uncertainty about banking industry disruption, geopolitical risks and other economic challenges.Released last week, the survey looked at companies across the country, including Long Island, where the outlook largely aligned with that of the nation.

On Long Island, “the thing that I’m most encouraged about is the general optimism about their own businesses – what’s close to home for them,” said Sarah Veitch, a market executive from JPMorgan Chase from her Melville office.

“We’re still hearing relatively positive sentiment about growth whether that’s revenue or adding headcount to support future growth,” she said.

That positive sentiment “is certainly more tempered than it might have been in previous years, but there is still a fair degree of optimism about the control that they have in their businesses and the positivity of the outlook for them,” she added.

The survey was conducted online from Nov. 9-20, for small businesses, with annual revenues between $100,000 and $20 million, and Nov. 16-Dec. 7 for midsize businesses (annual revenues between $20 million and $500 million). It featured 1,829 business leaders from across the country.

Regarding “expectation for a recession,” Veitch said, business leaders on Long Island expressed that “there’s less likelihood for that to occur.”

Amid mixed economic signals, midsize business leaders are nearly evenly split in their outlook on the national economy, with 31% optimistic, 34% pessimistic and 36% remaining neutral. While this year’s optimism is higher than the 22% reported a year ago, it remains at historically low levels for the survey.

When it comes to the local and regional economy, the outlook is rosier but still mixed, with 44% expressing optimism and 35% remaining neutral. For small business leaders, optimism for the national economy slightly dipped from 49% one year ago to 43% today, and perspectives on the local economy followed suit with 46% expressing optimism compared to 50% previously.

Business leaders are maintaining upbeat projections for their own companies in the year ahead with more than two-thirds of small and midsize business leaders optimistic about their company’s performance. The majority of midsize business leaders are expecting increased revenue/sales (61%), though these expectations are more tempered compared to previous years. Meanwhile, the 69% of small business leaders expecting increased revenue/sales is in-line with the highest levels recorded by the survey. Both small and midsize leaders anticipate greater profits (66% and 55%, respectively).

Small and midsize businesses continue to be vexed by some of the key issues they’ve faced for years, namely labor and inflation, even as they have tried to adapt and solve for these challenges. More than half of midsize business leaders (54%) cite labor-related issues—including shortages, retaining, recruiting and hiring—as one of their most significant challenges, followed by uncertain economic conditions (47%), revenue/sales growth (39%) and rising interest rates (36%). The labor challenges come as 86% of midsize business leaders say they expect to add to or maintain their current headcount in the next 12 months.

More than one-third of small business leaders (35%) report inflation as one of their most significant challenges, with rising taxes (19%) and the ability to grow sales/revenue (18%) also top concerns. The inflation worries persist as 90% of small business leaders say it has had at least some impact on their expenses, and the majority expect rising costs in areas like labor, energy and materials to continue. Despite this, 41% of small business leaders said that inflation will motivate them to accelerate their business plans, rather than scale back on (26%) or maintain (33%) current operations.

While businesses’ adoption of artificial intelligence (AI) tools, such as generative AI and language processing software, is not yet widespread, business leaders are giving more consideration to them to support a growing number of functions. Of the 46% of midsize businesses currently using or considering adopting AI, popular applications for the technology include business operations (69%) and internal/external communications (63%). Nearly half are currently or considering using AI for financial management/accounting (48%) and human resources/training purposes (47%).

While small businesses find social media tools, virtual meeting platforms and cloud technologies more essential to their business than AI, it ranks as the technology they’re most likely to add in the coming year, with 46% of small businesses planning to do so.