Leaders of middle market businesses are much less optimistic about the U.S. economy than they were at the start of this year. Just 32%—or about one in three—of middle market business leaders have confidence in the national outlook, down from 65% in January. And significantly, one-fourth (25%) now expect a recession, up from 8% at the beginning of the year, according to a survey from JPMorgan Chase.
Meanwhile, 55% of the business leaders in the survey cited uncertain economic conditions as the top challenge facing their company. This was followed by tariffs, cited by 41% of executives, along with revenue and sales growth, which also received 41%, JPMorgan said.
Surprisingly, despite the decline in economic optimism, business leaders remain bullish about their individual businesses. A majority, or 85%, of respondents predicted steady to increased company performance through the end of the year, said Matt Sable, co-head of JPMorgan commercial banking. More than two-thirds, or 78%, expect revenue and sales to increase or remain the same, while 73% expect profits to jump or hold steady. Thirty-seven percent plan to increase headcount, while 45% anticipate no changes to staffing.
“Business leaders are resilient, and it’s in their nature to be thinking about what’s ahead. While the near-term may seem uncertain, they’re operating with a long-term view, focusing on what they can control to run and grow their businesses,” Sable told Fortune by email.
For the past 15 years, JPMorgan Chase has questioned U.S. middle market business owners and leaders on the challenges and opportunities they face as part of its Business Leaders Outlook survey. The bank typically queries executives at the end of each year and reports its results in January, a spokeswoman said. Sometimes, it conducts a mid-year online survey. In June, JPMorgan questioned executives from various industries and received 718 responses. JPMorgan defines middle market businesses as companies with annual revenue between $20 million and $500 million.
Business leaders are still operating cautiously. Nearly half, or 44%, of the middle market executives said external factors caused them to delay their business plans to some extent. Of those who changed their plans, 74% blamed policy uncertainty—which includes tariffs, regulations and trade policies. Thirty-seven percent of leaders pointed to market volatility and another 37% mentioned shifts in customer demands.
More than one-third, or 35%, cited geopolitical events. “Leaders are recalibrating where necessary to ensure they can continue to deliver for their clients and communities, highlighting their resilience and determination,” Sable said in a statement.