A survey of 400 business owners and executives of businesses doing volumes in the $10 million to $2 billion range reveals that while they are confident in the futures of their own companies, they are not so confident in the future of the U.S. economy. The KeyBank survey was conducted during the second quarter of 2022 and the results were similar to what KeyBank found in a survey taken during the first quarter of the year.
About 78% of the respondents felt the outlook for their businesses was excellent or very good, with another 17% saying the outlook was good. For the U.S. economy in general, 55% said the outlook was excellent or very good with another 22% saying the outlook was good. Those businesspeople who had doubts about the future of the economy said that inflation, the cost of raw materials, the potential for recession, continuing impacts of Covid-19 and Russia”™s war against Ukraine were their biggest concerns.
Many of the respondents indicated that their businesses are in a growth mode with 51% expecting to expand their use of technology and automation in the next six months. Additional employees were planned to be added by 48% of the companies, with 45% expecting to introduce new products into the marketplace. Only 5% of the respondents said their businesses would not be investing or expanding in the next six months.
Among those companies planning to add employees, 31% anticipated difficulty in hiring, largely due to a lack of qualified candidates.
Joe McPheter, a senior vice president at KeyBank, told the Business Journals that what he has been picking up from businesses in the Hudson Valley is generally consistent with what the nationwide survey reported. McPheter is based in Tarrytown and is involved with corporate and commercial banking in the New York Metro area, including the Hudson Valley.
“What we are hearing more and more and I”™m hearing from our meetings is companies feel good about themselves,” McPheter said. “They actually feel strong, the companies are well-positioned. Surprisingly, I think part of that is from Covid, that microeconomic event that happened and made people step up and shore up their balance sheets a little bit.”
McPheter said the bank saw the use of lines of credit decrease for awhile because businesses were flush with cash and many had received federal money from the Paycheck Protection Program.
“Companies in the Hudson Valley are feeling good about themselves and without a doubt across the board there are concerns about what the future may hold,” McPheter said. “I don”™t think companies are concerned about filling their gas tanks because of the cost because at the end of the day, inflation has brought up the cost of everything. I think the concerns around inflation are effects on customers ”¦ their spending habits.”
McPheter said that they are starting to see consumers backtracking a bit and starting to spend a little bit less. He said there are concerns about Russia and Ukraine and added that supply chain disruption still remains an issue. He said that businesses with which he has spoken worry about where the point is when demand decreases while costs remain high.
McPheter said that businesses are paying closer attention to their financials on a monthly basis than they might have in the past and are questioning whether there could be a recession and, if so, when it might happen.
“I have not heard anyone say that we”™re in a recession. I don”™t think the numbers would support that. But I do hear them with the concerns of the ”˜R”™ word,” McPheter said.
McPheter said that the periodic surveys of business conducted by KeyBank are useful within the bank.
“I read them and it definitely is very valuable from a business standpoint. We”™re getting the feedback of the people that are in the market, that are driving this revenue, that we are supporting,” McPheter said. “Getting their feedback helps us look at our analytics and get a pulse of the sentiment, which is really important.”
McPheter pointed out that business in the Hudson Valley is not highly concentrated in one sector and, therefore, the overall economy is less likely to feel sharp pains if one sector of the national economy takes a severe hit.
“We have a decent amount of construction, we have a decent amount of distribution. Retail and consumer goods are prolific. A lot of the areas especially within Westchester have a lot of disposable income,” McPheter said. “I think we”™re pretty well balanced unlike, maybe, regions of Vermont or Maine where timber is a large part of what they do.”
He said that companies are investing in technology not only to take advantage of what it can do but also use it where possible to ease the effects of personnel shortages and expand individual productivity.
“We”™re talking with a company ”¦ that”™s looking at a $20 million project to put in automated robots to pull the boxes from the shelves because they can”™t get enough employees and the cost of labor continues to rise, so automation I think for most companies is a true focus,” McPheter said. “Four out of five companies that we speak to have implemented new systems that are technology-based or are in the process of doing so.”
McPheter said that one important takeaway from the latest KeyBank business survey is that business leaders are focused on their businesses more than outside factors that they can”™t directly control, such as the national economy and politics.
“The best CEOs that we deal with know what they can control and they focus on that,” McPheter said “They”™re driving value, growing market share, investing in their companies, trying to grow their staffs. They”™re cognizant of what is going on in politics but I don”™t think it”™s slowing them down or stopping them.”
