WITH ALL the gloom and doom being spouted about the U.S. economy, you would expect small and mid-sized business owners to be battening down the hatches and preparing for the worst.

Not at all.

A sizable number continue to be optimistic about the U.S. economy, according to a new survey. So much so that their optimism is running 34% ahead of where it was at this time last year.

Not only do most business owners see the general economy in a favorable light, but almost eight in 10 are “highly optimistic” about the prospects for their own businesses, according to the survey of 500 business owners conducted in early September by PNC Financial Services Group.

A third of the 500 business owners surveyed think the impact of the U.S.economy on their businesses is major, but most feel the effect is minor or of little impact.

Recession concerns are 'overstated'

"These findings are consistent with PNC's forecast for continued economic expansion through the rest of 2024 and in 2025," said PNC Chief Economist Gus Faucher. "While there's increased uncertainty around the economy, positive sentiment like this demonstrates that the fundamentals remain solid. With small- and mid-sized business owners feeling very optimistic and the labor market remaining solid, recession concerns in the fall of 2024 are overstated."

The survey found that:

• A third expect to seek a new loan or line of credit in the next six months.

• Three in 10 expect capital spending to grow in the next six months. Top areas for planning investments or improvements are Human Resources practices, products and services as well as technology.

"We're seeing businesses act based on their optimism. They're anticipating an increase in demand, making investments and boosting inventories, both positive signs for the economy," Faucher said.

• Nearly two-thirds of businesses expect an increase demand for their products or services in the next six months.

• To meet demand, a survey-high of four in 10 (41%) owners expect the level of inventory to increase in the next six months.

• Six in 10 plan to raise prices in the next six months, the highest rate since Spring 2018. They expect to raise them by 5% or more.

• Nearly two in 10 (18%) business owners expect to increase the number of full-time employees in the next six months. But more than a third (35%) of businesses that regularly hire employees are finding it is harder to hire qualified candidates, a return to 2023 levels following a respite last spring.

• More than four in 10 (42%) owners expect U.S. consumer prices to increase by 5% or more in the next year, a record high for the survey. Inflationary factors also dominate concerns when it comes to risks to the business for the next six months. A majority of businesses are feeling the impact of inflation in supplier prices, while nearly half are experiencing inflationary pressures from employee compensation.

• As the 2024 U.S. Presidential Election draws closer, concern about the impact on business is building. More than two-thirds (68%) of owners are at least moderately concerned about the risk U.S. political uncertainty poses to their business, up significantly from six months ago (45%).