US economy

US business confidence in global economy plunges


Just 39 per cent of midsized businesses in the US are optimistic about the outlook for the global economy in 2019, down 30 points from this time last year, according to a new study showing a rift between companies’ confidence in their own prospects and their outlook for international trading conditions.

Tensions between the US and several trading partners and concern that we are nearing the end of a decade-long economic expansion contributed to the caution among business with revenues between $20m and $500m, said Jim Glassman, senior economist at JPMorgan Chase.

The bank’s annual Business Leaders Outlook report, released on Monday, shows that most US companies remain upbeat, with 84 per cent of midsized businesses and 74 per cent of companies with revenues below $20m voicing optimism about their own prospects.

Almost all of them, 91 per cent, said they planned to maintain or increase their capital expenditures this year, though Mr Glassman said it was too early to tell whether this reflected the impact of the December 2017 cut to corporate tax rates, which Republicans pitched as boosting business investment.

Some 74 per cent of midsized companies and 58 per cent of smaller groups expect their profits to rise in 2019.

“What’s interesting is that the things they know most about they tend to be quite optimistic about, but if you ask them about national or global issues they tend to echo what’s in the news,” Mr Glassman said: “Businesses are being more cautious as they focus their growth plans on what they can control.”

Companies voiced more confidence in the prospects for the US economy than for global conditions, though the number of midsized companies expressing optimism dropped 16 points to 73 per cent and just 55 per cent of smaller companies were optimistic, down 8 points.

“If you could time travel I doubt you could find a better time in history for the US economy at a macro level,” Mr Glassman said. “The only challenge really is the challenge of finding workers.”

The survey chimes with reports showing that confidence among chief executives of larger companies remains strong, but has ebbed in recent quarters. It also correlates with the picture in the latest US payrolls data, released on Friday, which showed continued strength in the job market.

As businesses’ anxiety about sales growth ebbs, the limited supply of skilled talent has emerged as their top concern in the JPMorgan survey, Mr Glassman said, prompting business owners to tempt prospective employees with training programmes and offers to pay college debts.



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