The economy is a source of optimism for business owners, according to PNC’s latest Economic Outlook survey. Nearly 60% of respondents were highly optimistic about the national economy as part of the semi-annual survey of small- to mid-sized business owners. That’s up from 34% a year ago.

The national sentiment, further boosted by 62% of respondents expressing optimism for their local economy, supports PNC’s forecast of a soft landing for the U.S. economy as a whole in the remainder of 2024 and into 2025.

Business leader optimism also extends to their own business prospects over the next six months. More than 75% of respondents reported being highly optimistic about the prospects for their business, just below the 79% who responded similarly in the Spring and well above the survey’s historical average of 39%.

“The labor market is solid and recession concerns have cooled for the fall of 2024, supporting the notion that the economy will continue to expand for the remainder of this year and into next,” said PNC Chief Economist Gus Faucher. “That’s an encouraging environment for business owners and I think that’s reflected in the optimism they are showing for business performance in the months ahead.”

Despite their optimism, respondents still feel that inflation is a risk to their business, with 42% of those surveyed saying they expect U.S. consumer prices to increase by 5% or more in the coming year. That’s a record high for the survey. Inflation peaked at more than 9% in 2022 and has been steadily falling since. Still, a majority of the business leaders in the survey reported they are feeling the impact of inflation through supplier pricing, with nearly half reporting that inflation is impacting their employee compensation.

Those fears run contrary to recent economic data and Faucher’s projections of slowing inflation as wage growth weakens and consumer demand and price growth slow. And though growth in the economy may be slower in the coming months, Faucher said he still sees a strong labor market, continued household wealth growth, and consumer spending contributing to a strong close to 2024.

“Clearly, despite slowing inflation, business owners are still feeling its effects as they buy, hire, and make borrowing decisions,” Faucher said. “Still, we expect those pressures to ease in the coming months as growth slows and the Fed adjusts its interest rate policy in response.”

Reinforcing the positive forecast for the economy and despite concerns about inflation, there was a significant increase (64%, up from 56% in the spring) in respondents reporting they expect demand for their product or service to grow. Likewise, more than 40% said they expect to increase inventory to meet that demand. In addition to boosting inventories, 30% of respondents said they expect capital spending to increase over the next six months, with human resources, technology, and product/services the primary beneficiaries of that investment.

PNC’s annual survey, now in its 22nd year, measures small business leaders’ opinions and attitudes on a variety of topics related to the economy, their individual businesses, and the impact of geopolitical events. Other findings of PNC’s fall survey include:

  • 29% of business leaders anticipate requesting a new loan or line of credit in the next six months – the highest level in the history of the survey;
  • 61% plan to raise prices in the next six months – up significantly from 47% in the spring;
  • 38% plan to raise prices by 5% or more, the highest level since 2010;
  • And 68% of business owners are at least moderately concerned about the impact of the U.S. presidential election on their business. That’s a significant increase from the 45% who reported being concerned in the spring. 

“There are still uncertainties with regard to inflation and the upcoming election that are on the minds of business leaders,” Faucher said. “But their projections around future investment, demand, and price increases for their own products show optimism for the future of the economy, and that’s a good thing.”   

To see the full 2024 PNC Fall Economic Outlook Survey results visit PNC Media Room.