According to a new study from financial advisor CIT Group, middle market executives are expressing renewed optimism in their business prospects compared to a year ago. However, despite this positive outlook they are concerned about potential tax increases, government regulations, compliance with the Affordable Care Act and the current strength of the U.S. and global economies.
The report, "Voice of the Middle Market — Perspectives from the Heart of the U.S. Economy," overviewed the middle market, whose companies take in more than $6 trillion in revenues and employ more than 30 million people annually, according to a news release.
"As one of the leading job creators in the United States and the economic backbone of America, middle market companies are looking to grow their businesses but feel greater attention needs to be paid to the policies that directly affect their companies and their concerns on Capitol Hill," said John A. Thain, chairman and CEO of CIT.
Key finding from the study include:
- The majority of middle market executives report that their companies are in a strong position today (60 percent). In addition, many remain optimistic with 55 percent saying they are better off today than compared to a year ago.
- However, the optimism of middle market executives is not without its challenges. While most are worried about economic uncertainty in the U.S. and globally (81 percent and 70 percent, respectively), there are also concerns about potential tax increases (74 percent), compliance with the Affordable Care Act (70 percent) and compliance with government regulations (66 percent). In addition, 54 percent said they believed rising interest rates would have a negative impact on their business.
- Looking ahead to the next 12 months, middle market executives express concern about talent management with 59 percent concerned about their ability to retain top talent, and 60 percent with their ability to hire top talent.
- Respondents report that throughout the next 12 months their companies are likely to: increase the range of products and services they offer (59 percent); expand into adjacent markets (55 percent) and increase the size of their workforce (46 percent).
- A significant majority of middle market executives agree that middle market job growth will have a significant impact on strengthening the U.S. economy (96 percent). Despite this, 83 percent believe Congress is doing too little to support the middle market; while 95 percent disapprove of the job performance of Congress and 70 percent disapprove of the job performance of President Obama. Overall, two-thirds reported disapproval of the job performance of both Congress and the President.
- Indicative of their lack of optimism in the strength of the U.S. economy and overall poor job performance rating for Congress, a vast majority of middle market executives (80 percent) reported that balancing the federal budget will have a significant impact on their business.
- Overall satisfaction with financing remained high. Eight in 10 middle market executives (81 percent) report that they are satisfied with their company's access to financing, as well as the cost of financing for their company (80 percent). Most also say that they are satisfied with the variety of financing alternatives available to their company (79 percent).
- With satisfaction remaining high about their access to financing, middle market executives expressed plans to put that cash to work for working capital purposes (35 percent), by investing in plant and equipment (34 percent) and financing acquisitions (30 percent).
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