America’s Middle Market Businesses Share Bleak Outlook Post Election

Dec 14, 2012 No Comments by

CLEVELAND, Dec. 14,  2012 /PRNewswire/ – It’s business as usual – and not in a good way – for middle market executives parsing 2012 presidential election results and post-election headlines for signs political gridlock is giving way to a unified plan for economic progress.

According to the latest KeyBank Middle Market Business Sentiment survey, more than two-thirds (67 percent) of middle market executives have a fair to poor outlook for the US economy in the next 12 months. Only 16 percent of those surveyed are more confident in their businesses’ potential to thrive post-election.

In addition, the percentage of middle market business executives planning on increasing cash reserves nearly doubled. Pre-election surveys indicated 23 percent planned on increasing already robust cash reserves. That percent increased by 23 percent, according to post-election surveys.

Executives were surveyed between Nov. 7 and 12. KeyBank has tracked middle market business sentiment over the past six months.

“Middle market business executives need certainty to make plans,” said Cindy Crotty, KeyBank executive vice president and head of KeyBank’s Commercial Banking segment.

“Before they can switch gears from saving to expanding, they need to see our leaders in Washington avoid the fiscal cliff,” she said. “More importantly, middle market executives want assurance our leaders will work together to create an economic path to progress.”

The election did little to shift power in gridlocked Washington, and Crotty said the survey results reflect middle market executives’ concern that partisan politics takes precedence over developing a non-partisan economic policy.

“Right now business need to see clear policy on important issues such as tax rates and regulation – even if that policy means more taxes or increased regulation,” Crotty said. “They might not like the policies, but at least they would know what to expect and be able to plan accordingly,” she said.

Crotty, who has been a professional in the banking industry for more than three decades, said KeyBank’s middle market clients have strong balance sheets and that there are middle market executives taking advantage of the low-rate environment – but only when they see certain opportunity.

“Given the low rates, we would have anticipated more businesses borrowing money to make investments and maintaining their cash reserves for other uses,” Crotty said. “The middle market will continue to sit on cash reserves and delay investment until there is proof positive that our government can pull together and create a plan for robust and sustainable growth.”

Other Notable Findings:

•  Seventy percent of middle market businesses are extremely or very concerned about the fiscal cliff given the outcome of the election.

•  When asked how their perspective on the fiscal cliff has changed post-election, nearly half (47 percent) of businesses are more concerned.

•  There has been a nine percent decrease in business owners planning to add employees since August. Crotty said middle market businesses, which are significant employers, have become accustomed to running leaner and may remain as such for the long view.

 

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