An overwhelming majority -- 93 percent -- of mid-market companies expect the United States economy to grow, according to top-line results of a new survey from Deloitte titled, “Mid-Market Perspectives: 2011 Report on America’s Economic Engine.” Ongoing concern about government debt and overall strength of the economy, however, tempers respondents’ optimism.
Conducted by the Economist Intelligence Unit, the survey gauges the economic outlook of mid-market chief executive officers and executives from across the U.S. and revealed key insights into this business segment’s plans for growth and recovery after enduring the worst economic downturn in 80 years.
As many as eight in 10 (81 percent) executives from U.S. middle market (companies with $50 million to $1 billion in annual revenue) expect annual revenue to increase in 2011. Moreover, survey results show mid-market firms are well-positioned for growth after focusing on improving productivity, deleveraging and rightsizing their operations during the downturn. Two-thirds of companies surveyed report lower debt ratios today than prior to the recession and 54 percent have higher cash balances. Strengthening the balance sheet will continue as a top priority as 63 percent of executives say cash balances will still be up in a year’s time and 65 percent agreeing debt ratios will remain down.
Overall, the survey provides a positive and encouraging outlook for growth in the middle market and the U.S. economy. Additional survey highlights include:
-- Productivity: Nearly three-quarters (72 percent) of respondents report higher levels of productivity than pre-recession.
-- Hiring: A large majority of executives (69 percent) plan on adding full-time employees this year.
-- Business expansion: As the majority of firms (56 percent) focus on domestic growth targets, 34 percent of all firms and 44 percent of companies with annual revenue in excess of $500 million will focus on global expansion.
-- Access to financing and capital: Despite the challenges to access financing and capital, 38 percent of respondents will pursue financing to expand their businesses in the coming year.
Middle market executives surveyed also recognize fundamental structural challenges which temper their optimism and influence their business decisions towards mitigating risk. In particular, at all levels –federal, state and municipal – government debt is ranked by half of all survey respondents as the primary obstacle to U.S. growth.
Other concerns expressed by middle market executives include:
-- Regulatory issues: There is broad concern that burdensome regulation, as well as healthcare costs and high tax rates, are obstacles to growth in the short- and long-term.
-- Economic growth: While an overwhelming majority of executives anticipate the economy will grow, only 20 percent believe it will expand at a pace that will support widespread job creation.
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