Survey: Business confidence in economy soars while concerns over skills gap grow

U.S. business leaders are increasingly confident in the global economy but fear the toll a widening skills gap could have on their firms, according to a survey released Wednesday.

Executives polled in JPMorgan Chase’s annual business outlook survey conducted Jan. 2-19 expressed growing faith in strong 2018 economic growth, but voiced concerns about the long-term prospects of hiring.

The online survey of 1,685 executives from midsize businesses – defined by the bank as having $20 to $500 million in yearly revenue – showed more than two-thirds (69 percent) expressing confidence in the global economy, a 39-point increase since 2017.

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While the finance industry initially panicked over President Trump’s election, stocks and business confidence boomed in his first year in office as the new GOP-controlled government slashed regulations and cut taxes. Roughly nine of 10 business leaders polled (89 percent) said they’re optimistic about the U.S. economy.

Midsize business leaders are also expecting benefits to their firms specifically due to the recent slashing of the corporate tax rate from 35 percent to 21 percent. While 17 percent of midsize executives said they expected a major boost from the tax law, 53 percent predicted moderate benefits and 21 percent expect minor gains.

Midsize executives said their firms are most likely use their tax savings to pay down debt (44 percent), invest in capital (43 percent) and increase wages (33 percent). Twenty-two percent said they’d hire more workers, while 24 percent said the savings would go paying shareholder dividends.

Only 12 percent said their business would use the new law to bring foreign earnings to the U.S., while 49 percent said would keep money in foreign offices or pay down foreign debt.

Coaxing U.S.-based international companies to bring earnings — and their tax revenue — back from overseas was a major goal of the GOP tax bill.

Small businesses – defined as having $100,000 to $20 million in yearly revenue – aren’t planning similar investments, according to the survey of 955 small business leaders.

The number of small business respondents who said they planned to hire more workers (65 percent) and raise wages (56 percent) did not change from 2017.

The overall economic confidence is tempered by a growing skills gap between U.S. workers and positions that companies are looking to fill.

Close to half of midsize business leaders (45 percent) surveyed in the JPMorgan Chase poll say they’re concerned about the limited supply of talented job applicants.

The most common concerns among executives were a lack of applicants (52 percent) and a shortage of candidates with sufficient training or skills (50 percent).

Federal and state policymakers are rushing to respond to a rapidly changing economy. As highly skilled baby boomers retire from the workforce, businesses are struggling to replace them with qualified candidates. The rise of automation also threatens the U.S. manufacturing, retail, transportation and shipping sectors, among others.