Inflation and a contentious presidential election continue to spell trouble for the U.S. economy, but a new study shows the majority of business owners in Los Angeles are bullish on this year’s outlook.
A Bank of America survey of mid- and small-sized businesses published last week revealed 78% of small business owners in Los Angeles County expect revenue to increase this year.
For Reseda-based Healthcare Staffing Professionals, the survey directly reflects its own experience coordinating recruitment. Chief Executive Maxie Juzang has operated the company through multiple economic cycles, and said he’s learned how to optimize market contractions.
“We’ve always used these periods of time to focus on business development and growth so that when the economy gets robust again, we’re in a position to really capitalize on that,” he said.
Juzang said his company’s goal is to retain its entire staff and expand the business development team – the latter of which he admits is not cheap.
During the Covid-19 pandemic, Healthcare Staffing Professionals received a line of credit from Bank of America to finance the talent pools it was coordinating for the massive epidemiology and vaccination operations across the country. Healthcare Staffing Professionals was a strategic partner with Los Angeles County for providing health care workers amid the pandemic’s shortage.
Coming out the pandemic, the company is now shifting to service other industries such as government agencies, commercial sectors and kindergarten through high school education. This month’s Bank of America survey shows almost 70% of mid-sized businesses plan to hire this year. Juzang believes the trajectory of his company matches this sentiment.
“We’re excited,” Juzang said. “We don’t think inflation is a big issue. Compensation for the workforce has also increased significantly due to the tight labor market. We’re pretty optimistic about where we are right now.”
What the survey found
Los Angeles business owners are more optimistic on both local and national economic outlooks compared to the national average.
According to Bank of America’s report, which compiled responses from the month of March, 78% of small business owners in L.A. expect their revenues to increase this year, and about half believe both the local and national economy will improve.
These local results were notably higher than the national average, where 65% of small business owners across the country expected revenue to increase this year and 42% expected their local economies to improve.
“I would say the entrepreneurial spirit in Los Angeles is alive and well,” said Raul Anaya, the head of Bank of America’s business banking vertical. “L.A. continues to be a consumer-driven economy very much around products and services.”
Despite Federal Reserve Chair Jerome Powell’s hints that rate cuts are less likely this year, companies continue to seek financing for expansion. An overwhelming 93% of mid-sized businesses said they plan to obtain funding for new tech and equipment.
The bank did not disclose L.A.-specific break downs for mid-sized businesses, but this cohort of companies on a nationwide basis back expansion plans with the belief revenue will increase as well. Almost 90% of mid-sized survey respondents from a pool of 377 businesses across the country said they believe their revenue will increase this year.
“It’s important because if their confidence in their business is as high as it is based on these surveys, they’re going to be so much more comfortable hiring, much more comfortable expanding their businesses,” Anaya said. “It’s a very bullish sentiment around growth and positivity.”
The survey scope is relatively small compared to the scale of mid-sized businesses in the U.S. – the National Center for the Middle Market accounts for nearly 200,000 middle market businesses in the country.
However, this year’s revenue projections beat last year’s Bank of America survey of a similar-sized pool, as only 75% of mid-sized businesses predicted revenue growth in 2023.
The forecasts came with a list of concerns from business owners for this year. Both small and mid-sized companies cite the U.S. political environment as the top concern, as economic policy could shift quickly in an election year.
Inflation closely followed, with 74% of small business owners mentioning it and 69% of mid-sized operators.
Bank of America published the report on Wednesday – the same day the Federal Reserve met and left interest rates unchanged as its outlook for future cuts continues to shift.
The central bank of the U.S. remains wary about inflation’s continued escalation. The latest Consumer Price Index saw a 0.4% increase in March, prompting the hawkish stance from Powell reversing previous predictions that borrowing costs could come down by year’s end.
Bank of America’s economists continue to project rate cuts, with the first one being in December and future shavings in the next two years.
