Everything is local, and that’s especially true for the middle market which really represents the Main Streets of the American economy. Government statistics remain critically important, but if a store on Main Street loses its lease, that has a significant impact on how these executives view the economy.
NEW YORK--(BUSINESS WIRE)--Despite the explosion of big data throughout Corporate America, middle market executives are judging the state of the economy based on personal experience and observation more than economic indicators. Approximately three in five executives say the best way to judge the U.S. economy is through observing the economic stability of their community, friends, and coworkers. Less than half (41%) say government data is a better way to judge the economy. These are some of the key findings found in the fourth annual Voice of the Middle MarketTM(www.cit.com/middlemarketoutlook) study released today by CIT Group Inc. (NYSE:CIT), a leading provider of commercial lending and leasing services.
Although middle market executives are more optimistic about the U.S. and global economies in 2015, they are still guarded as only 35% and 22% describe them as strong, respectively. Executives have the most confidence in their local economies, with nearly half describing it as strong.
An overwhelming majority (83%) reported data security as a concern, up from 67% in 2014. With such prominent data breaches in the news over the past year, data security outpaced concerns such as the Affordable Care Act, regulations, and tax increases.
“Rather than relying only on data, our study revealed that middle market executives judge the economy based on their own experiences and from what they see impacting those close to them,” said Jim Hudak, President of CIT Corporate Finance. “Everything is local, and that’s especially true for the middle market which really represents the Main Streets of the American economy. Government statistics remain critically important, but if a store on Main Street loses its lease, that has a significant impact on how these executives view the economy.”
Jeff Kilrea, Group Head and Managing Director of CIT Sponsor Finance, added, “A key takeaway from the study is that a large majority of middle market executives (61%) completely agree that policies coming out of Washington are more about scoring political points than solving real problems. In fact, 45% of middle market executives strongly feel like Washington doesn’t understand the middle market. This data is valuable as it’s crucial that we understand how middle market executives view key issues that are impacting their businesses.”
- Positive Experiences with the Economy: More than 60% of executives have had more positive experiences, such as going on vacation or receiving a promotion, than negative. Only about 20% have experienced more negative experiences, such as employee layoffs, over the past year.
- Experiencing Strength and Stability: About seven in ten executives describe their company as strong. More than half (57%) say their company is doing better than last year, with executives at companies with higher revenue feeling this more strongly than executives at companies with lower revenue. About three-quarters think their company will likely increase the range of products and services offered in current markets over the next 12 months, and more than two-thirds (69%) expect to enter other regions within the U.S.
- View on the Lending Environment Remains Positive: Similar to results from the 2014 Middle Market Outlook, 91% of executives feel satisfied with their company’s access to financing and the variety of financing alternatives available to them. However, 19% of executives report dissatisfaction with their company’s cost of financing. Nearly one in three (30%) expect to use this financing to help U.S. expansion, but even more (41%) expect to use it to invest in Information Technology (IT).
- Middle Market Workforce Expanding: About seven out of ten middle market executives anticipate the middle market workforce will grow over the next 12 months. Sixty percent of executives reported having experienced workforce growth over the last 12 months and only 6% have cut back.
- Continued Dissatisfaction with Elected Officials: Only 13% of executives surveyed approve of Congress and 35% approve of President Obama’s job performance. About nine in ten agree that Congress pays too much attention to Fortune 500 companies, and that policy coming out of Washington does not consider the needs of middle market businesses. A wide majority (93%) believe Federal policies are politically motivated rather than aimed at solving real problems.
- Trump Leading the Pack: Nearly half (48%) of executives surveyed would prefer a Republican in the White House while fewer than one in four (23%) would prefer a Democrat. At 29%, Donald Trump garnered the most support from middle market executives. Although he’s since announced he is not running for office, Vice President Joe Biden, along with Hillary Clinton, lead among potential Democratic candidates, with slightly more than 20%.
- The Middle Market Acknowledges the Value of Technology: Eighty percent of executives have seen an increase in their IT budgets over the last three years, with 41% reporting budgets growing more than 5%. More than three fifths (64%) plan to increase their IT budget even further over the next two years.
CIT thought leadership content can be found at View from the Middle™ (cit.com/viewfromthemiddle) and our CIT Point of View blog (cit.com/pov). View our corporate video (cit.com/corporatevideo) and follow us on Twitter, LinkedIn, YouTube and Facebook. Register to receive press releases at cit.com/newsalerts.
About the Survey
KRC Research, on behalf of CIT, fielded an online survey among 406 U.S. middle market executives representing a range of industries. Fieldwork was conducted in the United States in August and September of 2015. In order to be eligible to participate in the survey, respondents had to be in a leadership role at firms with revenues between $25 million and $1 billion, the majority of whose employees were based in the United States. Researchers defined leadership roles as: Owner, C-Suite Executive (Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Information Officer, Chief Investment Officer, or other C-Suite title), or SVP/VP/Director.
Founded in 1908, CIT (NYSE:CIT) is a financial holding company with more than $65 billion in assets. Its principal bank subsidiary, CIT Bank, N.A., (Member FDIC, Equal Housing Lender) has more than $30 billion of deposits and more than $40 billion of assets. It provides financing, leasing and advisory services principally to middle market companies across more than 30 industries primarily in North America, and equipment financing and leasing solutions to the transportation sector. It also offers products and services to consumers through its Internet bank franchise and a network of retail branches in Southern California, operating as OneWest Bank, a division of CIT Bank, N.A. cit.com