More than 40% of manufacturers in Minnesota expect a recession next year.
That's what Enterprise Minnesota found in its annual survey, administered in August and September. Last year, only 18% expected a recession.
The worry about a recession might be even higher now than when the survey was completed, said Bob Kill, CEO of Enterprise Minnesota. Since then the Federal Reserve has hiked interest rates twice and recession fears have grown.
"The continued threat of inflation combined with wage inflation as a key part of it ... is different even from six to eight weeks ago," Kill said.
Ernie Goss, an economics professor at Creighton University who leads monthly surveys of supply managers in manufacturing and banking in the Midwest, said Mid-America Business Conditions Index results show that business sentiment for the next six months has gotten progressively worse since July.
"Manufacturers and the bankers are both saying [the outlook] is getting worse," Goss said. "Since mid-July it began getting more negative each month."
In September, 55.6% of Creighton's respondents thought the economy would contract; a month later, that sentiment had grown to 63%.
"That was the worst number we've gotten since the pandemic began," Goss said.
Since 2008, Enterprise Minnesota has asked manufacturers across the state whether they think the year ahead will be one of economic expansion, a flat economy or recessionary.
A bit more than one-third this year expect flat economic growth in 2023, and nearly one-fifth expect an expansionary environment next year.
The percentage of companies expecting a recession, at 43%, is the highest since the first year of the survey in 2008 when 56% of respondents were expecting the 2007-2009 recession would continue.
Despite respondents' apprehensions over next year, their confidence is strong. When asked how confident they were that their company could withstand a recession, 88% said yes.
Of larger companies, 96% expressed confidence in their future, while only 75% of smaller companies said the same.
Manufacturers' concerns have shifted since last year. Companies are less worried about supply chain issues. Now, they are more concerned about attracting qualified workers and overall inflation.
"Competition for workers, not just from manufacturer to manufacturer but in the community, is still extremely acute," Kill said. "It's really stymying growth."
