Middle market business index q4 2021 final secured


December 01, 2021


Middle market firms continue to be optimistic overall about future revenues, net earnings and the overall economy compared to the somewhat dour current outlook.

“This quarter’s survey demonstrates the resiliency of the middle market. Despite continued inflationary pressures and supply chain difficulties, more than half of middle market leaders expect revenues and earnings to increase in the coming months,” said U.S. Chamber Executive Vice President and Chief Policy Officer Neil Bradley.

“However, the middle market sector does remain strained by persistent high inflation. Almost three in four businesses reported paying higher prices for goods. It’s critically important that policymakers in D.C. do not slow the recovery through tax increases and government spending that would only impede our path to full employment and economic growth.”


SNARLED SUPPLY CHAINS and the spread of the delta variant combined to reduce the RSM US Middle Market Business Index to 129.7 in the final quarter of the year from a peak of 143.7 previously.

An easing was to be anticipated, though, and the current reading is in line with the pre-pandemic score of 126.2 in the final quarter of 2019.

Given that we expect a re-acceleration in household spending and higher fixed investment by businesses
to close out the year, we anticipate that middle market business conditions will remain solid even as firms work to confront challenges in securing materials and workers.

Executives’ responses to RSM US’s proprietary survey reflected the slowing economy. Rising prices and what looks like a behavioral shift among workers provide a more challenging context for domestic middle market businesses. The survey, conducted from Oct. 4 to Oct. 21, asked 408 senior executives at middle market companies for their opinions on business conditions.

Responses to nine of the 10 survey questions declined, including the outlook on the economy, revenues and net earnings. Only 37% of respondents indicated the economy had improved in the quarter, even as 51% anticipated general improvement through the first half of next year.

Not surprisingly, 45% of executives reported higher gross revenues over the past three months, while 68% expected revenues to accelerate in the coming six months.

The story on net earnings was similar. Roughly 43% of respondents reported an increase over the past three months, while 62% expected an improvement through the end of next year’s second quarter.

As has been the case for some time, middle market firms continue to be optimistic overall about future revenues, net earnings and the overall economy compared to the somewhat dour current outlook.

The cost of goods

In our estimation, the primary concern among middle market participants revolves around the cost of goods used at earlier stages of production and the cost of intermediate goods, as well as challenges around passing along those price increases.

For now, aggregate demand is more than sufficient to absorb the higher costs in the production process. In fact, we think that falling unemployment and rising income have made it somewhat easier to pass along price increases, which in turn is part of the relatively optimistic outlook.

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