March 09, 2023


CHICAGO – The RSM US Middle Market Business Index (MMBI), presented by RSM US LLP (“RSM”) in partnership with the U.S. Chamber of Commerce, increased to 134 in the first quarter, up 9.4 points from the previous quarter. Easing inflation and solid household consumption underscored the increase in topline sentiment that is reflective of a resilient American economic expansion in the middle market as firms continue to navigate economic headwinds and crosscurrents.  

“The ability of the middle market to withstand the twin shocks of surging inflation and rising interest rates reflects an underlying resilience of households and firms to adapt to the unique challenges that characterize the post-pandemic economy,” said Joe Brusuelas, chief economist with RSM US LLP. “The economy expanded at a 3% pace during the final six months of last year, and the robust consumer activity in January indicates that the current economic expansion is not finished.” 

Middle Market Sentiment Suggests Relief, though Risks Remain   

The improvement in the topline index also captures the relief firms experienced as overall inflation peaked last June and continues to moderate, while the goods sector is seeing disinflation. This relief is highlighted by the 53% of MMBI survey respondents who indicated an increase in gross revenues in the current quarter, up from 42% in the final quarter of last year, and the 49% of participants who reported an increase in net earnings. Impressively, 57% of respondents stated they expect to see an increase in both gross revenues and net earnings through the middle of this year.  

The combination of that resilience and relief has bolstered business confidence to the point that firms are increasing inventories in the first quarter, which poses a degree of risk going forward as the lagged impact of interest rate increases begins to sink in. More than half, or 53%, of respondents said they had bolstered their stock of goods, which should be monitored closely given that excess household savings are declining.  

“With a 9.4-point increase in topline sentiment, middle market firms have optimism about business conditions as we start the year,” said Neil Bradley, executive vice president, chief policy officer and head of strategic advocacy at the U.S. Chamber of Commerce. “Increases reported in firms’ revenues and earnings for Q1 2023 and slowing inflation are driving optimism in the middle market sector. However, as household savings continue to fall, close attention will have to be paid to consumers’ ability to spend throughout the year and the impact of a potential decrease in household expenditures.” 

Firms Experience Solid Demand and Benefit from Prices Received 

Sentiment on the overall economy surged, with 47% of executives indicating that the economy had improved in the current quarter, up from only 28% previously. Forty-one percent said they expect it to improve over the next six months. RSM attributes the plurality of respondents indicating a general improvement in economic conditions to a combination of solid demand, an easing in prices paid and a mild increase in prices received.  

Roughly 69% of respondents said that prices paid had increased, down from a recent peak of 82% in the third quarter of last year. Middle market firms have benefited from the correction in oil and gasoline prices and have also been aided by disinflation in the goods sector. 

The survey results show that demand was so strong at the start of the year that 55% of respondents indicated they benefited from an increase in prices received. Approximately 62% of executives surveyed stated they expect to pass along higher prices over the next six months. 

Additionally, middle market firms continue to prioritize capital expenditures, with 49% of respondents indicating they had increased outlays on productivity-enhancing software, equipment and intellectual property in the current quarter. More than half (55%) said they intended to do so through midyear.  

Service Sector Inflation and Tight Labor Market Challenges Continue  

The MMBI report cautions that service sector inflation has not yet peaked. It is up 7.6% on a year-ago basis through January, mostly driven by housing and housing services – both categories that are part of a complex chain of factors driving rising wages.  

Employment and compensation both continue to reflect a historically tight labor market that will likely temper the robust gross revenues and earnings outlook. Of the firms surveyed, 47% increased hiring and 58% used higher compensation to attract labor in the first quarter. Looking ahead, 51% of respondents said they intend to hire more workers and 63% indicated they will increase compensation to compete for scarce labor. 

The survey data that informs this index reading was gathered from 406 respondents between January 9 and January 30, 2023. 

About the RSM US Middle Market Business Index  
RSM US LLP and the U.S. Chamber of Commerce have partnered to present the RSM US Middle Market Business Index (MMBI). It is based on research of middle market firms conducted by Harris Poll, which began in the first quarter of 2015. The survey is conducted four times a year, in the first month of each quarter: January, April, July and October. The survey panel consists of approximately 1,500 middle market executives and is designed to accurately reflect conditions in the middle market.  

Built in collaboration with Moody’s Analytics, the MMBI is borne out of the subset of questions in the survey that asks respondents to report the change in a variety of indicators. Respondents are asked a total of 20 questions patterned after those in other qualitative business surveys, such as those from the Institute of Supply Management and National Federation of Independent Businesses.  

The 20 questions relate to changes in various measures of their business, such as revenues, profits, capital expenditures, hiring, employee compensation, prices paid, prices received and inventories. There are also questions that pertain to the economy and outlook, as well as to credit availability and borrowing. For 10 of the questions, respondents are asked to report the change from the previous quarter; for the other 10 they are asked to state the likely direction of these same indicators six months ahead.  

The responses to each question are reported as diffusion indexes. The MMBI is a composite index computed as an equal weighted sum of the diffusion indexes for 10 survey questions plus 100 to keep the MMBI from becoming negative. A reading above 100 for the MMBI indicates that the middle market is generally expanding; below 100 indicates that it is generally contracting. The distance from 100 is indicative of the strength of the expansion or contraction.    

About The U.S. Chamber of Commerce   

The U.S. Chamber of Commerce is the world’s largest business organization representing companies of all sizes across every sector of the economy. Members range from the small businesses and local chambers of commerce that line the Main Streets of America to leading industry associations and large corporations.    

They all share one thing:  They count on the U.S. Chamber to be their voice in Washington, across the country, and around the world. For more than 100 years, we have advocated for pro-business policies that help businesses create jobs and grow our economy.   

RSM is the leading provider of professional services to the middle market. The clients we serve are the engine of global commerce and economic growth, and we are focused on developing leading professionals and services to meet their evolving needs in today’s ever-changing business landscape. Our purpose is to instill confidence in a world of change, empowering our clients and people to realize their full potential. 

RSM US LLP is the U.S. member of RSM International, a global network of independent assurance, tax and consulting firms with 57,000 people in 120 countries. For more information, visit, like us on Facebook, follow us on Twitter and/or connect with us on LinkedIn