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It’s a bird, it’s a plane…
No, it’s the ever-escalating RSM US Middle Market Business Index (MMBI), which reached a new all-time high in the first quarter of 2018.
Measuring companies with revenues between $10 million and $1 billion annually, the MMBI rose 4.5 points to 136.7. Anything over 100 means the middle market is growing.
“The U.S. economy is growing well above its long-term trend of 1.5% amid a tightening labor market that’s fueling wage growth,” said Joe Brusuelas, RSM US LLP chief economist.
The middle market is made up of over 200,000 businesses, 40 million workers, and contributes about $6.2 trillion to the U.S. economy.
Since tax reform became law last December, middle market business executives have gotten more bullish about the economy. Nearly 70% surveyed said the economy improved in the first quarter, and 73% expect improves over the next six months.
Business confidence is broad-based:
- The MetLife & U.S. Chamber of Commerce Small Business Index is also at a new high, and in the first quarter it saw the biggest increase-ever increase in optimism.
- The most-recent USG + U.S. Chamber of Commerce Commercial Construction Index saw continued strong confidence from contractors that commercial construction demand will increase over the next year.
Of the challenges facing the middle market, one is economic the other is policy-related.
RSM’s Brusuelas notes that difficulty in finding workers could create “bottlenecks in production… resulting in a slowdown in growth” for middle market companies. Workforce development is key.
On the policy side, Neil Bradley, Senior Vice President and Chief Policy Officer, U.S. Chamber of Commerce, warns, “It’s imperative that we avoid policy changes–such as greater limits on immigration or restrictionist trade policies–that would impede economic growth and diminish the ongoing benefits from the recent passage of tax reform.”