After navigating a topsy-turvy 12 months, business leaders are eager to move on.
“We hear a lot of confidence from a lot of business owners,” said Jim Cook, Chase's market executive for northern Indiana.
Cook cited conversations with northeast Indiana executives and results of the annual JPMorgan Chase Business Leaders Outlook survey, which found 7 in 10 midsize businesses expect revenue and sales growth this year. Almost half of small businesses also forecast growth. More than 2,100 business leaders in various industries participated in the late November nationwide survey. Results were released in January.
The COVID-19 pandemic has forced almost every business to pivot. Shifting employees to remote work, building up cash reserves and identifying new sources of capital are among the options survey respondents have pursued.
Jim Glassman, head economist for JPMorgan Chase Commercial Banking, praised executives' resilience.
“Businesses have weathered many storms over the past year, displaying impressive levels of creativity and adaptability as they shifted to new operating models, distribution channels and technologies,” he said in a statement. “The challenges aren't over, but their tenacity has helped sustain economic momentum and offers optimism for recovery in 2021.”
Cook, who is based in Fort Wayne, shares their sunny outlook.
“I don't know what the future holds,” he said, “but (commercial banking) customers are more prepared than ever.”
Bill Adams, a PNC Bank senior economist based in Toledo, said his bank's annual survey of midsize and small-business owners also found respondents optimistic about an economic recovery in 2021.
Various government economic stimulus efforts, including sending checks to households, have provided significant help to consumers and businesses, he said. Federal Reserve policies also have bolstered the economy.
“Consumers are going to have much better spending power coming out of this than they usually do after economic downturns,” Adams said.
Consumer spending is a critical part of the U.S. economy, making up an estimated two-thirds. Strong spending could propel the economy to significant growth after various closures and capacity limits end.
Northeast Indiana, like the rest of the manufacturing-heavy Midwest, was well-positioned to ride out the pandemic's economic effects, Adams said.
The industries most affected include restaurants, tourism and energy, he said. This region's economy doesn't rely heavily on any of those areas, he added. Also, northeast Indiana doesn't include any major cities, which are experiencing an “especially painful recession,” he said. Remote work has transformed large downtowns nationwide into virtual ghost towns.
Adams expects business leaders will allow some employees to keep working from home after widespread vaccination. He also forecast companies will incorporate some of the new technology that has contributed to convenience and productivity gains during the pandemic.
The methods most likely to be embraced long term, he said, are those that don't interfere with developing client relationships or workplace culture.
The business world already was experiencing rapid change. The pandemic accelerated it, said Mark Hamrick, Washington bureau chief for Bankrate.com, a personal finance website.
Some companies had already dabbled in video conferencing, but use has exploded during the pandemic, Hamrick said. Damage to the economy would have been much worse without such technology, which allowed office workers to remain productive, he said during a phone interview.
The health care industry has also seen a seismic shift related to video conferencing, Hamrick said.
“It's immensely useful for certain kinds of things,” he said. “They can't get a splinter out of your thumb,” but they can diagnose some conditions such as earaches, sinus infections and sprains.
For some industries, pandemic-related pivoting has involved scaling up quickly to meet consumer demand.
Streaming video services for entertainment were already growing in popularity, Hamrick said. Netflix and Disney+ are among the services that saw skyrocketing usage, he said. Grocery and restaurant delivery services were also gaining in popularity before the pandemic, and the pandemic forced them to scale up in a hurry, hiring drivers and workers to fill grocery orders, he added.
Hamrick expects changing consumer demands, market forces and increasing innovation will continue to force companies to evolve.
“Business operators have to be nimble,” he said.
The pandemic has prompted more businesses to use more banking technology than ever before, Chase's Cook said.
“Businesses can be slow to change sometimes,” he said, adding that resistance melted away when businesses were pushed to find new ways to serve customers while keeping staff safe.
Cook cited one business banking customer that previously brought customers' checks to a Chase branch each day for deposit. Now, it scans checks to deposit them remotely and also signed up to have Chase issue its checks rather than mailing checks handwritten by staff.
The technology and services weren't new during the pandemic. Chase spokeswoman Carlene Lule said JPMorgan Chase makes significant investments in technology every year, including $11 billion in 2020.
Cook said one of commercial bankers' challenges is to persuade clients to use all the services available to them. And it seems to be working. More than 50% of midsize businesses are using more banking technology now than prepandemic, he said.
“There's all kinds of reasons it makes sense,” Cook added, including protecting the client from fraud.
“We hear from clients, 'We wish we would have done this a long time ago. It exceeded my expectations. What else can you show me?'” he said.
Cook expects the changes will stick after the pandemic ends because he doesn't know of any businesses that go back to less advanced ways of doing business once they learn to use the new technology.
The coronavirus pandemic fueled the growth of online shopping, which increased 22% last year, according to the National Retail Federation, a trade association in Washington, D.C.
Some of the spending was money diverted from what would normally be spent on going to restaurants, movie theaters and concerts, the association said.
The retail federation's chief economist, Jack Kleinhenz, forecast e-commerce will continue to grow by 18% to 23% this year, reaching between $1.14 trillion and $1.19 trillion in 2021. He expects many consumers new to online shopping will keep clicking now that they've tried it.
Kleinhenz also predicted record retail sales growth of 6.5% to 8.2% over last year for a total of between $4.33 trillion and $4.4 trillion. The total excludes car dealers, gas stations and restaurants.
He studied various economic indicators before making his forecast, which includes a caveat.
“There is no doubt the economy is positioned for growth in 2021, but how much growth comes down to a single non-economic force – the coronavirus,” Kleinhenz said in a statement. “The pandemic remains the largest uncertainty and the biggest risk the economy faces in 2021.”
The National Retail Federation's monthly economic review for March noted the U.S. economy “is entering its second year of strong savings, high stock values, increased home prices, enhanced government support and record-low interest rates despite the pandemic.”
With employment and wages increasing, consumers will have “plenty of purchasing power” that will combine with pent-up demand to accelerate growth, the review said.
The pandemic's effects on supermarket shelves has been a tale of feast or famine.
Grocery stores have struggled to keep some shelves stocked because of shortages, Bankrate's Hamrick said. The obvious items are toilet paper and disinfectant, but soda pop has also been affected, he said. Aluminum cans are in short supply, he said, because so many people are indulging at home instead of gulping fountain drinks at restaurants.
That's the famine part. The feast has been in frozen food, Trader Joe's officials said. The data confirm the trend.
Frozen food sales nationwide totaled $66 million last year, a 23% increase over 2019, according to NielsenIQ, which tracks consumer spending.
Groceries have been hiring, bringing in workers to shop for consumers who prefer curbside pickup.
Online shopping, school work and office jobs can be performed while sitting on the couch. Most factory work cannot.
Sandra Moran, WorkForce Software's chief marketing officer, said the coronavirus has had a significant impact on the manufacturing industry, caused by “significant shifts in demand as well as supply chain disruptions caused by shutdowns, restrictions and new regulations impacting every industry.”
Early in the pandemic, for example, demand for cleaning products and personal protective equipment skyrocketed so quickly that factories couldn't keep up. But the demand for supplies used during elective surgeries bottomed out.
“What this did was it put manufacturing companies in a position where they had to constantly pivot and try to find new efficiencies to speed or decrease production to meet consumer demand,” Moran said in a statement. “This shift has a major implication on the workforce and employees working in factories, putting pressure for more production in less time.”
Employee scheduling can also be affected, Moran said. WorkForce Software makes software used for scheduling and other workforce management needs.
Manufacturers will need to remain agile even after the pandemic ends, she said.
“Consumer preferences for new products are also driving significantly shorter shelf life and require changes to the entire product ideation, design, manufacturing and delivery paradigm,” Moran said. “These dynamics are here to stay and have significant impacts to a company's workforce and require organizations to be able to continually change – faster than ever before.”
COVID-19: Caught in the Grip
The coronavirus outbreak was declared a global pandemic a year ago in March.
Businesses were some of the first and hardest hit, causing a ripple effect for employees and consumers. This story is part of a Journal Gazette series about changes prompted by the virus – at least temporarily – as individuals and communities rallied to respond and learned to cope.
You can find other stories that are part of this series at www.journalgazette.net by clicking the gray bar on the left rail under local news that is labeled COVID-19: Caught in the Grip.