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Survey: U.S. Middle Market Continues to Grow

By Ideas Lab Staff May 1, 2013

A new survey finds revenue and employment growth on the rise in the domestic middle market, but additional costs could reverse the trend.

The 197,000 middle market companies surveyed  in the latest Middle Market Indicator shows that growth in both employment and revenue has outpaced the expectations of the 1,000 middle market executives taking part in the poll.

The survey, released last week by the National Center for the Middle Market also found expectations of more growth in those two areas in the year ahead.

Unlike other sectors in the U.S. economy, the middle market has shown resilience in the financial crisis and has added over 2 million jobs while larger companies have shed more than 3 million.

Credit: GE Capital

Yet the gains could be shortlived, executives report, if costs in healthcare and tax increases go ahead – it might result in less investment, a curbing in employee benefits and even stall employment.

“We must not take the remarkable resilience of middle market growth for granted,” said Dr. Anil Makhija, Director of the National Center for the Middle Market.  “While the sector continues to outperform both its own expectations and national economic growth rates, the prospect of increased costs related to health care or tax increases could hold back this positive trend.  It’s surprising that, given the middle market’s potential for significant growth, policy initiatives in Washington are rarely viewed through this sector’s lens.”

The survey reported 89 percent of middle market executives listing business costs and uncertainty over government actions as prospective challenges to growing their business over the next 12 months.

Healthcare costs continue to top the list of concerns, with more than half expecting it to negatively affect business. Nine percent said increased taxes wouldn’t negatively impact their businesses.

The NCMM is a partnership between The Ohio State University’s Fisher College of Business and GE Capital. The survey polls 1,000 C-suite executives from the middle market’s nearly 200,000 companies, focusing on their business capabilities and performance, growth drivers, and economic outlook.  The survey is weighted to accurately reflect the size and geographic distribution of this sector, which includes companies with revenues between $10 million and $1 billion. It is conducted by the independent research firm RTi on behalf of the NCMM.