IOWA — The majority of small and large businesses in Iowa say a recession is coming in 2023, according to a survey conducted by Principal Financial.

Amy Friedrich with Principal has been involved with this study since it started ten years ago. The goal is to gauge how companies in the state feel about the future, Friedrich said. The survey also asked employees at businesses their thoughts for the first time.

Both businesses and employees believe a recession is looming in 2023. Seventy percent of employers and 74% of employees agreed things are about to take a downturn, up from 65% from a similar survey conducted in July.

Amy Friedrich sits down with Elias Johnson to discuss the finding of the 2022 Principal Financial Well-Being Index

“Small businesses are saying we think there’s a recession coming. But, they have worked so hard to get talent, to keep people in their jobs that they are not intending to make changes to their workforce unless they have to,” Friedrich said.

Instead, Friedrich said employers are willing to look at the prices of goods they sell, reduce spending where possible, and stay the course instead of expanding.

The study also showed 61% of the businesses surveyed reported growth in 2022, compared to 51% the previous year. With trends pointing in a positive direction, Friedrich explained why those same employers think business is about to decline.

“We make sense of that by saying small businesses fear the larger, more state government, federal economic conditions, but they feel good about themselves,” Friedrich said.

Forbes magazine reports monetary decisions made, like the Federal Reserve raising interest rates to curb inflation, take roughly a year before the full impacts are felt.

Another interesting takeaway from the study came from the employees; specifically what they value. Mental health & well-being ranked higher compared to their employers.

“If you’re out of touch with your employees, you risk putting the wrong solutions in place,” Friedrich said.

The Principal Financial Well-Being Index (October 6–16, 2022) surveyed 500 business owners, decision-makers, and leaders at companies with 2–10,000 employees. This wave also included input from 200 full-time employees, surveyed October 6–10, 2022.