Companies optimistic about their businesses and the economy

Wells Fargo today released its 2024 Q4 Commercial Business Sentiment Report in collaboration with Barlow Research Associates. Following the 2024 presidential election, survey results found that commercial business sentiment had not only improved when compared to Q3 2024, but reached the highest sentiment index score, 112.9, recorded in the past four years (up from 102.3 in Q3 2024). Between November 15 – November 22, 2024, 307 commercial companies with annual revenues ranging from $10 million to $500 million were surveyed about the state of their businesses, the economy, growth opportunities, and areas of concern.

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2024 Q4 Commercial Business Sentiment Report (Photo: Wells Fargo)

With election outcome uncertainty no longer a factor, companies reported increased optimism about the state of their businesses, demand for their products/services, and their expectation for overall economic improvement in both the near and long term: 51% of companies expect an improved U.S. economy in the next 12 months and 63% expect an improved economy in the next five years.

“The highly positive commercial sentiment recorded in Q4 was likely driven by the elimination of election unknowns, which typically delay business decisions and tend to raise concern,” said Mary Katherine Dubose, head of Specialized Industries for Wells Fargo Commercial Banking. “The second highest commercial sentiment index score we have recorded was in Q2 of June 2021 (111.7), following the release of the Covid vaccine, another time when businesses saw a clear way forward after a time of uncertainty.”

Key findings in the 2024 Q4 Commercial Business Sentiment Report include:

Internal drivers: How companies feel about the state of their businesses:

• State of business compared to 12 months ago: 19% said their business was worse-off vs. 29% that said their business was better-off.
• Expected state of business in the next 12 months: 6% expect worse vs. 43% that expect an improvement.
• Expected demand for goods/services in the next 12 months: 4% expect lower demand while 36% expect an increase in demand.

External drivers: How companies feel about the state of the economy:

• Expected state of the U.S. economy in the next 12 months: 13% believe the economy will be worse vs. 51% that expect it to be better (an increase from 22% in Q3).
• Expected state of the U.S. economy over the next 5 years: 13% believe the economy will be worse vs. 63% that expect it to be better (an increase from 44% in Q3).

Top factors that improved business in the last 3-6 months:

• 35% of businesses identified improved efficiency, while 29% of businesses identified their growing customer base, 27% identified reduced fuel costs and 27% identified interest rates stabilizing (7% increase from Q3).

Top Concerns impacting commercial business financial conditions:

• 57% of companies identified inflation as the top factor negatively impacting their company.
• Additionally, when asked to identify their top three concerns, 70% cited increased prices and costs, 49% cited reduced demand for goods and services, 48% citing the possibility of prolonged economic recession and 46% citing hiring/retaining employees.

About the Commercial Business Sentiment Study

The Wells Fargo Commercial Business Sentiment Study began in the summer of 2020 in collaboration with Barlow Research Associates to monitor the evolving impact on businesses from the pandemic, their most pressing challenges and the types of support they need from their bank. Given the continued fluid economic climate, the study has continued quarterly to understand evolving sentiment and needs of commercial companies.

An online survey was administered to collect data from senior, high-level executives (i.e., CFOs, treasurers, presidents, directors of finance, credit managers) at commercial companies. The fourth quarter 2024 study was conducted from November 15 to November 22 among 307 commercial companies.

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a leading financial services company that has approximately $1.9 trillion in assets. We provide a diversified set of banking, investment and mortgage products and services, as well as consumer and commercial finance, through our four reportable operating segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth & Investment Management. Wells Fargo ranked No. 34 on Fortune’s 2024 rankings of America’s largest corporations. In the communities we serve, the company focuses its social impact on building a sustainable, inclusive future for all by supporting housing affordability, small business growth, financial health, and a low-carbon economy. News, insights, and perspectives from Wells Fargo are also available at Wells Fargo Stories.

Additional information may be found at www.wellsfargo.com

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