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Wells Fargo: Commercial Business Sentiment Reaches Highest Level in Four Years

February 5, 2025
in News
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Wells Fargo released its Q4/24 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 Q3/24, but reached the highest sentiment index score, 112.9, recorded in the past four years (up from 102.3 in Q3/24). Between Nov. 15 – Nov. 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.

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,” Mary Katherine Dubose, head of specialized industries for Wells Fargo Commercial Banking, said. “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 Q4/24 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% cited the possibility of prolonged economic recession and 46% cited hiring/retaining employees

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