Almost a year into the COVID-19 pandemic, parts of the U.S. economy are doing well while others continue to struggle. The middle market is no different, but signs point toward cautious optimism for the year ahead.

Data from the 4Q 2020 Middle Market Indicator (MMI) by the National Center for the Middle Market (NCMM) reveals that the year-over-year growth fell to -1.2%, down from the 7.5% positive growth rate reported in 4Q 2019. At the same time, the S&P 500 reports -5.5% revenue growth.

The optimistic forecast from middle market executives is reflected in the projected revenue growth:­ 4.1% for the next 12 months. This is a substantial increase from the 2% revenue growth projected in July 2020, yet still well below historical levels of growth. Employment declines are also reported in this MMI, at a rate of -2.2%. In the coming 12 months, hiring is expected accelerate as companies stabilize and use more of their full capacity. For 2021, employment growth is expected at 2.3%.

“As COVID-19 hit in March of last year, we saw the devastating impact as the economy ground to a halt,” said NCMM Managing Director Doug Farren. “In the summer, the middle market appeared to gain its footing so to speak, as businesses reopened and more employees started going back to work. Now the reality of a protracted recovery highlights the long-term resilience of mid-sized companies.”

Amid ongoing economic uncertainty, companies plan to reduce or delay investments in the next 12 months. In 4Q 2019, 70% reported they would immediately put an extra dollar to work via investments. This quarter, only 57% said the same. Currently, 38% of companies surveyed plan to enter new markets in the next year, up from the 31% who planned to do so in Q2 2020.