Nearly every top executive in the United States is preparing for an economic slowdown in the next 12 to 18 months, according to a survey conducted by The Conference Board. Federal Reserve officials insist they can get rising inflation contained without starting a recession.
“Our CEOs are overwhelmingly bracing for a recession — both in the United States and in Europe.”
Steve Odland, the head of the business trade group
Having 98% of chief executives in the study preparing for an American downturn and 99% for a European one, it is nearly impossible to find one who does not anticipate a global recession.
According to the study, CEO confidence has now declined to levels last seen during the Great Recession.
Concerns that a recession will result from the Fed’s vigorous interest rate hikes have increased as the Fed has become more active in its battle against rampant inflation. More ominous cautions are now being issued by executives and professional investors.
In an interview with CNBC, one of the most influential and powerful CEOs in the world, Jamie Dimon, gave a somber appraisal that shocked Wall Street.
The CEO of JPMorgan Chase & Co. said that while Europe is currently experiencing a recession, the United States will follow suit “six to nine months from now.”
Dimon predicted an impending economic “storm” back in June. He now is confident that the storm is likely to strike because it appears to have intensified.
Despite the fact that most CEOs anticipate a slight recession, they are nonetheless closing their doors
Steve Odland, who previously served as the CEO of Office Depot, stated that businesses wish to do everything they can to reduce overhead before a recession arrives.
“You want to batten down the hatches. You really want to constrain the cost side while maximizing the revenue side.”
Steve Odland
According to reports, Mark Zuckerberg of Meta has informed his team to anticipate layoffs soon. And FedEx, a company seen as a leading indicator of the economy, is closing locations and reducing deliveries as its CEO issues a warning about a global recession.
What would a recession look like has become the topic of discussion on Wall Street instead of “Will there be a recession?”
“I don’t see a Great Recession,” says David Rubenstein, the co-founder of The Carlyle Group, and the author of “How to Invest: Masters on the Craft,” referring to the downturn that stretched from December 2007 to June 2009.
“I see, if we have a recession, a modest recession — a two-quarter type of recession, not a one-year type of recession.”
David Rubenstein
The CEOs surveyed by The Conference Board, with 85% anticipating a “short and modest” recession, concurred with that forecast.
The U.S. economy still has a significant amount of strength, which might prevent it from collapsing as it did during the Great Recession, when a property collapse caused banks and household savings to fail.
People are still making purchases right now, and the majority of them are not in debt. Additionally, businesses have excellent bank balances, and the labor market is very robust. The unemployment rate decreased to 3.5% in September.
And there is no sign that CEOs see a sharp decline in their power any time soon.
Over the next 12 months, nearly half of those polled indicated they expected to increase hiring, and 85% said they anticipate raising pay by at least 3%.
“That’s unheard of from this group, going into a recession. Typically, you would hear that they’re cutting back. That that they are not going to increase wages.”
Steve Odland
What if you declared a recession but no one showed up?
Nobody is able to foretell a recession’s characteristics, duration, or even if it will occur.
“There is a lot of people who think that we will likely head into a recession in the United States at some point next year. But nobody knows for certain.”
David Rubenstein
It is generally accepted that the economy is in a recession when there have been two consecutive quarters of negative growth in the United States. The National Bureau of Economic Research, a non-profit organization that is not affiliated with the government, is ultimately responsible for deciding whether or not the economy is in a recession. And making that decision can take several months.
Officials from the Fed, such as Chair Jerome Powell, continue to believe they can achieve a so-called “soft landing,” in which high-interest rates are defeated without sending the economy into recession. However, politicians, analysts, and financiers concur that the path has grown more constrained, and the majority of corporate executives anticipate the landing to be at least somewhat difficult.
Information from National Public Radio (npr.org)