CEO confidence has plunged to its lowest levels because the Great Recession as central banks scramble to tame decades-high inflation, in line with the outcomes of a key survey.
A whopping 98% of US-based CEOs say they’re preparing for an economic recession over the subsequent 12 to 18 months, in line with the quarterly survey of business leaders conducted by the Conference Board released Thursday. The number rose even higher, to 99%, for CEOs based in Europe.
“CEOs are actually preparing for near-inevitable recessions in each the US and Europe,” said Roger W. Ferguson Jr., a Conference Board trustee and former Fed vice chair. “While the overwhelming majority still expect the US recession to be short and shallow, nearly 7 in 10 imagine the EU will enter a deep recession with serious global spillovers.”
Corporate bosses received more bad news this week after the newest Consumer Price Index showed inflation running higher than expected at 8.2% in September. The reading affirmed a view that the Federal Reserve will proceed sharply tightening monetary policy despite fears that its actions will trigger a lengthy recession.
Of the CEOs polled, just 5% felt economic conditions will improve over the subsequent six months. Meanwhile, 81% said the economic outlook is worse for the fourth quarter than it was within the previous quarter.
Jamie Dimon recently warned of a world recession.ZUMAPRESS.com
98% of US CEOs say they’re preparing for a recession.Getty Images
Some 85% of CEOs expect the US recession to be transient and shallow, while 13% expect a deeper downturn with a “material global spillover.”
When asked to call the largest global challenge their businesses currently face, 34% of CEOs pointed to political and government instability, while 17% cited energy access and security and 15% said the continued Russia-Ukraine war.
Even before the newest inflation data surfaced, JPMorgan Chase CEO Jamie Dimon warned the worldwide economy faced a series of headwinds that will spark a recession next 12 months, including higher rates of interest and inflation.
FedEx CEO Raj Subramaniam said last month he felt a worldwide recession was underway.Sipa USA via AP
“These are very, very serious things which I believe are prone to push the US and the world — I mean, Europe is already in recession — they usually’re prone to put the US in some form of recession six to nine months from now,” Dimon told CNBC.
Last month, FedEx CEO Raj Subramaniam triggered a market selloff when he signaled a worldwide recession was already underway.
Executives and investors will gain a greater sense of the Fed’s policy path when officials conduct their next two-day meeting on Nov. 1-2. The Fed is widely expected to hike its benchmark rate by three-quarters of a percentage point for the fourth straight meeting.