Recession will hit US in 12 to 18 months, says 98% CEOs: Survey

“Our economy is as strong as hell,” President Joe Biden say on saturday. That sounds like good news heading into the holiday season – with retailers hoping for strong spending despite rising interest rates and high inflation – but lest the mood turns too much. cheerfully, nearly every CEO expects a recession to hit America in the near future.

98% of CEOs are preparing for a US recession in the next 12 to 18 months, and 99% expect one to hit the EU, according to the Measure of CEO Confidence survey. released this week by the Board of Directors, in collaboration with the Business Council.

“CEOs are now bracing for the almost inevitable recessions in both the United States and Europe,” Roger W. Ferguson, Jr., Vice President of the Business Council, said in a statement.

If there’s a bright side for Americans, 85% of CEOs surveyed think the US recession will be “short and shallow,” with limited global spillover. In contrast, only 31% think the EU recession is similar, 68% predict it to be “deep” and with “material global spillover”.

“Everybody likes to predict a recession, and there will be a recession. It’s just a question of timing, and honestly, how hard,” said Citadel CEO Ken Griffin said last month at CNBC Delivering Alpha Investor Important conference.

About the timing, Jamie Dimon, CEO of JPMorgan Chase, giving a timeline for this week: six to nine months. He pointed to the high probability that the Fed will continue to raise rates next year, combined with the aftershocks of the pandemic and the aftermath of the Ukraine war.

Dimon said it is nearly impossible to predict whether the US recession will be “very mild” or “fairly difficult”.

“Right now,” he added, “the U.S. economy is actually doing well. Consumers have money”.

Department of Commerce last month’s report that consumer spending, which accounts for more than two-thirds of US economic activity, rose more than expected in August – up 0.4%, compared with economists’ expectations of 0.2% .

Fear of recession, low business confidence

Whether that continues this holiday season remains to be seen.

Economist Nouriel Roubini thinks a severe recession begins in the US later this year and could last until 2023.

“It won’t be a short and shallow recession,” New York University economics professor told Bloomberg last month. “It’s going to be serious, long, and ugly.”

FedEx Managing Director Raj Subramaniam said last month the global economy is on the verge of a “global recession”, noting that his company “saw a decline in volume in every segment worldwide” during a difficult quarter.

He said FedEx, long seen as a driver of global economic growth, will postpone hiring, close 90 offices and reduce capital spending by $500 million next year.

On a similar note, Meta CEO Mark Zuckerberg recently announced his company, which owns Facebook and Instagram, will freeze hiring and cut costs.

“I was hoping the economy would stabilize more clearly now, but from what we’ve seen it doesn’t look like it’s happening yet, so we want to plan a bit conservatively,” he said. said at a weekly Q&A session with staff.

He is one of many CEOs wary of the economic outlook. In a Conference Board survey, 74% of CEOs said they expect economic conditions to worsen over the next six months.

“CEO confidence has fallen further since the start of the fourth quarter and is at its lowest level since the Great Recession,” said Dana M. Peterson, chief economist at the Conference Board. But “despite expectations of slower growth, tight labor market conditions and wage pressures persist, while hiring plans remain strong,” she added.

In one KPMG survey of 400 US CEOs published earlier this month, more than half said they were considering reduce their workforce over the next six months to prepare for a recession. Meanwhile, most Americans are also worried about an upcoming recession and how it will affect them.

That can make it difficult for you to enjoy this holiday season. Dimon’s advice? “Be prepared.”

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