Financial services firm Deloitte conducted a survey of chief financial officers (CFOs) and found that nearly 50% of those surveyed expect the U.S. economy to be in a recession this year. Another 39% expect the North American economy to be in stagflation by the end of the year.
CFOs on the recession and the U.S. economy
Deloitte, one of the Big Four accounting firms, released the results of its CFO Signals Survey for the third quarter earlier this week. The survey, conducted between August 1 and 15, included 112 CFOs from the United States, Canada and Mexico. Deloitte explained that they represent large, diversified companies, noting that 84% of respondents reported revenues in excess of $1 billion and more than a quarter of them were from companies with annual revenues in excess of $10 billion.
According to Deloitte:
Forty-six percent of CFOs surveyed expect the North American economy to be in recession by the new year.
The financial services firm said CFOs are taking a variety of steps to prepare for a recession, including reducing or tightly managing operating expenses, controlling headcount, limiting hiring and increasing productivity.
In addition, a number of CFOs reported that they are evaluating their customers, services, and products to identify opportunities to help them weather the recession. Deloitte also found that:
Just over one-third of CFOs (39%) said they expect the North American economy to experience a period of stagflation by 2023.
“Another 15% expressed a more optimistic outlook, indicating that they expect the region’s economy to be growing with low to moderate inflation by 2023“, the firm describes.
In terms of capital market valuation, 30% of CFOs believe U.S. stocks are overvalued in this quarter’s survey. “47% indicated that U.S. stocks were neither overvalued nor undervalued, while 24% considered them undervalued,” Deloitte noted.
Many people are concerned that the Federal Reserve’s hawkish stance will push the U.S. economy into recession after Fed Chairman Jerome Powell’s speech in Jackson Hole. Among them, U.S. Senator Elizabeth Warren (D-MA) said, “I am very concerned that the Fed will push the economy into recession.”
An independent survey released last week showed that 72% of economists surveyed by the National Association of Business Economics expect the U.S. economy to be in recession by the middle of next year. Nearly one in five economists (19%) said the U.S. economy is already in recession. Another survey conducted by Stifel Financial last month found that 97 percent of U.S. executives are already preparing for a recession.