<mediadc-video-embed data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1655479097064,"cms.content.publishUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1655479097064,"cms.content.updateUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"rawHtml":"
var _bp = _bp||[]; _bp.push({ "div": "Brid_55478964", "obj": {"id":"27789","width":"16","height":"9","video":"1032720"} }); ","_id":"00000181-723e-ddb6-a5eb-7a3f50790000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedA majority of executives at companies across the world now say a recession is likely or that their area is already in a recession, according to a new survey.
The Conference Board survey released Friday found that 60% of such business leaders said they expect a recession, and a hefty 15% said they are already in a recession. The survey queried 750 CEOs and other top executives.
The executives were much more pessimistic about the future of the economy than they were just a few months ago. Late last year, a mere 22% of CEOs thought that a recession was on the horizon, speaking to just how much inflation and growth dynamics have changed since the start of 2022.
The numbers come as central banks across the globe contend with rising inflation and supply shocks arising from the war in Ukraine.
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Many economists thought that U.S. inflation had peaked when it declined to an 8.3% annual rate in April. But then, last week’s consumer price index report showed inflation rising again to 8.6%, the highest since 1981, leading the Fed to take extraordinary action to drive down prices.
The Federal Open Market Committee announced Wednesday that it would increase its interest rate target by three-quarters of a percentage point, to a range of 1.5% to 1.75%. That marked the first time that the central bank had taken such aggressive action since 1994.
Further complicating the inflation situation is the Russian war in Ukraine. Energy prices, which are leading the headline inflation numbers, have exploded since the Russian incursion. The higher energy prices translate to costlier goods across the board.
Gas prices have broken records several times over, and the national average is now $4.72 per gallon. That is up nearly 50 cents in just the past month and is approaching $2 more than this time last year.
Just 9% of CEOs in the Conference Board’s global survey said the war in Ukraine would not have a material impact on their business operations in the coming year.
Another interesting development is the concern surrounding cyberattacks. Cyberwarfare is now a major threat to countries and companies across the world as business becomes more reliant on technology. Business executives fear Russia might retaliate through cyberattacks.
About 43% of CEOs and 42% of other C-suite executives said they are “highly concerned” about the threat of cyberattacks resulting from the war in Ukraine.
Some prominent figures have been warning about the risk of a recession. Last week’s inflation report has increased expectations about the economy stagnating, given the Fed’s new, even more aggressive tightening cycle.
The World Bank recently said that many countries across the world are going to struggle to prevent a recession this year and pared down its global growth forecast.
The international financial institution now projects global growth to fall to 2.9%, a decrease of 1.2 percentage points from its previous forecast at the start of the year. The World Bank said alarm bells are flashing red for a “protracted period of feeble growth and elevated inflation.”
“The war in Ukraine, lockdowns in China, supply-chain disruptions, and the risk of stagflation are hammering growth. For many countries, recession will be hard to avoid,” said World Bank President David Malpass.
Additionally, a new survey by the Financial Times in partnership with the University of Chicago Booth School of Business found that 68% of the 49 economists queried said the most likely timing of a recession is sometime in 2023.
Almost 40% said the National Bureau of Economic Research would declare a recession in the first half of next year, while 30% projected one would be declared in the second half.
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Nevertheless, at least in the United States, there are some factors acting as buffers against the prospect of a recession, chief among them the strong labor market.
The economy beat expectations and added 390,000 jobs last month. Additionally, the country’s unemployment rate remained at 3.6%, an ultralow level that is just about where it was right before the pandemic began more than two years ago.
