Business leaders gathered for a CFO summit argued that the upcoming recession will be short and manageable.
- Lawyers and business leaders met for the first time in three years for the return of the Wall Street Journal’s biannual CFO Network Summit last week in New York City.
- The meeting discussed the Federal Reserve’s monetary policy, the labor market, climate change, ESG policies, and how raising capital is proving more difficult in the current market, The Wall Street Journal reports.
- Against the general trend of analysts, CFOs laid out predictions that the upcoming recession won’t be as severe as some economists are worried about and that solid areas of the economy shouldn’t have a problem working through a challenging but short recession.
Why It’s Important
As we’ve previously discussed, the U.S. economy remains curiously positioned. The Federal Reserve’s monetary tightening policies are pressuring the economy to slow, with prominent business leaders such as ARK Invest CEO Cathie Wood and Tesla CEO Elon Musk saying it could cause long-term deflation.
At the same time, this pressure isn’t being felt in the job market. Americans are generally optimistic about their job prospects going into 2023 and don’t expect widespread layoffs in the near future, which Fed Chair Jerome Powell interprets as a sign that interest rate hikes are not working yet.
Economists have been saying since mid-2022 that the U.S. is due for a recession sometime within the next 12 to 18 months. Likely, the U.S. was already in the early stages of a recession in late 2022. However, several firms and economists, including Treasury Secretary Janet Yellen, have downplayed concerns of an imminent recession. An August 2022 Deloitte report says more CFOs were worried about inflation than a recession.
“All our clients … have been preparing for a downturn in the economy. But … there’s more and more of a belief that any kind of downturn will be short and shallow, frankly. That seems to be taking over you know what was five or six months ago a very, very negative outlook,” says Ernst & Young global chairman Carmine Di Sibio.