Nearly half of chief financial officers, 46%, expect the North American economy to be in a recession by the new year and are already taking steps to prepare, according to the “CFO Signals” survey released today by Deloitte.
“Deloitte’s Q3 CFO Signals survey reveals that CFOs are grappling with the effects of inflation and the prospects of a potential recession,” said Steve Gallucci, national managing partner, US CFO program, Deloitte LLP, and global leader, Deloitte Touche Tohmatsu Ltd.
“Some organizations are already taking measures to cope with slowing growth, including cuts to hiring, wage growth and capital spending,” Gallucci said. “Nevertheless, sustained inflation remains a more worrying prospect for CFOs than a recession.”
CFOs’ concerns over persistent inflation outweighed angst over the possibility of a recession nearly three to one, according to the survey. It found 73% of CFOs were most concerned about persistent inflation, while 27% were most concerned about recession.
It also found 39% of CFOs expect the North American economy to be in a period of stagflation — a period of stagnant economic growth accompanied by persistently high inflation — by 2023. However, another 15% expressed a more optimistic outlook, indicating they expect the regions’ economy to be growing with low-to-moderate inflation by 2023.
Other findings:
- Just 33% of CFOs rated the current economy as good or very good, down from 52% in the second-quarter survey.
- 29% of CFOs indicated conditions in North America will improve in a year, up from 18% in the second-quarter survey.
- Sentiment was gloomy for the current economies of Europe, China and South America, with just 7% of CFOs viewing conditions as good or very good in each region.
- The percentage of CFOs expressing more optimism for their companies’ financial prospects declined to 19% in the third-quarter survey from 27% in the second — this figure is the lowest it has been since the survey in the second quarter of 2020.
- Inflation and geopolitics stood out most prominently among the CFO’s list of external risks.
The CFO survey for the third quarter took place between Aug. 1 and Aug. 15, and 112 from across the US, Canada and Mexico took part. Eighty-four percent of respondents came from companies with more than $1 billion in annual revenue.