Chief financial officers in the United States have started to prepare themselves and their finances for a recession. For the first time in several years, economic uncertainty is now their lead concern, replacing worries about the difficulty of hiring and retaining talented workers.
According to CNN, 53 percent of chief financial officers expect the United States to enter a recession prior to the 2020 presidential election. That information was sourced from the Duke University/CFO Global Business Outlook survey released on Wednesday. And two-thirds predict a downturn by the end of next year. While a slight downturn may not amount to a recession, it certainly means CFOs are taking the initiative to prepare for the worst.
Only 12% of CFOs in the United States indicated they have become more optimistic about the domestic economy, down from 44% a year ago, according to the Duke survey. CNN blamed the economic uncertainty on the trade war with China, and it obviously is playing a role, however, Americans themselves are partially responsible too. The debt load continues to rise with spending while wages are remaining largely stagnant.
Since the Federal Reserve is eyeing another rate cut in an attempt to prop up the flailing economy, CFOs are noticing the other red flags that have been popping up regularly for the past few months. But spending is still expected to rise in the U.S., even though most Americans cannot afford to do so. Businesses may have a little more leeway, and their spending is also expected to rise.
U.S. business spending is expected to inch just 0.6% higher over the next 12 months, the Duke survey found. That’s a sharp deceleration from 8% growth projected in March and the second-lowest growth since December 2009.
“I do think this could become a self-fulfilling recession,” John Graham, a finance professor at Duke University’s Fuqua School of Business and director of the survey, told CNN Business.
“If we are teetering on the edge of recession and companies are already worried, it’s going to make it more likely we tip into a recession.”
Make sure you’re prepared for a recession. It’s never a bad idea to just always be prepared for economic hardships. Buying gold as insurance (not an investment) could help give you some peace of mind.