Apr 3, 2019

Top executives are bracing for a global economic slowdown

Leading business executives' optimism about the current state of the global economy has tanked, and prospects that next year will be better are falling fast too, according to Deloitte's quarterly survey of more than 100 chief financial officers.

Why it matters: One of the biggest risks to the stock market and the economy itself is the fear of a recession, much more so than a recession itself, as we've written before. Executives that think economic prospects are only going to get worse can delay big projects which will further hurt growth.

  • 24% of CFOs said altering or delaying investments is the first thing they would do to prepare for a downturn, but only 8% have done so already.
  • CFOs' expectations for capital spending, fatter profits, more hiring and higher wages within the next 12 months are all below the survey's 2-year average.
Data: Deloitte; Chart: Chris Canipe

The big picture: The results are similar to findings from other sentiment surveys, including the Business Roundtable's quarterly CEO survey which showed plans to rein in plans for spending and hiring.

  • As for the average consumer, confidence in the state of the economy in March saw its biggest 1-month decline in over a decade, according to the closely watched Conference Board survey. Consumers' expectations for the economy in the next 6 months fell, too.

Other findings:

  • 84% of CFOs said the U.S. economy would slowdown or enter a recession by the end of next year and cited 3 factors — the trade war, the length of business and credit cycles and slowing growth in China and Europe — as the potential causes.
  • 15% said they already see signs of a U.S. downturn within their company's operations.

Go deeper

Situational awareness

Photo: Brett Carlsen/Getty Images

Catch up on today's biggest news:

  1. Mike Bloomberg offers to release women from 3 NDAs
  2. Wells Fargo to pay $3 billion to settle consumer abuse charges
  3. Bloomberg campaign says Tennessee vandalism "echoes language" from Bernie supporters
  4. Scoop: New White House personnel chief tells Cabinet liaisons to target Never Trumpers
  5. Nearly half of Republicans support pardoning Roger Stone

Wells Fargo agrees to pay $3 billion to settle consumer abuse charges

Clients use an ATM at a Wells Fargo Bank in Los Angeles, Calif. Photo: Ronen Tivony/SOPA Images/LightRocket via Getty Images

Wells Fargo agreed to a pay a combined $3 billion to the Justice Department and the Securities and Exchange Commission on Friday for opening millions of fake customer accounts between 2002 and 2016, the SEC said in a press release.

The big picture: The fine "is among the largest corporate penalties reached during the Trump administration," the Washington Post reports.

Bloomberg offers to release women from 3 nondisclosure agreements

Mike Bloomberg. Photo: Brett Carlsen/Getty Images

Mike Bloomberg said Friday his company will release women identified to have signed three nondisclosure agreements so they can publicly discuss their allegations against him if they wish.

Why it matters, via Axios' Margaret Talev: Bloomberg’s shift in policy toward NDAs comes as he tries to stanch his loss of female support after the Las Vegas debate. It is an effort to separate the total number of harassment and culture complaints at the large company from those directed at him personally. That could reframe the criticism against him, but also protect the company from legal fallout if all past NDAs were placed in jeopardy.