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.
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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.

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