Traders work on the floor of the New York Stock Exchange.
Lucas Jackson | Reuters
Each time the stock market hits a new low in 2022, it will head down again. Amid the highest interest rates in 15 years, high hopes among investors that the worst was yet to come turned into head shams. It’s not over.
recent damage Dow Jones Industrial Average A new survey of chief financial officers conducted by CNBC shows that even if the Fed’s fight against inflation has led to success, it will come at the cost of a hard landing for the economy next year.
The results of the latest quarterly survey of CFOs should come as no surprise. Throughout 2022, in conversations with individual members of the CFO Council, the prevailing view was often that the economy was headed for a hard landing. A boardroom poll at the recent annual summit in Washington DC on November 30 showed that the majority of CFOs hold this view.
of CNBC CFO Council The Q4 2022 survey is a sample of the current outlook for chief financial officers. It was conducted from November 30th to December 20th with 23 chief financial officers of major organizations.
Here are some details.
recession is coming
It has been pointed out that no recession is more predicted than one that has yet to hit the economy. Include his CFO in this prophet camp. More than 80% of his respondents in the Q4 survey expect a recession in 2023. This percentage is increasing quarter by quarter as more CFOs push back earlier predictions that the economy is already in recession. His CFOs are split on when, with the same percentage (43%) saying they expect a recession in the first half or second half of the year.
Whenever a recession hits, the timing is less important. Less than 10% of CFOs think his landing is softer than the findings. Possible.
more dow sales
The CFO’s view of the recession hints at more pain for the stock market, which is ending the year with a volatile drop in stock prices. More than half of his CFOs surveyed (56%) expect the Dow Jones Industrial Average to fall below 30,000 again before he reaches 40,000 for the first time. You have chosen to participate in the market or not call the stock in your survey.
But the outlook is not all bleak. In some key areas of the economy and markets, CFOs believe the worst is happening. For example, inflation.
Inflation has peaked
It remains the number one external risk factor CFOs mention, with more CFOs mentioning it in Q4, but now nearly two-thirds of respondents say inflation has peaked. I’m here. CFOs believe the Fed is doing a better job despite the costs to the economy and stock market. More than half of CFOs now rate his Fed’s handling of inflation as “good” or “excellent,” which is a significant improvement. The CFO, who said the Fed’s efforts to contain inflation were insufficient, fell from about a quarter of respondents in the third quarter to less than 10% who now hold this view. did.
Political risk does not disrupt markets
One of the reasons why many CFOs named inflation as the biggest external risk factor facing their business is another risk, which fell 10% quarter-over-quarter: the risk of over-regulation. Midterm elections and divided governments may be responsible for this dwindling fear.
For other major political risks looming 2023, CFOs think the headlines are worse than they actually are. A majority of his CFOs (over 80%) said the government is unlikely to shut down in 2023, and believe Congress is unlikely to fail to raise the debt ceiling. More than 90% of respondents have This echoes the views put forth by Kevin Brady, the outgoing Republican head of the House Ways and Means Committee. CNBC CFO Council Annual Summit Washington D.
“The bottom line is that our debts will be paid on time…we don’t expect it to be in 2011 or even 2018,” Brady said.
Firms Still Spending and Hiring
With economic conditions and stock markets weakening this year, one consistent finding in the CFO survey is that spending and investment plans are relatively stable. This is also true for the fourth quarter.
Less than a quarter of CFOs expect their companies to cut spending and headcount in 2023. Nearly 40% of CFOs say spending and headcount will remain the same next year, the same as those who expect it to increase.
