Chief executive officers and other top corporate executives are worried about inflation, supply chain issues and geo-political tensions, according to a recent survey and analysis by The Conference Board, and that has America’s top executives bracing for recession.
The war in Ukraine driving up energy prices and contributing to economic inflation, anxiety over possible Russian cyberattacks and ongoing COVID lockdowns in China have 76 percent of CEO’s believing that a recession is imminent or already here, according to the survey.
“Historically high energy prices, renewed supply chain disruptions, heightened geopolitics risks, and eroding consumer confidence are all putting downward pressure on global growth. That’s on top of lockdowns in China and the cascading ripple effects of the war in Ukraine. These disruptions, along with restrictive monetary and fiscal policy decisions, are fueling recession expectations,” said Dana Peterson, chief economist for The Conference Board.
The Conference Board’s survey included 750 responses from CEOs and executives around the world.
Although CEOs and C-Suite executives already ranked inflation as a top concern at the start of the year, the war in Ukraine has exacted economic costs, particularly in the energy market, that executives say is the most damaging economic cost of the war. Most CEOs expect high inflation rates to persist into 2023.
The economic damages coming from inflation, supply chain issues and the war are already hitting everyday consumers hard, with the price of everything – most notably energy – rising at a record-setting pace not seen since the early 1980s, and, according to the survey, the effect on consumers could get worse.
CEOs were roughly split on how their companies will handle this current economic and geopolitical climate, with 51 percent saying they will pass the cost onto consumers, while 47 percent said they were cutting costs.
Globally, 28 percent of CEOs said they would accelerate their move toward renewable energy to mitigate the volatility of the energy market.
Labor force issues also remain a problem for companies, according to executives. Although the United States currently has a low unemployment rate, job vacancies remain high. Of those surveyed 57 percent are promoting hybrid work-from-home models to attract employees, while 47 percent are increasing automation.
“As CEOs and other C-suite executives focus on ensuring the long-term growth of their business amid this volatile global environment, addressing labor force challenges will be essential,” said Rebecca Ray, executive vice president of human capital for The Conference Board. “To do this, firms are doubling down on the hybrid work model, automation, and improving their recruiting processes and communication around business strategy.”
None of this bodes well for the challenges faced by businesses, employees and consumers as the economy is showing signs of trouble: Wall Street is in the midst of a downturn, inflation recently topped 8.6 percent and the Federal Reserve Bank just increased interest rates by .75 percent, raising concerns over an economic recession.
Naturally, the country’s economic conditions are fueling the political campaign season with Republicans attempting to orchestrate a mid-term sweep, accusing President Joe Biden and Democrats of not doing enough to mitigate inflationary pressures.
In Connecticut, the GOP and gubernatorial candidate Bob Stefanowski have begun holding rallies at gas stations across the state, highlighting the high price of gasoline and pressuring Gov. Ned Lamont to hold a special session to pass their $1.2 billion package of tax cuts.
Lamont and Democrats passed a 2023 budget that included $660 million in tax cuts, including suspending the gasoline excise tax, a child tax rebate and a higher property tax credit. In a statement released earlier in the week, Democrat leadership accused Republicans of trying to “govern by political press release.”
“[Republicans] overwhelmingly voted ‘no’ on more than $600 million in tax cuts and now they are facing voters who realize that Republicans voted against cutting the gas tax, against providing tax relief to families and against eliminating taxes on pension,” said Senate President Pro-Tem Martin Looney, D-New Haven, and House Speaker Matthew Ritter, D-Hartford.
According to The Conference Board’s report, CEOs said “they can best benefit from lower taxes, public investment, fewer regulations, and an effective government energy transition plan.”
CEOs also acknowledged that trust in corporations – which may not be all that high to begin with – could be “eroded if there is any sense of profiteering.” The Biden administration and Connecticut Attorney General William Tong have warned of price gouging by gasoline stations and, nationally, Democrats have floated the idea of a windfall tax on oil companies.
“The war in Ukraine has created a new inflection point in geopolitics and the political economy. In the long term, the war and its impacts on inflation, economic growth, and a potential reshuffling of global alliances will demand innovative solutions,” the report says. “On the downside, its impacts will likely be felt most deeply by the world’s most vulnerable populations.”
