CFOs predict recession in third quarter of 2020

Two-thirds of CFOs predict a recession by the third quarter of 2020, according to the Global Business Outlook Survey conducted by the International Association of Financial Executives (IAFEI) together with Duke University ad Grenoble Ecole de Management.

Some 67% of CFOs said the US will be in recession by the third quarter of next year, and an even higher number of 84% believe the recession will be underway by the first quarter of 2021.

When asked what’s the best predictor of a slow-down, roughly half the CFOs said GDP growth, consumer spending (39%), commodity prices (31%) and interest rates (29%).

Despite this, CFOs expect their capital spending to increase by 5% over the next 12 months. Hiring will also increase 2%, they believe.

The CFO Optimism Index has been trending higher for the best part of a decade, but fell sharply over the course of 2018, reflecting a trend last seen prior to the 2008 financial meltdown.

Optimism outside the US is somewhat better, climbing 2 points to 59 (on a scale of 0-100) in the first quarter of 2019 – with capital spending expected to grow 3% and employment 2%.

Asia and Latin American are more bullish that Europe and the US, with an Optimism Index of 65. In Africa the index is climbing, but off a low base, to 55.

The survey generated responses from 1,500 CFOs, including 469 from North America, 261 from Europe, 590 from Latin America and 42 from Africa.

 

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