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Incoming months hard for business owners, CEOs concur in survey

Joseph Brown by Joseph Brown
May 30, 2022
in Business

The economic outlook for the United States is bleak, with more than half of company executives expecting a recession in their own industries, survey shows.

The majority of corporate executives, 57% according to the Conference Board’s measure of CEO sentiments, expect inflation will continue and worsen over these few years. Meanwhile, the board’s measure for CEO confidence decreased to 42% from the first quarter’s numbers which pegged it at 57%. The low outlook readings below 50 are considered negative by researchers of the board.

The Business Council’s vice chairman Roger Ferguson said that the negative outlook among executives could be attributed to many economic events like increasing wages, rising prices, inflation, and conflict abroad, among others.  

Here are major points and comparisons from the report by the Conference Board:

  • Only 14% of CEOs said that they’d seen improvements in their business during the second quarter;
  • 61% described having current worse conditions compared to 35% from the last survey;
  • There was a steep decrease in the percentage of CEOs seeing improvements in the overall economic conditions, from 50% to 19%;
  • Over 60% expect that the conditions will become harsher in the next few months, almost triple from the last quarter’s 23%;
  • A lower number of companies will hire in the third quarter of this year, from 66% to 63%;
  • 80% experienced challenges in scouting qualified applicants;
  • 91%, up from 85%, intend to raise workers’ wages next year
  • 38%, lower than the former 48%, will risk spending capital on their businesses;
  • 20% believe that stagflation is highly likely – a condition where there is slow growth and increased inflation.

“The recent survey suggests that this set of circumstances is not likely to get better anytime soon and consequently pressures on the middle line and the bottom line for businesses, pressures on the household sector, pressures at CEO level, and frankly, pressures on the Federal Reserve,” said Ferguson.

Inflation in the US caused by external factors

The recent increase in commodity prices is causing much concern. Gasoline prices in the United States are projected to skyrocket by 25% as warmer weather approaches, and supplies from countries such as Russia become increasingly scarce due to its conflict with Ukraine. Many countries have also banned their exports following the supply chain crisis.

In a recent announcement, India banned its wheat exports following inflation due to a shortage of supply. The ‘shocking’ announcement was followed by other countries imposing export bans on their respective products as well. The supply of raw materials like oil, maize, sunflower, grains, and fertilizers, has now declined since countries have stopped exporting them. Russia has also restricted Ukraine from making shipments because of its blockade – Ukraine is a well-known supplier of wheat.

With all of these happening at a time, the market may be sure headed for an upset. However, authorities have assured corporate executives that they are doubling their efforts to address the problem. US President Biden and other department heads are meeting every now and then to come up with solutions to a myriad of problems in the US market.

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Joseph Brown

Joseph Brown
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As a business analyst, Joseph has a proven track record of driving growth and profitability for companies in various industries. With a keen understanding of market trends and consumer behavior, he has successfully implemented strategic initiatives that have resulted in significant revenue increases. Joseph's expertise in data analysis and market research has been instrumental in helping businesses make informed decisions and stay ahead of the competition.

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The economic outlook for the United States is bleak, with more than half of company executives expecting a recession in their own industries, survey shows.

The majority of corporate executives, 57% according to the Conference Board's measure of CEO sentiments, expect inflation will continue and worsen over these few years. Meanwhile, the board's measure for CEO confidence decreased to 42% from the first quarter's numbers which pegged it at 57%. The low outlook readings below 50 are considered negative by researchers of the board.

The Business Council's vice chairman Roger Ferguson said that the negative outlook among executives could be attributed to many economic events like increasing wages, rising prices, inflation, and conflict abroad, among others.  

Here are major points and comparisons from the report by the Conference Board:

  • Only 14% of CEOs said that they'd seen improvements in their business during the second quarter;
  • 61% described having current worse conditions compared to 35% from the last survey;
  • There was a steep decrease in the percentage of CEOs seeing improvements in the overall economic conditions, from 50% to 19%;
  • Over 60% expect that the conditions will become harsher in the next few months, almost triple from the last quarter's 23%;
  • A lower number of companies will hire in the third quarter of this year, from 66% to 63%;
  • 80% experienced challenges in scouting qualified applicants;
  • 91%, up from 85%, intend to raise workers' wages next year
  • 38%, lower than the former 48%, will risk spending capital on their businesses;
  • 20% believe that stagflation is highly likely – a condition where there is slow growth and increased inflation.

"The recent survey suggests that this set of circumstances is not likely to get better anytime soon and consequently pressures on the middle line and the bottom line for businesses, pressures on the household sector, pressures at CEO level, and frankly, pressures on the Federal Reserve," said Ferguson.

Inflation in the US caused by external factors

The recent increase in commodity prices is causing much concern. Gasoline prices in the United States are projected to skyrocket by 25% as warmer weather approaches, and supplies from countries such as Russia become increasingly scarce due to its conflict with Ukraine. Many countries have also banned their exports following the supply chain crisis.

In a recent announcement, India banned its wheat exports following inflation due to a shortage of supply. The 'shocking' announcement was followed by other countries imposing export bans on their respective products as well. The supply of raw materials like oil, maize, sunflower, grains, and fertilizers, has now declined since countries have stopped exporting them. Russia has also restricted Ukraine from making shipments because of its blockade – Ukraine is a well-known supplier of wheat.

With all of these happening at a time, the market may be sure headed for an upset. However, authorities have assured corporate executives that they are doubling their efforts to address the problem. US President Biden and other department heads are meeting every now and then to come up with solutions to a myriad of problems in the US market.

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