- 91% of CEOs of major US companies said a recession would come within a year.
- Only a third said it would be mild and short, with most expecting it to affect their business’ growth.
- Netflix, Microsoft and Tesla have laid off staff. Some companies are planning to halt ESG efforts.
According to a new KPMG survey, most CEOs are already preparing for a recession, which they say will weigh on profits and stunt growth.
Measures companies are planning to take to weather the recession include reducing ESG spending and laying off staff.
The vast majority of CEOs – 91% – said they thought a recession would come within a year, and only a third said it would be mild and short. 80% said they thought this would affect the expected growth of their organization over the next three years.
Goldman Sachs analysts said in August that there was a 30% chance that the US would enter a recession in the next 12 months, but that a euro-zone recession was twice as likely.
But data from the Bureau of Economic Analysis shows that Americans have already spent nearly a third of their accumulated savings, showing that “the risk of a recession is greater than we previously thought,” according to Pantheon Macroeconomics.
More than three-quarters of US CEOs surveyed said they had planned for a recession, with 59% saying they planned to pause or rethink their ESG efforts and 51% considered cutting their workforce.
Companies like Meta and Google have announced the hiring freeze, while Gap, Netflix, Microsoft, Wayfair, Peloton and Tesla have all laid off staff this year.
In addition to laying off some employees, 71% of CEOs said they believed inflation and the rising cost of living would affect their company’s ability to retain staff.
“CEOs are on a tightrope as they consider a wide range of actions – including workforce reductions – to prepare for a potential recession while still weathering the pandemic, dealing with supply chain and technology disruptions and a host of other risks and finding ways to drive growth,” KPMG US CEO Paul Knopp said in a statement.
In the long run, the US CEOs surveyed said they were largely optimistic about the future. Nearly all said they were confident about the growth of their business and industry over the next three years, while 93% said they were confident in the US economy and 71% in the global economy.
KPMG pulled data on US CEOs from its 2022 CEO Outlook, which surveyed 1,325 business leaders around the world between July and August. The larger, international survey showed less pessimism about the economy: 86% of respondents expected a recession in the coming year, but 58% said they thought it would be short-lived.
A third of CEOs worldwide said they had already paused or reconsidered their ESG efforts due to the economic outlook. 39% said they had already implemented a workforce freeze and 46% said they are considering cutting their workforce in the next six months.
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