In the group’s global survey of 750 executives, respondents revealed concerns about inflation and supply chain bottlenecks, especially amid the Russian invasion of Ukraine. Over 60% said that “they expect a recession in their primary region of operations before the end of 2023 or earlier,” while 15% said that “their region is already in recession.”
The United States economy shrank at a 1.5% annualized rate in the first quarter of 2022, according to the U.S. Bureau of Economic Analysis, with two consecutive quarters of negative growth indicating recession territory. The yield curve inverted earlier this week for United States government bonds in another sign that a recession is on the horizon. In response, the Federal Reserve is currently trying to battle inflation by increasing interest rates, including a 0.75% rate hike that represents the boldest anti-inflation action since 1994.
“There is this gap between how consumers are viewing this — they’re not as worried as CEOs are,” Conference Board Chief Economist Dana Peterson told The Wall Street Journal. “But CEOs are trained to look 12 to 18 months down the line. Most consumers? The next few months, or three to six months, is really what they’re thinking about.”
While the Consumer Price Index (CPI) rose 8.6% year-over-year as of May, the Producer Price Index (PPI) — which tracks inflation for businesses — rose 10.8% over the same period, according to two recent reports from the U.S. Bureau of Labor Statistics.
A slim 10% of CEOs believe inflationary pressure will be resolved by the middle of 2022, according to the Conference Board. While the plurality predict an end to soaring price levels by the end of the year, 31% remain concerned that inflation will endure beyond 2023.
Other salient risks weighing on CEOs include the increased chance of cyberattacks amid the Ukraine conflict. Likewise, executives are attempting to strengthen their supply chains.
The Conference Board’s findings correspond with other recent polls tracking sentiment among business leaders. In CNBC’s most recent CFO Council Survey, 68% of financial executives said that a recession will occur in the first half of 2023. None of the 22 respondents expect the economy to avoid a recession.
In a survey from the National Association of Manufacturers, 59% of business leaders said inflationary pressures “make a recession more likely in the next 12 months.” Likewise, more than 90% of respondents pointed to higher raw material costs as one of the “primary business challenges” in the second quarter of 2022.
Biden, however, attributed rising inflation to “Putin’s Price Hike” and pinned the blame on purported corporate price-gouging, as well as wealthy Americans failing to pay higher taxes.
“Prices at the pump are a major part of inflation, and the war in Ukraine is a major cause of that. The United States is on track to produce a record amount of oil next year, and I am working with the industry to accelerate this output,” Biden said in a statement. “But it is also important that the oil and gas and refining industries in this country not use the challenge created by the war in Ukraine as a reason to make things worse for families with excessive profit taking or price hikes.”