Most CEOs are already preparing for a recession, with plans including laying off staff and cutting spending on environmental issues, a major survey shows
- 91% of CEOs of large US companies said there'd be a recession within the next year.
- Only a third said it would be mild and short, and most expect it to affect their company's growth.
Most CEOs are already preparing for a recession, which they think will slash earnings and stunt growth, according to a new survey by KPMG.
Measures companies plan to take to weather the recession include cutting ESG spending and laying off staff, the survey, which canvassed the opinions of the CEOs of 400 American companies with annual revenues of at least $500 million, showed.
The vast majority of CEOs – 91% – said they thought there would be a recession within the next year, and only a third said it would be mild and short. 80% said they thought it would affect their organization's anticipated growth over the next three years.
Goldman Sachs analysts said in August that there was a 30% probability that the US would enter a recession over the next 12 months, but that a recession in the Euro area was twice as likely.
But data from the Bureau of Economic Analysis shows that Americans have already spent almost a third of their pent-up savings, which Pantheon Macroeconomics said shows "the risk of recession is higher than we previously thought."
More than three quarters of the American CEOs surveyed said they had made plans for a recession, with 59% saying they planned to pause or reconsider their ESG efforts and 51% considering downsizing their workforce.
Companies including Meta and Google have announced hiring freezes, while Gap, Netflix, Microsoft, Wayfair, Peloton, and Tesla have all laid off staff this year.
As well as laying off some workers, 71% of CEOs said they thought inflation and the rising cost of living would impact their company's ability to retain staff.
"CEOs are walking a tightrope as they consider a wide range of actions — including workforce reductions — to prepare for a potential recession while still managing through the pandemic, dealing with supply chain and technology disruption and numerous other risks and finding ways to drive growth," KPMG US CEO Paul Knopp said in a statement.
In the long term, the US CEOs surveyed said they were largely optimistic about the future. Almost all said they were confident about the growth of their company and industry over the next three years, while 93% said they were confident about the US economy and 71% about the global economy.
KPMG extracted the data on US CEOs on from its 2022 CEO Outlook, which polled 1,325 business leaders across the world between July and August. The larger, international survey showed less pessimism about the economy, with 86% of respondents expecting a recession in the next year, but 58% saying they thought it would be short and mild.
A third of the CEOs globally said they'd already paused or reconsidered their ESG efforts because of the economic outlook. 39% said they'd already implemented a hiring freeze and 46% said they were considering downsizing their workforce over the next six months.