August 29, 2022
Nearly half (46%) of chief financial officers expect the North American economy to enter recession by the turn of the year, and are already preparing for it, according to Deloitte’s CFO Signals survey released today.
Steve Gallucci, National Managing Partner of Deloitte LLP’s U.S. CFO Program and Global Leader of Deloitte Touche Tohmatsu, said:
“Some organizations have already taken steps to deal with slower growth, such as cutting jobs, increasing wages and cutting capital spending,” Gallucci said. “That said, sustained inflation is a more worrying prospect for his CFO than a recession.”
The survey found that CFOs’ concerns about persistent inflation outweighed fears of a possible recession by nearly three to one. 73% of CFOs were most concerned about sustained inflation, and 27% were most concerned about a recession.
We also found that 39% of CFOs expect the North American economy to be in a period of stagflation (a period of stagnation in economic growth accompanied by sustained high inflation) by 2023. However, another 15% expressed a more optimistic outlook, with the region’s economy growing at low to moderate inflation by 2023.
- Only 33% of CFOs rated the current economy as good or very good, down from 52% in the second quarter survey.
- Twenty-nine percent of CFOs said conditions in North America will improve within a year, up from 18% in the second quarter survey.
- Current economic sentiment in Europe, China and South America is pessimistic, with only 7% of CFOs viewing the situation in each region as good or very good.
- The percentage of CFOs who are more optimistic about their company’s financial prospects fell from 27% in the Q2 survey to 19% in the Q3 survey. This number is the lowest since the second quarter of 2020 survey.
- Inflation and geopolitics stood out most on CFO’s list of external risks.
The third quarter CFO survey ran from August 1 to August 15 and included 112 participants from the United States, Canada and Mexico. His 84% of respondents hail from companies with annual revenues exceeding his $1 billion.