More than two thirds of CEOs think Fed’s war on inflation will trigger a recession – and one in 10 fears a severe ‘hard-landing’ slump, new poll reveals
- A new survey reveals that CEO confidence in the economy has dropped to its lowest point since the beginning of the Covid-19 pandemic
- The survey, conducted by The Conference Board, found that 68% of CEOs surveyed fear that the economy is headed for a recession
- CEOs surveyed say they fear that the Federal Reserve’s efforts to quell soaring inflation will trigger the recession
- 11% of CEOs surveyed say they fear a deep ‘hard-landing’ recession, while the rest expected only a mild recession
More than two-thirds of CEOs fear that the Federal Reserve‘s attempts to quell inflation will lead to a recession, with one in 10 worrying the US faces an extremely tough ‘hard-landing’ slump,’ according to a new poll.
The poll found that 68% of CEOs surveyed fear that the Fed’s attempts to stem soaring inflation will trigger a recession.
The survey spoke to 133 CEOs of mostly public companies between April 25 and May 9.
11% of those CEOs feared a ‘hard-landing’ deep recession, while the rest said they only expected a ‘very short, mild,’ recession.
Inflation in the US remains high but has fallen slightly from the four-decade record it set in March
Inflation has risen steadily over the years but hit a 40-year high last month. Experts warn that the US could be in for a couple years of high prices and relatively high unemployment
The survey did not note whether business leaders are fearing recession to strike soon, just that they expected it ‘over the next few years.’
Inflation has soared so sharply in recent months that the Federal Reserve may not be able to slow it by gradually increasing interest rates.
A sharp increase in interest rates would likely trigger a downturn.
‘Recessionary-concerns are real,’ CEO of the American Petroleum Institute Mike Sommers, told CNN in response to the survey, noting that recessions often follow rapid hikes in interest rates.
The survey was released the same week that the former head of the Federal Reserve said the US is heading toward a period of high inflation and low economic growth, while the head of Goldman Sachs and other global banks warn that a recession is coming.
Ben Bernake led the Federal Reserve until 2014. He warns that a period of low economic growth and high prices and unemployment, dubbed ‘stagflation,’ could be coming
Goldman Sachs chairman Lloyd Blankfein believes that the US is on its way to a recession
Ben Bernake, who led the Fed through the 2008 financial crisis, says ‘stagflation’ may be on the horizon.
The term, coined in the 1960s, refers to low economic growth combined with high unemployment and high prices.
The phenomenon was a notable feature of Jimmy Carter’s presidency in the 1970s, when the US experienced a ‘supply shock’ after oil-producing nations raised their prices.
Economists use three variables to measure it: gross domestic product (the market value of all goods and services made in a country) unemployment and inflation (a decrease in the buying power of money.)
Stagflation happens when the first is down and the last two are up.
‘Even under the benign scenario, we should have a slowing economy,’ Bernake told the New York Times as average prices are up by 8.3 percent from last year.
‘And inflation’s still too high but coming down. So there should be a period in the next year or two where growth is low, unemployment is at least up a little bit and inflation is still high. So you could call that stagflation,’ he added.
Meanwhile, the chairman of Goldman Sachs said the risk of the US falling into a recession is ‘very, very high.’