What America’s Most Prominent CEOs Are Saying About Recession

JP Morgan CEO Jamie Dimon looks on in a meeting with France's President Emmanuel Macron during a business summit, at the Palace of Versailles, southwest of Paris, on July 11, 2022. Ludovic Marin/Pool via Reuters

Despite the U.S. economy slipping into a technical recession in the first half of 2022, CEOs believe that economic conditions could further deteriorate over the next six months, according to a recent survey by a nonprofit business membership and research group organization.

The Conference Board survey found that 98 percent of chief executives are preparing for a recession in the next 12 to 18 months in the United States.

Eighty-one percent of CEOs noted that general economic conditions have worsened from six months ago, and 74 percent anticipate that conditions will weaken over the next six months. More than half (52 percent) noted that conditions in their own industries were in worse condition to start the fourth quarter, while 54 percent expect short-term prospects to soften in their own industries during the next half-year.

“CEO confidence sunk further to start the fourth quarter and is at its lowest level since the Great Recession,” Dana M. Peterson, chief economist of The Conference Board, stated in the report. “CEOs’ view of current conditions as well as their expectations deteriorated.”

While there is almost universal certainty that a recession will occur in 2023, the magnitude of the next economic downturn is most notable. According to the latest quarterly assessment, 85 percent of respondents think a brief and shallow U.S. recession with limited global spillover is the most likely scenario.

The results were comparable to a recent KPMG survey of more than 1,300 CEOs this past summer (pdf). Ninety-one percent of American CEOs are “convinced” a recession is coming in the next 12 months.

SpaceX founder Elon Musk during a T-Mobile and SpaceX joint event in Boca Chica Beach, Texas, on Aug. 25, 2022. Michael Gonzalez/Getty Images

But what are some of Corporate America’s most well-known CEOs, such as Tesla’s Elon Musk, or individuals saying about the next downturn?

‘Batten Down the Hatches’

Following the release of Goldman Sachs’s third-quarter earnings report, the investment bank’s CEO, David Solomon, told Reuters that “there’s a reasonable chance of a recession,” although he “could still see a scenario with a soft landing.”

That caught the attention of Amazon founder Jeff Bezos, who shared Solomon’s comments by tweet and remarked that “the probabilities in this economy tell you to batten down the hatches.”

Bridgewater Associates founder Ray Dalio told Bloomberg at the Greenwich Economic Forum last week that the U.S. Federal Reserve’s path to bringing down inflation could ignite a substantial and prolonged recession. He added that surging debt levels, historically low interest rates, political turmoil in Washington, and the Ukraine–Russia conflict “are the perfect storm” that “all affect each other.”

“Because of the size of the issues we are dealing with, it’s not something we are used to because of its magnitude,” he said. “They’ve produced this giant lurch forward, and now will raise interest rates to the point that there’s enough economic pain and financial market pain to deal with that.”

In a recent interview with CNBC, JPMorgan CEO Jamie Dimon explained that the plethora of “serious” headwinds could push the U.S. and global economies into recession within nine months.

“These are very, very serious things which I think are likely to push the U.S. and the world—I mean, Europe is already in recession—and they’re likely to put the U.S. in some kind of recession six to nine months from now,” he said.

But Cathie Wood, the CEO of investment firm Ark Invest, believes that the current economic contraction “will be sustained.”

“The first two quarters of real GDP negative, to us, means we’re in a recession. We believe this recession will be sustained,” Wood recently told Yahoo Finance Live, adding that a contributing factor will be “a serious inventory correction.”

At Tesla’s annual shareholder meeting in August, Musk said he anticipates a “mild recession” that will last about 18 months.

“Making macroeconomic prognostications is a recipe for disaster, but my guess is that we are past peak inflation and that we will have a recession,” he stated. “I’m just guessing here, this is total speculation. But I would guess it’s a mild recession for, I don’t know, 18 months or something like that.”

In September, according to quotes obtained by CNBC, Alphabet CEO Sundar Pichai told staff during an all-hands meeting in New York that the company would be preparing to adapt to the “toughest macroeconomic conditions” in the past decade in preparation for a hard landing.

“The fact that, you know, we are being a bit more responsible through one of the toughest macroeconomic conditions underway in the past decade, I think it’s important that as a company we pull together to get through moments like this,” he said. “We don’t get to choose the macroeconomic conditions always.”

Alphabet CEO Sundar Pichai speaks at a panel at the CEO Summit of the Americas hosted by the U.S. Chamber of Commerce in Los Angeles, on June 9, 2022. Anna Moneymaker/Getty Images

FedEx CEO Raj Subramaniam told CNBC’s Jim Cramer during a Sept. 15 interview that the numbers suggest the economy is “going into a worldwide recession.”

What Do the Numbers Show?

The Federal Reserve Bank of Atlanta’s GDPNow estimate suggests that the U.S. economy expanded 2.9 percent in the third quarter, up from the model’s 0.3 percent projection at the end of September.

But that doesn’t mean conditions have significantly improved. From Corporate America to economists to market analysts, the consensus is that another recession is on the horizon.

Economists polled for Bankrate’s Third-Quarter Economic Indicator stated that there is a 65 percent chance of a contraction within the next 12–18 months, up from 33 percent in the first quarter.

“This raises the risk that emergency savings could be needed by households in the coming months, much the same as it was needed or would have been useful during the early days of the pandemic, when 22 million jobs were lost in just two months’ time,” Mark Hamrick, Bankrate’s senior economic analyst, said in the report. “We don’t expect anything nearly so severe, but the economy is at some risk here.”

Over the past month, plenty of data have been pointing to a slowing economy.

The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI), for example, weakened to 50.9 in September, from 52.8 in August. In addition, the S&P Global Composite and Services Purchasing Managers’ Index (PMI) prints were stuck in contraction territory. The Manufacturing PMI came in below 52.0.

In August, durable goods orders fell 0.2 percent, while construction spending tumbled 0.7 percent. Industrial and manufacturing production each rose just 0.4 percent. Retail sales were flat at zero percent. Plus, a wide array of regional central bank indexes continued to contract, from the Philadelphia Fed Bank’s Manufacturing Index (negative 8.7) to the NY Empire State Manufacturing Index (negative 9.1).

These numbers have been reported as the annual inflation continues to be elevated at a hotter-than-expected 8.2 percent. The core inflation rate, which excludes the volatile energy and food industries, rose to 6.6 percent.