The latest results from the quarterly Duke University/CFO Global Business Outlook indicate that nearly half of U.S. chief financial officers (48.6%) expect a recession to hit by the end of 2019. Further, 82% expect a recession by the end of 2020.
As reported in The Wall Street Journal, these results come at a time when there are still some positive signals of a growing economy: an unemployment rate that remains near historic lows, strong services and manufacturing sector data, rising retail sales, and a record 98 consecutive months of job growth.
However, the Duke University/CFO Global Business Outlook survey results indicate that CFOs have concerns despite these recent positive economic indicators. For example, 47% of U.S. CFOs surveyed indicated that the historically tight labor market means that finding and retaining quality employees has become more difficult — noting this as a top concern for 2019.
“CFOs are getting ready for a recession in the next 18 months,” says Campbell Harvey, a founding director of the survey. “All of the ingredients are in place: a waning expansion that began in June 2009 — almost a decade ago — heightened market volatility, the impact of growth-reducing protectionism, and the ominous flattening of the yield curve, which has predicted recessions accurately over the past 50 years.”
In addition, the survey notes that CFOs anticipate U.S. economic growth will be less than 3% in 2019 (compared to 4.2% and 3.5% GDP growth in the second and third quarters of 2018, respectively), and that capital spending and employment growth will increase by around 3%.
“Their recession projections suggest CFOs believe most of this growth will occur early in the year,” says John Graham, the director of the survey and a finance professor at Duke’s Fuqua School of Business.
What does this mean? According to Graham, “there is still time for the government to use the tools at their disposal to soften the fall.”