- Nearly half of CFOs surveyed see a recession even earlier than 2020, saying they expect one by the end of 2019.
- CFOs have become pessimistic in most regions of the world, says the Duke CFO Global Business Outlook.
- Next year, CFOs expect “sub-3%” growth for the US economy, with capital spending and employment growth of about 3 percent.
Some 82% of chief financial officers say they see a recession beginning by the end of 2020, while nearly half see it even earlier, by the end of 2019.
That’s according to a survey of US CFOs in the Duke CFO Global Business Outlook.
“The end is near for the near-decade-long burst of global economic growth,” said John Graham, a finance professor at Duke’s Fuqua School of Business and director of the survey. “The US outlook has declined, and moreover the outlook is even worse in many other parts of the world, which will lead to softer demand for US goods.”
CFOs have become pessimistic in most regions of the world: 97% percent of African CFOs say their countries will be in recession no later than year-end 2019, as do many CFOs in Canada (86%), Europe (67%), Asia (54%), and Latin America (42%). The survey, which generated responses from more than 500 CFOs around the world, has run for 91 consecutive quarters. This most recent survey ended on Dec. 7.
Campbell Harvey, a founding director of the survey, who teaches a technology innovation course at Fuqua, listed a perfect storm of waning expansion, heightened market volatility, protectionism, and the flattening of the yield curve which tends to predict recessions.
“CFOs are getting ready for a recession in the next 18 months,” he said. “All of the ingredients are in place.”
For 2019, the survey suggested a 1-in-10 chance that annual real growth will be 0.6%. In this “worst-case scenario,” the report said, CFOs expect their capital spending to fall by 1.3% and for hiring to “remain flat.”
Next year, CFOs expect “sub-3%” growth for the US economy, with capital spending and employment growth of about 3 percent.
“Their recession projections suggest CFOs believe most of this growth will occur early in the year,” Graham said. “This means there is still time for the government to use the tools at their disposal to soften the fall.”