America’s CEOs are becoming an increasingly more pessimistic group as inflation rages and as the Federal Reserve keeps hiking interest rates, according to a new survey by KPMG.
"Ninety-one percent of CEOs surveyed believe there will be a recession in the next 12 months. Only one-third of those CEOs believe it will be a short and mild recession. Some CEOs are considering workforce reductions, roughly half of the CEOs are thinking about whether they need to reduce workforce," KPMG CEO Paul Knopp told FOX Business.
Knopp also explained that of the 400 large company C Suite executives surveyed, many believe the Fed has a tougher balancing act in controlling this economic downturn.
"They're paying a lot of attention to what the Fed is saying around the kind of weakness or sustained weakness they need to create, the cooling they need to create in the economy to beat the corrosive effects of inflation, which can really, in the long term, damage the economy significantly," he added.
U.S. policymakers last month inked the third consecutive 75-basis-point rate hike of the year and laid the roadmap for more of the same in the coming months. In a twist, Federal Reserve Chairman Jerome Powell also reversed his belief that the economy could avoid a hard landing or sharp downturn.
"The chances of a soft landing are likely to diminish to the extent that policy needs to be more restrictive or restrictive for longer…"
"The chances of a soft landing are likely to diminish to the extent that policy needs to be more restrictive or restrictive for longer," he said during his press conference following the September meeting.
Policymakers also signaled the job market may need to take a hit. They lifted their forecast for the annual 2023 unemployment rate to 4.4% from 3.8%. On Friday, investors will get the September jobs report, which is expected to show that employers added 250,000 positions while unemployment held at 3.7%.
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Companies including Facebook, Ford, Robinhood and Google have already signaled hiring pullbacks and/or select layoffs.
On Wall Street, the stock market, often a barometer of future sentiment, is on pace for its worst year since 2008. The S&P 500, the broadest measure of stocks, has lost 23%.
Despite the grim outlook, more than 90% of these business leaders say their companies will be resilient over the next three years, expressing confidence in the domestic economy and their respective businesses.