Most CEOs are already preparing for a recession, which they think will slash earnings and stunt growth, according to a new survey by KPMG.
Measures companies plan to take to weather the recession include cutting ESG spending and laying off staff, the survey, which canvassed the opinions of the CEOs of 400 American companies with annual revenues of at least $500 million, showed.
The vast majority of CEOs – 91% – said they thought there would be a recession within the next year, and only a third said it would be mild and short. 80% said they thought it would affect their organization’s anticipated growth over the next three years.
Goldman Sachs analysts said in August that there was a 30% probability that the US would enter a recession over the next 12 months, but that a recession in the Euro area was twice as likely.
But data from the Bureau of Economic Analysis shows that Americans have already spent almost a third of their pent-up savings, which Pantheon Macroeconomics said shows “the risk of recession is higher than we previously thought.”
More than three quarters of the American CEOs surveyed said they had made plans for a recession, with 59% saying they planned to pause or reconsider their ESG efforts and 51% considering downsizing their workforce.
Companies including Meta and Google have announced hiring freezes, while Gap, Netflix, Microsoft, Wayfair, Peloton, and Tesla have all laid off staff this year.
As well as laying off some workers, 71% of CEOs said they thought inflation and the rising cost of living would impact their company’s ability to retain staff.