Chief Financial Officers (CFOs) are more pessimistic about the state of our economy than they’ve been in years. As such, they expect an overall recession in the near future. It’s no wonder that a recent survey pegs the chance of a recession at 50% or more at half of all financial institutions. Sixty percent of CFOs expect the economic downturn to arrive during the second half of this year. At the same time, another 15% of them are guessing it will be 2026.
Even with the recession fears hanging heavier than ever, a positive sentiment seems to be prevailing among CFOs regarding how bad it would be. Ninety percent of them think the coming recession will be a mild one. Fifty percent of them say that impact will be significant and 40% say it will be modest. The most frequently cited external business risk, named by 30% of CFOs, is policy uncertainty. Inflation comes in a close third, with 1-in-4 respondents citing it as an issue. Consumer demand completes the trifecta of top risks, cited by one in five CFOs.
"Too chaotic for business to navigate effectively," expressed one CFO respondent, highlighting the challenges posed by current economic conditions.
Although three out of four CFOs are still confident in their own industries, they are showing signs of concern about the overall U.S. economy. This very cautious outlook is reflected in the falling share of firms that expect to increase their capital expenditures (capex) this year. That’s a steep fall from the previous quarter’s plans. The U.S. is planning to borrow trillions, and pressure on U.S. treasury bond yields is likely to continue. Further, an overwhelming 65% of CFOs believe that yields will continue to be in the 4%-5% range by the end of 2025.
Our survey showed that tariffs are a significant and central cause of this “resurgent inflation.” A surprising 90% of CFO respondents shared this level of confidence. The timeline for the Federal Reserve to return inflation to its 2% target is continuously extending. Now, it’s becoming obvious that the goal is getting more out of reach. Half of the CFOs no longer expect to hit this mark before the second half of 2026. Some expect to even reach it as early as 2027.
"Complete chaos, without an end game strategy," stated a CFO responding to the survey, reflecting on the current economic climate.
U.S. trade policy is solely to blame for the coming economic recession. Survey participants from the CFO community have described it as “extreme,” “disruptive,” “aggressive,” and even likened it to “a wild ride.” This feeling is reflective of the fear, confusion and reality of paralysis on behalf of businesses under the current policy climate.
Only 10% of my respondents think the DJIA will get back up to 40,000 before it goes through 50,000. That’s indicative of their overall skepticism about rapid market growth, at least in the near term.
Inflation is a top priority for CFOs, being listed second for external business risk. The ongoing confusion about inflation and what it means for future policy action still has major ripple effects back to business plans in every industry.
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