I really try to be a facts guy. Making decisions based on data is better than just emotion. And while consumer confidence is up and things feel like the Trump agenda is keeping unemployment low and the future rosy, experts are issuing warnings.
The experts could be completely wrong but unless someone has a guaranteed crystal ball then expert advice is all we have to use to make informed decisions with. No expert is ever 100 percent right.
Well here is what the experts are saying.
“Nearly half of U.S. CFOs believe the nation’s economy will enter a recession by the end of 2019, according to the Duke University/CFO Global Business Outlook.
Worst-case projections would see capital spending drop in 2019, accompanied by flat hiring.
The CFO survey has been conducted for 91 consecutive quarters and spans the globe, making it the world’s longest-running and most comprehensive research on senior finance executives. The survey ended Dec. 7. Results are for the U.S. unless stated otherwise.
RECESSION LIKELY NEXT YEAR
Nearly half (48.6 percent) of U.S. CFOs believe that the U.S. will be in recession by the end of 2019, and 82 percent believe that a recession will have begun by the end of 2020.
“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 U.S. outlook has declined, and moreover the outlook is even worse in many other parts of the world, which will lead to softer demand for U.S. goods.”
CFOs have become pessimistic in most regions of the world. Ninety-seven percent of African CFOs believe their countries will be in a recession no later than year-end 2019, as do many CFOs in Canada (86 percent), Europe (67 percent), Asia (54 percent), and Latin America (42 percent).
ECONOMIC OUTLOOK FOR 2019
In 2019, CFOs expect sub-3% growth for the U.S. economy, with accompanying 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.”
Moreover, their forecasts are skewed to the downside, with a one-in-ten chance that annual real growth will be a meager 0.6 percent. In this worst-case scenario, CFOs would expect their capital spending to fall by 1.3 percent and for hiring to remain flat.
“CFOs are getting ready for a recession in the next 18 months,” said Campbell Harvey, a founding director of the survey, who teaches a technology innovation course at Fuqua. “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.”
TIGHT LABOR MARKET REMAINS TOP CONCERN
Difficulty hiring and retaining qualified employees remains the most-cited concern among CFOs, though the 47 percent of CFOs calling it a top-four concern is down six points from the two-decade high last quarter.
Other top concerns include the cost of employee benefits, government policies, and economic uncertainty.
Consistent with predictions of recession, the Optimism Index for the U.S. Economy slipped to 66 this quarter, compared to an all-time high of 71 last quarter; CFO optimism about their own firms’ financial prospects dropped two points to 69 on a 100-point scale. Both indices were at all-time highs earlier this year.
The survey’s CFO Optimism Index has historically been an accurate predictor of future hiring and overall GDP growth.” –
If you put any value in the concerns of corporate CFOs then now may not be the right time to obligate yourself too close to your financial limits. A downturn in the economy tends to dump a lot of people into the debt crisis hopper. These things never work out well for individuals as jobs are slashed and incomes stagnate.
I’m not saying the sky is falling. I’m just saying this is what the epxerts are saying now and it’s information to know as you move forward so you can make informed financial decisions.
For companies in the debt relief industry, they will welcome this potential news of loads of new customers headed their way.