About 57 percent of respondents expect inflation to come down “over the next few years,” while noting that the economy will suffer a “mild recession” that will last a “very short” period of time due to rising interest rates.
However, the results showed that executives are taking a more pessimistic approach, with the “Measure of CEO Confidence” dropping from 57 percent in the first quarter to 42 percent in the second quarter of 2022.
“CEO confidence weakened further in the second quarter, as executives contended with rising prices and supply chain challenges, which the war in Ukraine and renewed COVID restrictions in China exacerbated,” Dana Peterson, Chief Economist of The Conference Board, said a news release, referring to rampant, harsh lockdowns that have been carried out by the Chinese Communist Party in recent weeks.
“Expectations for future conditions were also bleak,” added Peterson, “with 60 percent of executives anticipating the economy will worsen over the next six months—a marked rise from the 23 percent who held that view last quarter.”
To deal with labor shortages, meanwhile, about 70 percent of CEOs said they are increasing wages “across the board” to retain workers, said Roger Ferguson, with The Conference Board. “On top of that, companies are grappling with higher input costs, which 54 percent of CEOs said they are passing along to their customers. This may contribute to cooling in consumer spending heading into the summer.”
Speaking to CNBC, Ferguson said that Wednesday’s findings suggest Americans should be ready for a “slowing” of the economy, adding that “wages that are increasing but not keeping up with inflation, and then the inability to pass all this along is creating a very challenging dynamic.”
Fed Chairman Jerome Powell, in a Tuesday interview, said the central bank is committed to raising interest rates until inflation comes down. The annual inflation rate of April 2022 stood at 8.3 percent, which is at 40-year highs, although it is slightly lower than the 8.5 percent inflation as seen in March 2022.
“We will go until we feel like we are at a place where we can say, ‘Yes, financial conditions are at an appropriate place. We see inflation coming down,’” Powell told the Wall Street Journal. “We will go to that point, and there will not be any hesitation about that.”
The Conference Board survey findings come as current and former CEOs have started to increasingly issue warnings about a looming recession. On Tuesday, Wells Fargo CEO Charles Scharf admitted to the WSJ that it’s “hard to avoid some kind of recession” although he suggested it will only be mild.
From The Epoch Times