Even with the stock market ticking up to new record highs, American chief executives are most concerned about a recession in 2020, according to the latest survey by Conference Board, ticking up from their third biggest concern in 2019.
A recent survey of American chief financial officers showed about 52% of them feared a recession in 2020, and 76% feared one hitting the economy by 2021.
Global gross domestic product as a whole dipped from 3% in 2018 to 2.3% in 2019, mostly centered around ongoing trade disputes and other geopolitical concerns such as climate change.
“Business leaders are like normal people. We just don’t quite understand where this all will be going,” Conference Board chief economist Bart van Ark told The Wall Street Journal.
While CEOs fret over recession, Conference Board actually projects global growth to tick up to 2.5% this year and the report accompanying the survey even warned that executive fears can become a sort of self-fulfilling prophecy. Nobel laureate economist Robert Shiller has even written a book called “Narrative Economics,” where he discusses how narratives — whether true or not — can end up driving the market.
“People are fascinated by this idea of a business cycle, so they say that we’re overdue for a recession or they say that we’ve got an inverted yield curve,” Shiller said of his book. “These are stories that have been amplified and they’ve gotten to the point where they may be self-fulfilling prophecies. The inverted yield curve causes a recession because people think it will.”
However, concerns over trade still run rampant after the U.S. and China announced an agreement to a phase one deal trade deal. Chinese survey respondents ranked trade their No. 1 issue among their global concerns, while their American counterparts ranked it fourth in a tie with political instability.
The survey of 740 CEOs was conducted in September and October, so a bit before December’s trade breakthrough, though, van Ark said the results still wouldn’t have changed much.
“As long as we don’t have any guidance about where it’s going to go next, it’s very hard to make big investments,” van Ark said. “I don’t think the stress of this is going to go away.”
Salesforce.com CEO Marc Benioff admitted trade was at the top of the list of concerns for the 100-plus CEOs he has recently spoken with.
“Because that issue is on the table, then everybody has a question mark around in some part of their business,” he said, according to TWSJ. “I mean, we’re in this strange economic time; we all know that.”