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Company CEOs Saying Economy Will Tank in 2023

  • 91% of US CEOs anticipate there will be recession in the next 12 months, according to a KPMG survey.
  • The economic uncertainty has prompted dozens of major companies to announce lay-offs and hiring freezes.
  • From Tesla to FedEx, here are 2023 predictions from CEOs at 10 of the nation’s top companies.

As the New Year approaches, everyone who’s anyone is trying to figure out what’s going on with the US economy.

Over the weekend, President Joe Biden said the economy is “strong as hell,” a characterization that many top US execs and economists disagree with. In a recent survey by big four tax advisory firm KPMG, 91% of CEOs said they anticipate a US recession in the next 12 months – and only one-third believe it will be “mild and short.”

While Federal Reserve Chair Jerome Powell insists the central bank’s recent interest rate hike won’t trigger a recession, the Fed’s own research warns that similar moves have historically given way to a rise in unemployment.

Following the rate hike, economists surveyed by The Wall Street Journal rated, on average, that the probability of a recession within the next 12 months is 63% – up from an average probability of 49% in July. And one statistical model from Bloomberg Economics says there’s a 100% chance that the US economy will tip into a recession within a year.

By and large, things aren’t too bad right now. But a lot of smart people are saying: Just wait. Things are really going to suck in 2023.

A recession would affect the average person in a number of ways, mainly in regards to employment. Even though workers have been enjoying a historic amount of bargaining power during the pandemic as companies have scrambled to fill a labor shortage, the trend is about to reverse. The Fed will further raise interest rates to combat inflation, which will increase costs for businesses. That means they’re going to start cutting staff if they haven’t already, and lead to many layoffs and higher levels of unemployment. Those interest rates also mean that credit card and loan debt will get more expensive.

From Tesla CEO Elon Musk who’s predicting a “mild recession” for 18 months to Restoration Hardware CEO Gary Friedman who said “anybody who thinks we’re not in a recession is crazy,” here’s what 10 of the nation’s top business leaders are bracing for in 2023:

Tesla CEO Elon Musk

The world’s richest man believes “making macroeconomic prognostications is a recipe for disaster” but gave his two cents anyway at a shareholder meeting in July, predicting that the US will experience a mild recession for 18 months. The month before, Musk told Tesla execs that he had “super bad feeling” about the economy, instructing them to pause hiring and cut 10% of staff, according to internal emails viewed by Reuters.

Musk told investors in October that “North America is in pretty good health,” but pushed back on the Fed’s decision to keep raising interest rates.

“There’s more deflation than inflation,” he said. “The Fed’s decisions make sense if you’re looking through the rearview mirror, but not if you look out the front windshield.”

FedEx CEO Raj Subramaniam

After the shipping giant reported disappointing earnings in September, Subramaniam told CNBC that he thinks we’re barreling toward a “worldwide recession.” The company has announced a slew of aggressive cost-cutting measures, including closing 90 retail locations and five corporate offices, as well as freezing hiring.

Restoration Hardware CEO Gary Friedman

During RH’s earnings in September, the luxury furniture boss said “anybody who thinks we’re not in a recession is crazy.” He predicted troubled waters ahead for the next 12 to 18 months, and said the downturn is “just getting started.”

Hilton CEO Chris Nassetta

The hospitality veteran is slightly more optimistic. Nassetta said in mid-October that he believes there’s a “reasonably good chance” the economy will have “soft-to-bumpy landing.” In July, the exec told investors that while there’s “a lot of macro uncertainty,” he feels good about the hotel giant’s future.

Former Home Depot and Chrysler CEO Robert Nardelli

Nardelli has been sounding the alarm on a recession hitting the US “like a rocket ship” for months now, telling Fox News on Tuesday that the nation is the “least prepared” to face a recession than he’s ever seen.

JP Morgan CEO Jamie Dimon

Dimon is perhaps the loudest of the recession soothsayers. In June, he estimated there’s a 20- to 30% chance of a “harder recession” and a 20- to 30% chance of “something worse.” Most recently, he predicted the downturn will be much softer than the economic “hurricane” he originally forewarned. He noted in his company’s most recent earnings report that people’s savings are up in comparison to this time last year, and even more than pre-COVID. Credit card borrowing, he said, is also stable.

“That extra money they have in their checking accounts,” he said, “will deplete probably by sometime mid-year next year. And then, of course, you have inflation, higher rates, higher mortgage rates, oil, volatility, war. So, those things are out there and that – it’s not a crack in current numbers. It’s quite predictable it will strain future numbers. ”

Goldman Sachs CEO David Solomon

The investment firm head offered a similar warning to Dimon, saying that the “global economy continues to face significant headwinds.”

During the company’s third-quarter earnings call in October, he said equity markets being “well off recent highs,” central banks raising interest rates, and geopolitical instability were all exacerbating factors that impacted Sachs’ performance in the last few months.

“I think you have to expect that there’s more volatility on the horizon now. That doesn’t mean for sure that we have a really difficult economic scenario,” he told CNBC in October. But on the distribution of outcomes, there’s a good chance that we have a recession in the United States. “

Citadel CEO Ken Griffin

“Everybody likes to forecast recessions, and there will be one,” Citadel’s billionaire CEO told CNBC in late September, noting that he thinks inflation has peaked. “It’s just a question of when, and frankly, how hard. Is it possible at the end of ’23 we have a hard landing? Absolutely.”

Deutsche Bank CEO Christian Sewing

Sewing, whose investment firm is based in Germany, preempted the resignation of his government, which recently told citizens to brace for a recession.

“We will no longer be able to avert a recession in Germany,” Sewing said in September. “Yet we believe that our economy is resilient enough to cope well with this recession – provided the central banks act quickly and decisively now.”

Microsoft CEO Satya Nadella

People have called Microsoft “recession-proof” before, but even the technology giant is taking a hit. It laid off nearly 1,000 workers in late October, in an uncommonly large set of layoffs for the company. Microsoft’s stock has also fallen 29% since January, along with many other tech companies. “None of us are immune to macroeconomic headwinds,” CEO Satya Nadella said in an interview with Yahoo Finance in October, stressing that we’re in a period where every company needs to “do more with less,” such as smaller operating expenses.

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