More than 90% of CEOs believe a recession will occur within the next 12 months, according to a recent KPMG survey. The vast majority feel that the recession will be difficult, with only around 34% believing the upcoming rescission will be brief and not too painful.
The executives recognize that there are a host of uncertainties to contend with. The challenges range from the possibility of the United States getting embroiled in a war with Russia, as heated rhetoric between Vladimir Putin and President Joe Biden has risen lately, to the effect runaway inflation has on American families. As the Federal Reserve Bank fights inflation, the results are plunging stock prices with losses of around $10 trillion. Higher interest rates are making home ownership out of reach for many people, particularly young families just starting their lives together.
Workers Should Be Worried
If the top executives are worried, you should be too. When the C-suite is concerned about the future, they’ll take proactive actions to cut costs, reigning in expenditures to ride out the storm.
The knee-jerk reaction is for businesses to reduce headcount. Companies in a wide array of sectors have already announced mass downsizings, hiring freezes and job rescissions.
The tech sector reflects the new reality. Instead of unfettered growth, tech giants and startups are cutting personnel. Apple pink slipped 100 recruiter contract roles. Meta is slicing staff for the first time in its history and placing a hiring freeze for new employees. The company is also set to close one of its New York offices. Nearly 600 startups let go of about 80,000 workers, according to Layoffs.fyi, a crowdsourced site that tracks employer riffs. Netflix, Google, Intel, Microsoft, Robinhood, Coinbase and Twitter have all announced hiring freezes or selective downsizes.
It’s not just the tech sector. In a dire warning, FedEx, the ubiquitous package delivery company, surprised Wall Street analysts by changing its forward-looking outlook, warning that profits may falter due to an economic slowdown.
One of the ways the Fed is whipping inflation is by cooling the economy. Stocks are faring the worst drops since the financial crisis. The S&P 500, an index serving as a bellwether for the entire stock market and the economy’s health, plunged about 25%. Many widely held tech stocks are down significantly more than that. Bonds, which are thought of as relatively safe, have also cratered.
The United Nations Conference on Trade and Development warned on Monday that the Fed’s plans may cause a global recession. The organization claims that there will be dire consequences for people living in developing nations, causing possible stagnation and instability.
America’s Top Business Leaders Are Concerned About The Future
A recent Business Roundtable survey corroborates KPMG’s findings. Members of the Business Roundtable, composed of a group of America’s leading C-suite leaders, showed increasing pessimism in their Economic Outlook survey. The business leaders are preparing for a decrease in hiring, capital investments in new projects and overall sales.
The Business Roundtable contends that elected politicians should focus on enacting policies conducive to long-term economic growth and global competitiveness. The C-suite executives call for bipartisanship to allow reform legislation to expedite energy infrastructure projects to realize U.S. climate and energy goals and create American jobs. They also ask for Congress to support innovation and increased domestic energy production.
The group contends that high-flying startups will fall back to earth. Some that lack the revenue or profits to stand alone will be bought out by private equity firms or larger rivals. Companies that have been prudent with their cash reserves may find bargains and go on acquisition sprees.
What You Should Do Now
If you have a safe job, you may want to ignore all the talk about the Great Resignation and quiet quitting. Find ways to ensure that you’re deemed an invaluable employee who is a must-keep if things go bad.
If your job is not secure, start reaching out to recruiters to help you find new opportunities. Find career coaches and résumé writers to help you jumpstart your job search. Get in touch with people in your network and ask them for job leads and introductions to opportunities.
Cut down on spending, so you have a financial cushion in a potentially tough, prolonged, drawn-out recession. Avoid credit cards and variable loans that can suddenly increase the interest rates you’re required to pay. If you want to buy the dips in the stock market, be careful, especially if you’re chasing meme stocks. A high inflationary period is not the time to lose money.
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