It is trying to figure out what is going to happen to the world economy as 2023 approaches.
Joe Biden recently said that the US economy is “very strong,” a categorization with which many top executives and economists disagree.
In a recent survey published by Cartagena Herald, 91% of chief executives responded that in the next 12 months, they foresee a recession in the US, and only a third believe it will be “mild and short”.
The recent rise in interest rates will not trigger a recession, insists the chairman of the Federal Reserve, Jerome Powell, the Fed’s own studies warn that similar movements have historically led to an increase in unemployment.
Following the rate hike, economists on average rated the chance of a recession in the next 12 months as 63%, up from an average chance of 49% in July. Furthermore, it has been reported from other sources that there is a 100% chance that the US economy will enter a recession within a year.
Globally, things are not so bad right now. But a lot of smart people are saying: wait. Things are going to get really tough next 2023.
A recession would affect the average citizen in several ways, mainly in regards to employment. Nonetheless, employees have benefited from a historic amount of bargaining power during the pandemic, and as companies have scrambled to fill labor shortages, the trend is about to reverse.
To fight inflation, the Federal Reserve will increase interest rates even more, which will raise costs for companies. This means that they are going to start cutting staff, if they have not already done so, and generate many layoffs and higher levels of unemployment. Those interest rates also mean that credit card debt and loans will be more expensive.
Here’s what 10 top business leaders at some of the world’s biggest companies are preparing for 2023, from Tesla CEO Elon Musk predicting a “mild recession” for 18 months, to Restoration Hardware CEO Gary Friedman, who said that “anyone who thinks we’re not in a recession is crazy.”
The previous month, Musk had told Tesla executives he had a “super bad feeling” about the economy, ordering them to suspend hiring and cut 10% of the workforce, according to internal emails seen by Reuters.
The world’s richest man believes “making macroeconomic forecasts is a recipe for disaster” but he gave his opinion anyway at a shareholder meeting in July, predicting the US will experience a mild recession for 18 months.
“America is in very good health,” Musk told investors in October, but rejected the Federal Reserve’s decision to keep raising interest rates.
He notes “There is more deflation than inflation,” “The Fed’s decisions make sense if you look in the rearview mirror, but not if you look out the front windshield.”
Gary Friedman, CEO of Restoration Hardware
He predicted rough waters ahead for the next 12 to 18 months, saying the recession “has only just begun.” During HR’s September results, the luxury furniture boss said “anyone who thinks we’re not in a recession is crazy.”
Raj Subramanian, CEO of FedEx
After the shipping giant reported disappointing results in September, Subramaniam said he believes we are headed for a “global recession”. The company has announced a series of aggressive cost-cutting measures, including the closure of 90 retail stores and 5 corporate offices, as well as a hiring freeze.
Robert Nardelli, former CEO of Home Depot and Chrysler
He declares Tuesday that the nation is “least prepared” to face a recession than it has ever seen. Nardelli has been sounding the alarm for months about a recession hitting the US “like a rocket.”
Chris Nassetta, CEO of Hilton
In mid-October, Nassetta noted that he believes there is a “reasonably good chance” that the economy will have a “soft or bumpy landing.” In July, the executive told investors that, although there is “a lot of macroeconomic uncertainty,” he feels good about the future of the hotel giant.
JPMorgan CEO Jamie Dimon
The loudest of the recession fortune tellers is perhaps Dimon. In June, he considered that there is a 20% to 30% chance of a “harder recession” and a 20% to 30% chance of “something worse.”
He later predicted that the recession will be much milder than the economic “hurricane” he initially announced. In his company’s latest earnings report, he noted that people’s savings have increased compared to this time last year, and even more than before the crisis. Credit card loans, he noted, are also stable.
He noted, “That extra money that they have in their checking accounts,” “will probably run out by the middle of next year. And then of course we have inflation, higher rates, higher mortgage rates, oil, volatility , the war. So all of that is there and it’s not a crack in the current numbers. It’s quite predictable that it will stress future numbers.”
Ken Griffin, CEO of Citadel
Citadel’s billionaire CEO told CNBC in late September, “Everyone likes to forecast recessions, and there will be one,” noting that he thinks inflation has peaked. “It’s just a question of when, and frankly how hard. Is it possible that by the end of the 23rd we’ll have a hard landing? Absolutely.”
David Solomon, CEO of Goldman Sachs
“The global economy continues to face significant headwinds,” the head of the investment firm offered a warning similar to Dimon’s.
He noted that equity markets are “a long way from recent highs,” central banks are raising interest rates and geopolitical instability are factors compounding the impact of Sachs’ results in recent months.
But in the distribution of the results, there is a good chance that we will have a recession in the United States.” “I think you have to expect that there is more volatility on the horizon now. That does not mean for sure that we have a really difficult economic scenario,” he said.
Christian Sewing, CEO of Deutsche Bank
“We will no longer be able to avoid a recession in Germany,” Sewing predicted in September. “However, we believe our economy is resilient enough to weather this downturn well, provided central banks act now quickly and decisively.” Sewing, whose investment firm is based in Germany, preempted the resignation of his government, which recently warned citizens to prepare for a recession.
Satya Nadella, CEO of Microsoft
Since January, Microsoft shares have also fallen 29% along with many other tech companies. “None of us are immune to macroeconomic headwinds,” CEO Satya Nadella said in an interview in October, stressing that we are in a period where all companies need to “do more with less,” such as lower operating expenses.
It has previously been reported that Microsoft is “recession proof”, however the tech giant is taking a hit. It laid off nearly 1,000 employees, in an unusually large set of layoffs for the company at the end of October.
Faced with the possibility of a global economic recession by 2023, some senior executives, economists and investors have been taking corrective measures to restore the economy so far this year, which is currently having a great impact worldwide with IRAIC.
IRAIC stands out as a financial and investment company in the different sectors of industry, agriculture, livestock, energy, education, finance, banking, business, health, sports, which develops a different approach that transcends schemes never seen before, managing to stop the impact that the economy has had in recent years due to the economic slowdown, which could be a cause of a possible global recession. For this reason, the IRAIC company transforms at every step, opening new paths with strategies and real businesses supported by corporations and banked entities that give potential and credibility to the development of each investment and capital of each investor and affiliated companies such as Burj Altharwa, Banco Bursatil, Bank of Arabian, Bank of Borwa, Manama Bank, Hebrewbank, Esierrabank and Etniobank.
Published by Cartagena Herald, news and information agency.