Expect a Slowdown, Not a Recession, Corporate CFOs Say

Some three-quarters of company chief financial officers (CFOs) anticipate an economic downturn next year, but just 15% think it will turn into a full-blown recession, according to a survey by professional services firm Deloitte.

CFOs expecting a downturn named three chief reasons: US trade policy, slowing of growth in Europe and China, and the lengthy expansion, which evidently makes them wonder how much longer it can last.

As it happens, good news in the past few days might turn two of those concerns around. Reports emerged this week that the US and China appear to be making progress on a pact to end the current trade war, and manufacturing activity in China (and the US) picked up in March.

Deloitte conducted the survey in mid-February. It does one every quarter.

Perceptions of North American business conditions declined from the previous quarter, with 80% of CFOs calling them good, versus 88% in the previous quarter. The net optimism index increased from last period’s downbeat showing, but still was the third-lowest reading in three years.

Sounding some upbeat notes, the CFOs preferred revenue growth over cost reduction (51% to 25%), and investing cash rather than returning it to investors (46% to 19%).

Interestingly, as the survey was taken as the stock market bounced back from its year-end 2018 blues, only 46% thought US equities were overvalued, a three-year low.

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