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US: CFO recession fears ease: PwC

Aug. 22, 2023

C-suite economic optimism is growing, but executives remain split on the possibility of a recession.

Dive Brief:

Optimism among C-suite leaders regarding the state of the economy is on the rise, according to a survey released Tuesday by Big Four accounting firm PricewaterhouseCoopers.

“As we look with economists, policymakers, business leaders, what they see is the possibility of a soft landing,” Wes Bricker, PwC U.S. vice chair and trust co-leader, said during a media briefing Monday. Only 17% of executives “strongly agree” there will be a recession in the next six months, down from the 35% who said the same in October 2022, according to the survey.

While recession fears are easing across the broader C-suite, however, sentiment about the possibility of a coming recession varies among members of the leadership team. Only 8% of CFOs anticipate a recession in the next six months, compared to 27% of chief operating officers, the survey of 607 US executives found.

Dive Insight:
CFOs and COOs have differing opinions regarding the possibility of recession as they are focused on how inflation and other economic headwinds have impacted disparate areas of the business.

“CFOs have spent, I would say, the better part of the COVID-19 crisis and beyond really anchoring scenario planning, shoring up their balance sheets, writing their cost structure,” Bricker said Monday in response to questions. “And I think that gives them optimism that, across multiple scenarios, they’ll help guide the company to financial success.”

Coming from an operating perspective, meanwhile, COOs are “focused on the complexity of transformation,” Bricker said — whether that is transformation of the workforce, the customer experience, or risk functions.

Taking that all together, “there’s an incredible amount of operational work to do… and I think what we see in the data is that COOs are looking at multiple scenarios around the transformation work with a bit more caution than the chief financial officers, who feel ready to allocate capital, to invest in the future, and to deliver results for their stakeholders,” he said.

Robust consumer spending and a strong labor market have persuaded some economists, including those at the Federal Reserve, to step back from their recession forecasts in recent months, CFO Dive previously reported. Many are predicting a mild economic contraction, with growing optimism that the Fed will achieve a so-called “soft landing.”

Overall, leadership is less worried about top risk factors than they were a year ago, allowing them to renew their focus on growing the business and towards investment in new technologies, Neil Dhar, PwC U.S. vice chair and consulting co-leader said Monday.

Still, executives have not fully relaxed when it comes to a potential recession quite yet. Economic growth “is still expected to be uneven,” Bricker said, with some executives remaining vigilant in this regard — economic uncertainty remained high on the list of risk factors cited by most executives, according to the survey.

More frequent or broader cyberattacks remain the top business risk according to 74% of executives, with 36% noting this is a “serious risk,” according to the PwC survey. Economic uncertainty came in second with 72% of executives — 27% of which consider it a serious risk — while talent acquisition and retention rounded out the top three with 71%. Many members of the C-suite report that they are also facing margin pressure, with 28% stating this was a serious risk to their businesses.

“Inflation is declining but remains above policymaker targets, and many companies may not have sufficient pricing power to sustain their margins,” Bricker said.

The survey was conducted between Aug. 1 and Aug. 8 and included responses from chief information officers, chief technology officers and chief human resource officers as well as CFOs and COOs, according to PwC.

[CFO Dive]

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