A high number of U.S. executives believe the country is now in a recession, despite the Biden Administration’s refusal to admit the economy’s consecutive contractions over the last year.
A survey conducted by Stifel Financial shows that 18 percent of executives, business owners, and investors consider the economy already in a recession, compared to 79 percent of them expecting a downturn within the next 18 months.
Only three percent of executives believe the U.S. could completely avoid a recession over the same time frame.
‘Given the uncertain backdrop, it’s understandable that companies are planning for a potentially prolonged downturn and are considering various economic scenarios, as well as their approach to strategic planning over the next year,’ Michael Kollender, head of consumer, retail and diversified industrials investment banking at Stifel, told Fox Business.
‘Market conditions and economic cycles often turn quickly,’ he added.
The survey also reveals that businesses believe labor constraints, inflation, supply chain disruptions and a recession are the biggest threats to profitability.
A study shared by Stifel Financial – an investment bank based in Missouri – revealed that 18 percent of U.S. corporate executives, business owners and private equity investors think the economy has already entered a phase of recession after back-to-back quarterly contractions. Overall, 79 percent of respondents expect an economic decline over the next 18 months
Inflation has forced Americans to decrease their purchase power and to focus more on essentials, including groceries and gas
President Joe Biden is adamant that the U.S. can avoid a recession altogether, although both Democrats and Republicans are criticzing No. 46 for being too slow to react to Americans’ growing financial burdens
A major part of executives – 53 percent – expects inflation risk to remain a challenge to their interests and assets for the next two quarters to a year, while 43 percent anticipate an economic decline to last for more than that.
In July, the US consumer price index jumped 8.5 percent from a year ago, according to the Labor Department. That was down from the eye-watering 9.1 percent annual increase seen in June, but still far above the Federal Reserve’s two percent target rate.
Inflation has reached its highest peak in 40 years and it means the cost of everything from haircuts to back-to-school supplies has jumped painfully fast, and low-income and middle-class families have been hit the hardest.
Though gas prices have dropped off their recent peaks, offering some relief, food prices have continued to jump, with the cost of groceries rising 13.1 percent in July from the year before.
A slight majority of executives – 53 percent – expect challenges stemmed from inflation to preside over at least the next two quarters to a year, while 43 percent anticipate an economic decline to last for more than that
Top bosses cite labor constraints, inflation, recession and supply chain disruptions as issues that pose the greatest risk to their businesses
Though gas prices have recently plummeted, providing some breathing space for consumers, food prices have continued to surge, with the cost of groceries rising 13.1 percent in July from the year before
The study comes as the Biden administration continues to deny that the U.S. is in a recession, despite it shrinking for a second straight quarter in July.
President Joe Biden and his officials point to metrics like record job growth and steadily levels of consumer spending to argue that the country is not yet in a recession – and previously claiming that such a downturn is not inevitable.
No. 46 has faced criticism from both sides of the aisle for being slow to react to Americans’ growing financial burdens.
From calling inflation ‘transitory’ in summer 2021, to denying there is a recession despite two quarters of negative economic growth, multiple surveys have shown US voters feel that the president is disconnected from their struggles.
In July, a CNN poll found that just 30 percent of Americans approve of how he’s handling the economy and nearly 7 in 10 don’t think the president has paid attention to the country’s worst issues.
Biden pointed out that Federal Reserve Chairman Powell ‘made it clear that he doesn’t think the US is currently in a recession.
Meanwhile, U.S. Federal reserve officials said there is ‘a lot of time still’ before they need to decide how large an interest rate increase to approve at their September 20-21 policy meeting, Richmond Federal Reserve President Thomas Barkin told Reuters on Friday.
With an unusually long eight-week gap between meetings, the Fed still has ‘another bite’ at data including jobs, inflation and other reports that will shape whether it opts for a half-percentage-point increase in its benchmark overnight interest rate or a third consecutive 75-basis-point hike, Barkin told reporters on the sidelines of a Maryland Association of Counties conference in Ocean City, Maryland.
Rising housing costs, which make up nearly a third of most household budgets, have also become a particular concern for many families, as interest rates continue to climb.
Buying a home in the US is the least affordable it’s been in 33 years as mortgage rates soar this year and home prices hit record high, the National Association of Realtors said last week.
The average mortgage payment jumped to $1,944 in June, a 33 percent increase compared to the $1,297 average back in January.
Rents have also been rising sharply in many markets, as families priced out of homebuying drive up demand for rentals.
Published by Associated Newspapers Ltd
Part of the Daily Mail, The Mail on Sunday & Metro Media Group