We’ve enjoyed several years of economic recovery and upswing, but could another recession be looming on the horizon? Some experts seem to think so, although nothing is set in stone at this time.
Recently, Duke University’s Fuqua School of Business surveyed CFOs on their opinions of a recession in the near future. Respondents predicted our economic future as follows:
- 38 percent foresee a recession by the first quarter of 2020
- 67 percent predict a recession by the third quarter of 2020
- 84 percent believe a recession will strike by the first quarter of 2021
What factors tend to drive a potential recession, and why do most CFOs foresee the possibility of an economic downturn in the near future? Chiefly, four factors are taken into account: Consumer spending, interest rates, commodity prices, and GDP growth.
John Graham, finance professor at Duke and director of the Global Business Outlook survey, said “I think we’re at the stage of the recovery, and there are enough uncertainties out there, that I think a recession is out there on the horizon. It’s just kind of a matter of how far off at this point.”
“What we’re saying here is that if consumer spending were to take a negative turn, or if commodity prices, or interest rates, that might be what pushes us into the recession sooner rather than later.”
Currently, GDP growth holds steady at about 2.3 percent.
While the report might seem dire, CFOs aren’t all gloom-and-doom. Most estimate in increase in capital spending for 2019, along with a 5 percent increase in revenue. They also expect a 2 percent increase in hiring, and a 3 percent jump in wages this year.
In other words, the recession predictions are based more on patterns and potentials, rather than any sure signs that have already manifested. We will continue to monitor this situation, and update you on economic predictions for coming quarters. In the meantime, do call us if you have any questions about your personal outlook, and we can help you anticipate any changes that you might need to make.