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Here's what worries CFOs more than a recession

Alexis Christoforous

Chief financial officers at big U.S. companies predict an economic downturn in 2020, and many are already taking steps to mitigate the damage to their companies, according to Deloitte’s quarterly CFO Signals Survey.

Nearly all of the CFOs surveyed in the fourth quarter – 97% – believe a slowdown has already begun or will start sometime this year, but they don’t see it ballooning into a full-blown recession.

In fact, 69% of the corporate leaders surveyed characterize the economy as “good,” and expectations for a technical recession fell to 3%, down from 15% in the first-quarter of 2019.

Still, 82% have already taken action to offset an expected slowdown in business and consumer spending.

“Almost 60% have started spending-reduction programs,” Sandy Cockrell, Deloitte Global CFO program leader tells Yahoo Finance’s “The First Trade.” “About a third have taken headcount out, so we’re starting to see those levers being pulled already.”

More than recession, Cockrell says the number one concern for CFOs this year is trade policy. “If we can get some agreements on trade policy, I think you’ll see some real tailwinds coming from that,” he says.

The U.S. and China are expected to sign a phase one trade deal next week, but uncertainty about future tariffs and the likelihood of a phase two deal abound.

Climate change on the radar

Climate change is also a major concern for CFOs. More than 70% say they are under some pressure from shareholders to take preventive actions and 91% say they already have.

“Generally that means beginning to look at your energy footprint, being more efficient, and building operational elements into your governance processes, to make sure climate change is something you’re taking care of,” says Cockrell.

As U.S. stocks continue to post record highs into the new year, 77% of respondents say stocks are overvalued, the highest level in nearly two years.

CFOs are also keeping a close eye on the 2020 presidential election: 65% say economic performance will depend significantly on who wins the White House in November, though just 7% have made business adjustments based on the upcoming election.

Alexis Christoforous is a Yahoo Finance reporter and co-anchor of “The First Trade.” Follow her on Twitter @AlexisTVNews.

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