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60% of global CEOs expect a recession by 2023: Conference Board

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Yahoo Finance political columnist Rick Newman looks at how executive leadership across industries is assessing recessionary forecasts, how European economies may fare amid global slowdowns in areas such as the energy market, and how President Biden is choosing to address recession concerns.

Video Transcript

SEANA SMITH: Recession fears surging among top business leaders. A new survey from the Conference Board found that more than 60% of CEOs expect a recession in the next 12 to 18 months. That's compared to just 22% at the start of the year. Rick Newman is here with us. And Rick, we talk about the fact that the Biden administration obviously facing a huge challenge when it comes to inflation. Now more business leaders are sounding the alarm on possible recession. It can't be what they want to hear.

RICK NEWMAN: That's right, and it brings to mind Jamie Dimon, the CEO of JPMorgan Chase, saying recently, he sees a hurricane that might be coming. I do want to make one point about that survey, however, which was from the Conference Board. Those were global CEOs. That was not just people running US companies. That was people running some US companies, but also companies in Europe and Asia and other parts of the world.

And other countries are in worse shape than we are. Biden keeps saying that. And he's right, especially Europe, which is dealing with a lot more difficulty from the Russia-Ukraine War than we are here in the United States. They are much more dependent on Russian energy. And they're having a much harder time dealing with some of that Russian energy that's getting cut off.

So Europe may already be in a recession. That does not mean we're going to go into a recession here. I just don't want us to become a little too promiscuous, call it-- going around, saying, oh, a recession is coming. A recession is coming. The unemployment rate is still 3.6%, I think. That's extremely low. So we're not there yet. And let's not talk ourselves into it.

RACHELLE AKUFFO: And I think you raise a fair point. I know we spoke about this before, sort of speaking a recession into an existence, and then that affecting sort of mood among CEOs and other things. But when you keep in mind that this many CEOs are thinking like this, and we're already seeing some layoffs in the tech sector, could you think that'd end up having more of a tightening in the labor market, if CEOs are becoming more pessimistic?

RICK NEWMAN: Yes, but there's another side to this, which is these sort of warning signs that we're talking about, this is exactly what the Federal Reserve is trying to do. They are trying to cool off the economy. That means cool off the labor force. If you make people a little more conscientious about spending money, that is exactly what the Fed is trying to do. They are trying to reduce demand for all these things that have been going up in price so much.

So, yes, these are-- on one respect, these are typical warning signs of a slowing economy. But it's also exactly what the Federal Reserve is trying to do. When you hear it's bad news for Target's earnings that they have too much inventory and they're going to have to start having clearance sales, but that means inflation is going to come down, at least in those products. So this is what the Fed is trying to do. And this gets back to the central question for the Fed, is, will they go too far, or will they get it just about right?

DAVE BRIGGS: And I hate to keep talking about the R word, recession, but President Biden was asked about it by the AP and said that a recession is not inevitable. But a couple of key caveats, and one being that he said most of what happened is a consequence of COVID, and, two, that the United States is better positioned than anyone in the world to get through this without a recession. Are those true statements?

RICK NEWMAN: I think they are. And I mean, I'm sure that possibly some tiny place like Luxembourg might be in a better position or Switzerland, you know, where they depend on banking for the world's elite. But among large developed economies, I mean, we have the best labor situation. We are dealing with the Russian invasion of Ukraine and the resulting increases in energy products. That is a global market. And you can't escape that.

But here, in the United States, we also have more domestic energy production, which Europe does not have. And that's a good thing. Now Biden, of course, wants oil and natural gas drillers to produce even more than they are drilling. But we probably are going to get to record levels of oil and natural gas production here in the United States. So it's not a comfort to people to say, yeah, the economy kind of sucks here right now, but it sucks worse someplace else. That doesn't make anybody feel good. But it's-- look at the data, and it's, more or less, true.

SEANA SMITH: And Rick, it's also causing some tension within the Democratic Party, right, because some Democrats are a little bit frustrated that Biden hasn't been changing his strategy or changing the messaging when it comes to the pressure that the country is under with inflation.

RICK NEWMAN: Right, there's now some grumbling coming out of Capitol Hill among Democrats who are saying, look, this situation has completely changed from six months ago when Biden was still trying to get his Build Back Better legislation through. And basically, what the White House has done is just a rebranding exercise. Now they're saying, oh, we need to pass-- help families with child care because that will help beat inflation. That will lower the cost of child care for families. So it's the same program with a different branding attached to it.

And some people-- some Democrats on Capitol Hill are starting to say, we need a new plan, man. The problem is, there's just not much the president or Congress can do about inflation. This is up to the Federal Reserve to fix it. Biden has said that. And he's just in a crappy political position right now, which is why his approval rating is-- last I saw, it was at 39%, the lowest of his presidency so far. And I suppose it could probably go lower than that.

DAVE BRIGGS: Yeah, said Ro Khanna, needs to be more imagination, more energy, more boldness. Not a terrific review of their economic plan. Rick, good to see you. Happy Father's Day. Thanks.

RICK NEWMAN: Thanks, man. See you guys.