Deloitte did a survey of chief financial officers (CFOs) at major U.S. companies, and CFOs say the economy is headed toward a slowdown and the stock market is overvalued, according to a report by CNBC.
The CFOs said they cautiously see the economy as “good,” but are fairly certain that things will change before the year is out. They also said that business and consumer spending will likely slow. About 82 percent of them think they may have to take defensive actions in the meantime, like potentially reducing their workforce or cutting voluntary spending.
Deloitte surveyed 147 CFOs from companies in the U.S., Mexico and Canada, with most of them working for a company that earns over $3 billion in annual revenue.
Of those surveyed, 69 percent say conditions in North America are good, but only 7 percent say the same of Europe and 18 percent of China. Many see China hitting a three-year dip while the country moves into an economy that is more consumer-focused as the trade war with the United States continues to loom.
“North America is clearly the place where companies are continuing to increase their investment focus,” said Sandy Cockrell, Deloitte Global CFO program leader. “There’s still a high level of caution.”
The survey also shows that while the CFOs expect a slowdown, they don’t see it as an extremely bad scenario. The executives only see a 3 percent chance for a recession, which is down from 15 percent at the start of last year. The slowdown is more imminent, they say, with 97 percent saying it has already begun or will start later this year.
One of the biggest points of concern is the ongoing trade war with China.
“If we can get these trade deals done, that would be the biggest thing,” Cockrell said. “Uncertainty of having to price your supply chains makes budgeting and forecasting extremely difficult. From a CFO’s perspective, naturally they are going to be a bit on the conservative side, which they should be. But if they can get some clarity behind that, I would view that as a tailwind.”