Under the shadow of high U.S. inflation and the Federal Reserve’s sharp interest rate hikes, investors’ pessimism has grown stronger, the consumer confidence index has been declining, and the U.S. small business optimism index has fallen to a nearly two-year low. A survey of CFOs’ confidence in the performance of the U.S. economy this year also fell to its lowest level in nearly a decade.
Respondents downgraded their economic growth forecasts and the optimism index fell to 50.7, the lowest level since late 2012, according to the quarterly CFO survey conducted by Duke University’s Fuqua School of Business and the Richmond and Atlanta Feds.
John Graham, Duke University finance professor and academic director of the survey, said:
Optimism about the broader economy has fallen sharply, with monetary tightening being one of several factors dampening the outlook.
The 320 U.S. financial data industry executives surveyed in the May 25-June 10 survey continued to rank inflation, labor quality and supply conditions as their most pressing concerns.
The report shows that CFOs generally expect companies to face higher price and cost pressures. On average, CFOs expect real GDP to grow by 1.5% over the next 12 months, down from 2.5% forecast in the last survey; more than one-fifth of CFOs believe U.S. GDP may grow negative in the coming year, up from 12% in the previous quarter .
In addition to recession and rising costs, CFOs face other worries. In June, as foreign tax credit rules threatened the net profits of some U.S. companies earlier this year, the CFOs of some U.S. companies, including Coca-Cola, Walt Disney and Verizon, filed a joint letter with the U.S. Treasury Department saying the new rules caused competitive disadvantage and will result in double taxation. The U.S. Treasury Department declined to comment at the time.
The National Federation of Independent Business’s (NFIB) Small Business Optimism Index for April came in at 93.2 last month, holding steady at its lowest level since April 2020. The agency expects a decline in the net percentage of business owners whose business conditions improve over the next six months. 1 percentage point, a record low. The report showed that U.S. businesses remained concerned about inflation and the economic outlook.
This month’s article in Wall Street News showed that consumer confidence at the University of Michigan in the United States hit a record low in June, while consumers’ long-term inflation expectations rose above the narrow range of fluctuations in the past few months, the highest since 2008.
In addition, according to Bank of America’s monthly fund manager survey , investors’ concerns about stagflation have reached the highest level since the 2008 financial crisis; optimism about global economic growth has fallen to an all-time low; global earnings expectations have fallen to 2008 lowest since.
There is no minimum, only lower, and the confidence of consumers, investors, and business operators has been shattered. It’s just that Powell, who also made remarks today, reiterated that the U.S. economy is in a good state to resist monetary tightening. Reducing inflation is the top priority at this stage, and he also promised not to let inflation affect the economy for a long time. However, can the American people still take Powell’s “reassurance”?